Eutelsat Communications (ISIN: FR0010221234 - Euronext Paris: ETL) reported revenues for the Third Quarter and Nine Months ended 31 March 2019.
Revenues for the three months to 31 March 2019
|
In ‚¬ millions |
|
Q3 2017-18 |
|
Q3 2018-19 |
|
Year-on-Year Change |
|
Quarter-on Quarter Change |
||||
|
|
IFRS 15 restated
|
|
Proforma1 |
|
Reported |
|
Actual2 |
|
Like-for-like3 |
|
Like-for-like4 |
|
|
Video Applications |
|
221.8 |
|
217.9 |
|
215.4 |
|
-2.9% |
|
-2.5% |
|
+0.0% |
|
Government Services |
|
38.0 |
|
38.0 |
|
39.9 |
|
+5.0% |
|
-1.0% |
|
+0.2% |
|
Fixed Data |
|
35.3 |
|
35.3 |
|
30.4 |
|
-13.9% |
|
-17.8% |
|
-7.3% |
|
Fixed Broadband |
|
20.8 |
|
20.8 |
|
19.1 |
|
-8.2% |
|
-9.7% |
|
-5.3% |
|
Mobile Connectivity |
|
17.9 |
|
17.9 |
|
19.8 |
|
+10.6% |
|
+4.7% |
|
+1.3% |
|
Total Operating Verticals |
|
333.8 |
|
329.9 |
|
324.6 |
|
-2.8% |
|
-4.0% |
|
-1.0% |
|
Other Revenues5 |
|
0.6 |
|
0.6 |
|
12.1 |
|
nm |
|
nm |
|
nm |
|
Total revenues |
|
334.4 |
|
330.4 |
|
336.7 |
|
+0.7% |
|
+1.4% |
|
+3.7% |
|
EUR/USD exchange rate |
|
1.21 |
|
1.21 |
|
1.14 |
|
|
||||
Rodolphe Belmer, Chief Executive Officer, commented: The Third Quarter of 2018-19 saw the return to growth in Broadcast on a quarter-on-quarter basis, an improvement in the US Government renewal rate and commercial wins in Maritime Mobility. The Konnect Africa broadband service is showing positive indications of demand but its ramp-up has been significantly hindered by some short-term operational issues. Moreover, we are experiencing softer conditions in Fixed Data and Professional Video. In consequence, revenues for the Operating Verticals at the nine month stage stood at -3%, and we now expect the outturn for FY 2018-19 to be in a similar range, versus our previous objective of ˜broadly stable.
We are encouraged by the resilience of our core Broadcast business, and we continue to target a return to slight revenue growth in FY 2019-20 on the back of the materialization of delayed business, traction in broadband and the availability of incremental capacity with EUTELSAT 7C and EUTELSAT Quantum. All other financial objectives for the current and following years are also confirmed.
Market conditions continue to support the pertinence of the focus on Discretionary Free Cash Flow generation implemented three years ago, and on which we continue to draw on all levers. In this context, our strengthened group is well placed to benefit from the next growth cycle in our industry driven notably by Fixed Broadband and Mobility. Finally, the outcome of discussions on tax territoriality treatment will lead to significant reduction in our annual tax burden.
HIGHLIGHTS
- Outcome of discussions on tax territoriality treatment to secure a reduction of the order of ‚¬70m in our annual tax burden, subject to final formal approval by French Tax administration.
- Resilience of core Broadcast with return to quarter-on-quarter growth, supporting stable Video revenues;
- Multi-year, multi-transponder commercial wins in Maritime Mobility including an agreement with Speedcast on EUTELSAT 133 West A and a multiple-satellite deal with Marlink;
- Recovery in renewal rate with the US Government to circa 85% in Spring;
- Positive indications of demand for Konnect Africa confirmed, but ramp-up hindered by temporary operational issues;
- Revenues for the Operating Verticals now expected at circa -3% like-for-like for FY 2018-19 reflecting Fixed Broabdband delays, deterioration in Professional Video and Fixed Data trends and slower than expected materialization of Video pipeline;
- All other financial objectives confirmed for the current and following year.
THIRD QUARTER REVENUES6
Total revenues for the Third Quarter 2018-19 stood at ‚¬336.7 million, up 0.7% year-on-year.
Revenues for the five Operating Verticals (ie, excluding ˜Other Revenues) were down by 4.0% on a like-for-like basis, ie, excluding a negative perimeter effect of c.1.2 points (disposal of the stake in EUTELSAT 25B) and a positive currency effect of c.2.4 points.
Quarter-on-quarter, total revenues were up by 4.3%. The revenues of the Operating Verticals were down 1.0% like-for-like.
Unless otherwise stated, all variations indicated below are on a like-for-like basis, ie, at constant currency and perimeter.
Core businesses
Video Applications (67% of revenues)
Third Quarter Video Applications revenues were down by 2.5% to ‚¬215.4 million, on a year-on-year basis. This reflected mostly an accelerated, double-digit decline in Professional Video in a context of intensifying competitive pressure. Professional Video now accounts for less than 8% of Video revenues. Pure Broadcast revenues were stable.
On a quarter-on-quarter basis, total Video revenues were stable while Broadcast revenues recorded a slight rise.
On the commercial front, a multi-transponder contract was secured for a new DTH platform on EUTELSAT 65 West A. On the other hand, other projects in the pipeline were delayed for non-structural reasons and should materialize in the near future.
At 31 March 2019 the total number of channels broadcast by Eutelsat satellites stood at 7,021, up 2.0% year-on-year and by 3.0% stripping out the effect of the disposal of EUTELSAT 25B. HD penetration rose by 11% to 1,509 channels, implying a penetration of 21.5% of channels compared to 19.7% a year earlier.
Government Services (12% of revenues)
Third Quarter Government Services revenues stood at ‚¬39.9 million, down 1.0% year-on-year. This reflected on one hand the incremental business secured last year at the 174°East orbital position covering Asia-Pacific, and on the other, the low outturn of the Fall 2018 renewal campaign with the US Government (70%).
On a quarter-on-quarter basis, revenues were stable (+0.2%).
The outturn of the Spring 2019 renewals with the US Government showed an improvement at 85% in value.
Fixed Data (9% of revenues)
Third Quarter Fixed Data revenues stood at ‚¬30.4 million, down 17.8% year-on-year. This reflected ongoing pricing pressure in a highly competitive environment as well as softer volumes in Latin America.
On a quarter-on-quarter basis, revenues were down 7.3%.
Connectivity
Fixed Broadband (6% of revenues)
Third Quarter Fixed Broadband revenues stood at ‚¬19.1 million, down 9.7% year-on-year. Excluding the expiry of a contract with a Middle-East customer for a spotbeam on EUTELSAT 3B, re-contracted to Taqnia in the Mobile Connectivity vertical, the underlying performance was -7.7%. This reflected a further decline in European Broadband with scarcity of capacity in certain countries and the transition to a new distribution model (Preferred Partnership Programme) which is leading to a decline in activity with legacy distributors, not yet fully compensated by the new model.
Revenues for Konnect Africa are running behind expectations reflecting temporary operational issues (political situation in DRC, regulatory delays in Ivory Coast and more generally logistical issues). As a result, no material revenues are expected in the current financial year. This reflects mostly rollout issues and does not, however, alter our view of the strong potential of this market where we expect a ramp-up next fiscal year.
Fixed Broadband Revenues declined by 5.3% on a quarter-on-quarter basis.
Mobile Connectivity (6% of revenues)
Third Quarter revenues for Mobile Connectivity stood at ‚¬19.8 million, up 4.7% year-on-year. They reflected the entry into service of the UnicomAirNet contract on EUTELSAT 172B, the carry-forward impact of the contract with Taqnia at 3°East and 70°East and the ongoing ramp-up of capacity contracts on KA-SAT.
On the commercial front, a multi-year, multi-transponder agreement was signed with Speedcast for capacity dedicated to Maritime Connectivity on EUTELSAT 133 West A, representing another win in this vertical following the conclusion of a multi-satellite deal with Marlink.
Quarter-on-quarter revenues were up 1.3% with the benefit of UnicomAirNet partially offset by the end of a temporary wide-beam contract on EUTELSAT 172B.
Other Revenues
Other Revenues amounted to ‚¬12.1 million in the Third Quarter versus ‚¬0.6 million a year earlier and -‚¬3.5 million in the previous quarter. They included a significant one-off engineering fee and a -‚¬5.7 million impact from hedging.
OPERATIONAL AND UTILIZED TRANSPONDERS
The number of operational 36 MHz-equivalent transponders stood at 1,418 at 31 March 2019, broadly stable versus end-December and slightly down year-on-year, mainly reflecting the disposal of EUTELSAT 25B in August 2018.
The number of utilized transponders stood at 960, down 10 units versus end-December. Year-on-year they were up by nine units on a reported basis and up by 17 excluding the disposal of EUTELSAT 25B. The evolution versus end-December principally reflects lower Fixed Data volumes in Latin America. On a year-on-year basis this was more than offset by new contracts in Video as well as the ramp-up at 174°East.
As a result the fill rate stood at 67.7% at end-March 2019 compared to 66.8% one year ago and 68.3% at end-December 2018.
|
|
|
31 March 2018 |
|
31 December 2018 |
|
31 March 2019 |
|
Operational transponders7 |
|
1,424 |
|
1,419 |
|
1,418 |
|
Utilized transponders8 |
951 |
970 |
960 |
|||
|
Fill rate |
|
66.8% |
|
68.3% |
|
67.7% |
Note: Based on 36 MHz-equivalent transponders excluding high throughput capacity.
BACKLOG
The order backlog9 stood at ‚¬4.4 billion at 31 March 2019 versus, ‚¬4.6 billion at end-December 2018, reflecting natural backlog consumption in the absence of material Video renewals. It was equivalent to 3.1 times 2017-18 revenues. Video Applications represented 76% of the backlog.
|
|
|
31 March 2018
|
|
31 December 2018
|
|
31 March 2019
|
|
Value of contracts (in billions of euros) |
|
4.6 |
|
4.6 |
|
4.4 |
|
In years of annual revenues based on last fiscal year |
3.1 |
3.3 |
3.1 |
|||
|
Share of Video Applications |
|
83% |
|
77% |
|
76% |
NINE MONTH REVENUES
Revenues for the first Nine Months of FY 2018-19 stood at ‚¬994.8 million, down 2.7%.
Revenues of the five Operating Verticals (excluding ˜Other Revenues) were down by 3.0% like-for-like, excluding a negative perimeter effect of c.0.5 points (net impact of the acquisition of Noorsat and of the disposal of EUTELSAT 25B) and a positive currency effect of c.1point.
Nine months to 31 March 2019
|
In ‚¬ millions |
|
9m 2017-18 IFRS 15 restated
|
|
9m 2017-18 proforma10 |
|
9m 2018-19 reported
|
|
Actual change |
|
Like-for-like change11 |
|
Video Applications |
|
664.8 |
|
654.9 |
|
647.5 |
|
-2.6% |
|
-2.1% |
|
Government Services |
|
117.6 |
|
117.6 |
|
121.7 |
|
+3.5% |
|
+0.7% |
|
Fixed Data |
|
108.7 |
|
108.7 |
|
96.4 |
|
-11.4% |
|
-13.9% |
|
Fixed Broadband |
|
63.6 |
|
63.6 |
|
59.6 |
|
-6.3% |
|
-7.1% |
|
Mobile Connectivity |
|
54.9 |
|
54.9 |
|
59.8 |
|
+8.8% |
|
+6.0% |
|
Total Operating Verticals |
|
1,009.7 |
|
999.7 |
|
985.0 |
|
-2.4% |
|
-3.0% |
|
Other Revenues |
|
12.7 |
|
12.7 |
|
9.7 |
|
nm |
|
nm |
|
Total revenues |
|
1,022.4 |
|
1,012.5 |
|
994.8 |
|
-2.7% |
|
-1.7% |
|
EUR/USD exchange rate |
|
1.19 |
|
1.19 |
|
1.15 |
|
|||
FINANCIAL OUTLOOK
At the Nine Month stage, revenues of the Operating Verticals of -3.0% like-for-like are tracking behind our Full Year objective of ˜Broadly Stable reflecting temporary operational issues delaying the ramp-up of Konnect Africa, softer conditions in Fixed Data and Professional Video and the late materialization of some contracts in the Video pipeline. We now expect the outturn for FY 2018-19 to be in the same range of circa -3%12.
We continue to target a return to slight topline growth in FY 2019-2013, which will benefit from the materialization of the delayed business mentioned above, an improvement in the performance of European Broadband, the initial contribution from the EGNOS payload on EUTELSAT 5 West B and the availability of new capacity on EUTELSAT 7C and EUTELSAT QUANTUM.
All other financial objectives for the current and following years are also confirmed:
- The EBITDA margin (at constant currency) is expected above 78% from FY 2018-19.
- The estimated Cash Capex13 spend is expected at an average of ‚¬400 million per annum for the period July 2017 to June 2020.
- Discretionary Free Cash Flow is expected to grow at a mid-single digit CAGR in the period July 201714 to June 2020 (at constant currency and excluding the impact of the disposal of the interest in EUTELSAT 25B).
- The Group is committed to maintaining a sound financial structure to support its investment grade credit rating with a net debt / EBITDA ratio below 3.0x.
- It also reiterates its commitment to serving a stable to progressive dividend.
This outlook is based on the nominal deployment plan outlined hereunder.
FLEET DEVELOPMENTS
Nominal deployment programme
|
Satellite1 |
|
Orbitalposition
|
|
Estimated launch(calendar year) |
|
Main applications
|
|
Maingeographiccoverage |
|
Physical Transponders/Spot beams
|
|
36 MHz- equivalenttransponders / Spot beams |
|
Of whichexpansion |
|
EUTELSAT 7C |
|
7° East |
|
June 2019 |
|
Video |
|
Turkey, Middle- East, Africa |
|
44 Ku |
|
49 Ku |
|
19 Ku |
|
EUTELSAT 5 WEST B |
|
5° West |
|
Q3 2019 |
|
Video |
|
Europe, MENA |
|
35 Ku |
|
35 Ku |
|
None |
|
EUTELSAT QUANTUM |
|
To be confirmed |
|
H2 2019 |
|
Government Services |
|
Flexible |
|
8 QUANTUM beams |
|
Not applicable |
|
Not applicable |
|
KONNECT |
|
To be confirmed |
|
Q4 2019 |
|
Connectivity |
|
Africa Europe |
|
65 spot beams |
|
75 Gbps |
|
75 Gbps |
|
KONNECT VHTS |
|
To be confirmed |
|
H2 2021 |
|
Connectivity Government Services
|
|
Europe |
|
~230 spot beams |
|
500 Gbps |
|
500 Gbps |
|
EUTELSAT HOTBIRD 13F |
|
13° East |
|
H2 2021 |
|
Video |
|
Europe MENA
|
|
80 Ku2 |
|
73 Ku2 |
|
None |
|
EUTELSAT HOTBIRD 13G |
|
13° East |
|
H2 2021 |
|
Video |
|
Europe MENA
|
|
80 Ku2 |
|
73 Ku2 |
|
None |
|
1 Chemical propulsion satellites (EUTELSAT QUANTUM, EUTELSAT 5 West B) generally enter into service 1 to 2 months after launch. Electric propulsion satellites (EUTELSAT 7C, KONNECT, KONNECT VHTS, EUTELSAT HOTBIRD 13F and EUTELSAT HOTBIRD 13G) between 4 and 6 months. 2 Nominal capacity corresponding to the specifications of the satellites. Total operational capacity at the HOTBIRD orbital position will remain unchanged with 102 physical transponders (95 36 Mhz equivalent transponders) operated, once regulatory, technical and operational constraints are taken into account.
|
||||||||||||||
Since the last quarterly update in February 2019, the launch of EUTELSAT 5 WEST B is now expected in Q3 2019, versus Q2 2019 previously, with no impact on the revenue profile.
Changes in the fleet
- EUTELSAT 12 WEST B now operates in inclined orbit.
- EUTELSAT 70C is being relocated.
*****
Third Quarter 2018-19 revenues conference call
A conference call will be held on Tuesday, 14 May 2019 at 18.30 CET / 17.30 GMT / 12:30 EST
To connect to the call, please use the following numbers:
- France: +33 (0) 1 76 77 22 57
- UK: +44 (0) 330 336 9411
- United States: +1 929 477 0324
Access code: 8262728#
Replay will be available from 14 May 2019 to 21 May 2019 on the following numbers:
- France: +33 (0) 1 70 48 00 94
- UK: + 44 (0) 207 660 0134
- United States: + 1 719 457 0820
Access code: 8262728#
APPENDICES: QUARTERLY REVENUES BY APPLICATION
Reported revenues
The table below shows quarterly reported revenues. Note: IFRS 15 was adopted from July 1st 2018.
|
In ‚¬ millions |
|
Q1 2017-18 |
|
Q2 2017-18 |
|
Q3 2017-18 |
|
Q4 2017-18 |
|
FY 2017-18 |
|
Q1 2018-19 |
|
Q2 2018-19 |
|
Q3 2018-19 |
|
Video |
|
223.3 |
|
225.9 |
|
225.0 |
|
223.1 |
|
897.3 |
|
217.2 |
|
214.9 |
|
215.4 |
|
Government Services |
|
41.1 |
|
39.6 |
|
38.0 |
|
40.2 |
|
158.9 |
|
42.4 |
|
39.4 |
|
39.9 |
|
Fixed Data |
|
37.1 |
|
36.3 |
|
34.9 |
|
34.2 |
|
142.5 |
|
33.3 |
|
32.6 |
|
30.4 |
|
Fixed Broadband |
|
22.3 |
|
21.8 |
|
21.5 |
|
21.1 |
|
86.7 |
|
20.4 |
|
20.1 |
|
19.1 |
|
Mobile Connectivity |
|
18.6 |
|
18.5 |
|
17.9 |
|
19.5 |
|
74.4 |
|
20.6 |
|
19.4 |
|
19.8 |
|
Total operating verticals |
|
342.4 |
|
342.1 |
|
337.3 |
|
338.1 |
|
1,359.8 |
|
334.0 |
|
326.4 |
|
324.6 |
|
Other Revenues |
|
6.8 |
|
5.4 |
|
0.1 |
|
35.8 |
|
48.1 |
|
1.2 |
|
(3.5) |
|
12.1 |
|
Total |
|
349.1 |
|
347.4 |
|
337.4 |
|
373.9 |
|
1,407.9 |
|
335.1 |
|
322.9 |
|
336.7 |
Proforma revenues
The table below shows quarterly proforma revenues for FY 2017-18. For comparability purposes with FY 2018-19 figures, they are restated from the following items:
- The contribution of EUTELSAT 25B as of August 2017. As a reminder, Eutelsat sold its interest in the Eutelsat 25B satellite in August 2018.
- The impact of IFRS 15.
|
In ‚¬ millions |
|
Q1 2017-18 |
|
Q2 2017-18 |
|
Q3 2017-18 |
|
Q4 2017-18 |
|
FY 2017-18 |
|
Video |
|
217.9 |
|
219.0 |
|
217.9 |
|
215.6 |
|
870.5 |
|
Government Services |
|
41.1 |
|
38.5 |
|
38.0 |
|
40.2 |
|
157.8 |
|
Fixed Data |
|
37.2 |
|
36.2 |
|
35.3 |
|
34.2 |
|
143.0 |
|
Fixed Broadband |
|
22.0 |
|
20.9 |
|
20.8 |
|
20.7 |
|
84.3 |
|
Mobile Connectivity |
|
18.6 |
|
18.5 |
|
17.9 |
|
19.5 |
|
74.4 |
|
Total operating verticals |
|
336.8 |
|
333.0 |
|
329.9 |
|
330.2 |
|
1,330.0 |
|
Other Revenues |
|
6.6 |
|
5.5 |
|
0.6 |
|
33.9 |
|
46.7 |
|
Total |
|
343.5 |
|
338.6 |
|
330.4 |
|
364.1 |
|
1,376.6 |
Financial calendar
The financial calendar below is provided for information purposes only. It is subject to change and will be regularly updated.
- 31 July 2019: Full Year 2018-19 results
Source: Eutelsat Press Release