On the day before most of Europe sets out on summer holiday, French satellite operator Eutelsat posted its full-year 2019-20 financial results and announced it acquired one of the continent’s largest satellite broadband distributor networks.
Both Eutelsat and market analysts expected that the COVID-19 pandemic would impact its financials, but the operator exceeded expectations and reported a strong cash flow position that will allow it to ramp up its KONNECT broadband service and invest in future Very High-Throughput Satellite (VHTS) services. Eutelsat also surprised market watchers by the sustained health of its broadcast segment business. In fact, broadcasting, which makes up 61% of Eutelsat’s total revenue, was the company’s strongest performing vertical.
Eutelsat’s company-wide revenues for the full-year were 1.278 billion Euros ($1.510 billion), down 3.2% on a reported basis compared the year prior. The operator’s fourth quarter revenues were down 2.1% from its 2018-18 fourth quarter. Eutelsat’s full-year broadcast revenues experienced the smallest decrease at 1.2%, due to a decline in business in Russia and the termination of a contract in Sub-Saharan Africa. However, the operator has been riding a wave of new capacity deals and business with Ghana RCS, Africa XP, Strong Roots, and Canal+ in Ethiopia, which helped offset losses.
Eutelsat saw larger decreases in its Data and Professional Video, Fixed Broadband, and Government segments, which make up a much smaller portion of the company’s pool of revenue. The operator was also impacted by a 45% loss of capacity on its EUTELSAT 5 West B satellite following a malfunction on one of its solar arrays. Its counterpart, EUTELSAT 5 West A, now operates in inclined orbit.
The operator will now focus on ramping up it’s next-generation broadband services. Eutelsat confirmed that it reached an agreement with Bigblu Broadband, the largest distributor of satellite broadband packages in Europe, to acquire its BBB Europe satellite broadband platform, as well as access to its network of installers and resellers and to its 50,000 subscribers across the United Kingdom, Ireland, France, Germany, Italy, Spain, Portugal, Poland, Hungary, and Greece.
Eutelsat will pay 38 million Euros ($44.8 million) for BBB Europe, which generated 35 million Euros of revenue in 2019. The operator expects to complete the acquisition in October 2020. While BBB Europe’s net contribution to Eutelsat’s revenues and EBITDA will not be material due to pre-existing alignment between the businesses, Eutelsat CEO Rodolphe Belmer said the acquisition is an important step toward the launch of its KONNECT service in 2020, with full operations expected by early 2021. The KONNECT satellite was launched in January to the 7 degrees East orbital slot.
“The coming year is expected to mark a turning point for our Fixed Broadband vertical, with the ramp-up of EUTELSAT KONNECT, to be followed in subsequent years by further incremental Connectivity capacity, namely KONNECT VHTS and EUTELSAT 10B, adding traction to our return to growth strategy,” said Belmer. “We are adding a retail pillar to our distribution strategy with the acquisition of the European satellite broadband activities of Bigblu Broadband … BBB Europe which will greatly enhance our European broadband distribution network as we progressively bring into service next-generation capacity in the form of EUTELSAT KONNECT and KONNECT VHTS, capable of bringing fiber-like high speed internet connection to the many areas in Europe that remain unserved or underserved by terrestrial infrastructure.”
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