Analysts on How Eutelsat Will Rewrite It’s Growth Story in FY19

Eutelsat CEO Rodolphe Belmer

Eutelsat CEO Rodolphe Belmer. Photo: Eutelsat

Eutelsat issued its full year results today, which saw falls in both overall profit and revenue. Its revenue for the 12 months until the end of June reached 1.407 billion euros ($1.647 billion), a fall of just under two percent compared to last year’s revenue figures. Profits for the year stood at 290.1 million euros ($339.67 million), a fall of over 17 percent compared to the same stage last year. Eutelsat still derives around 66 percent of its revenue from video, and its video revenue for the year approximately matched last year’s performance with a fall of less than one percent. The biggest concern would be in the fixed data segment of its business, which saw revenue fall down to just 142.5 million euros ($166.85 million), a 15 percent drop compared to the previous year.

The government side of the business had particularly interesting results. Government services revenue for the 12 months until the end of June were 158.9 million Euros ($186.05 million), a fall of almost 10 percent compared to the same stage last year. Given that SES saw an improvement in its government revenue in its recent half-year results, this figure could be seen as disappointing.

Eutelsat Chief Executive Officer (CEO) Rodolphe Belmer said the company had delivered a solid commercial performance in the last 12 months, which sets it in good stead to achieve its objective of returning to slight revenue growth this year.

However, like SES’s recently-issued results, there are signs of encouragement for Eutelsat. The operator “ended Financial Year (FY)18 tracking to immediate and medium term expectations. The element needed to support the current multiple (Video) is performing to plan, but the element needed to support a higher ‘defensive growth’ multiple (Fixed Broadband) is not. It should be within management’s gift to shape the growth story in FY19,” Jeffries Satellite Equity Analyst Giles Thorne said in a research note issued today.

Thorne also saw Eutelsat’s performance in video as positive. “Video revenue growth in Fourth Quarter (4Q)18 was flat Year-on-Year (YOY) (from -0.2 percent / -1.6 percent in 3Q18 / 2Q18), continuing its gentle inflection towards guidance for ‘slight growth’ (and needless to say, critical to sentiment),” he added. “There was no change in the message that broadcast continues to grow, while professional video declines. Within the Key Performance Indicators (KPIs), we note no deviation from the prevailing message of stable / growth channel count and compression-driven High Definition (HD) upgrades: total channels of 6,929 (vs. 6,630 in 4Q17) of which 1,455 are HD (21 percent penetration, +4 Percentage Points (PP) from 4Q17; critically, the comparable metrics for Hotbird (the neighborhood where the ‘secular decline’ debate is fiercest) were directionally similar (flat year-on-year channel count, +5.1PP YOY HD penetration).”

In other Eutelsat news, the operator announced yesterday it had signed a multi-year, multi-transponder contract with Media Group Ukraine for broadcasting services on its Eutelsat 9B satellite. Leveraging the Eutelsat 9B satellite’s dedicated coverage over Ukraine, Media Group Ukraine will broadcast “Xtra TV,” one of the country’s leading pay-TV platforms, with an enhanced offer of over 60 channels including 19 in HD, in eight thematic packages for all audiences.

Xtra TV is the only Ukrainian pay-TV platform to broadcast two TV channels dedicated to football, holding exclusive rights for the Union of European Football Association (UEFA) Champions League, UEFA Europa League, Premier League and Serie A. Media Group Ukraine is deploying advanced encryption technology across all of its decoders to guarantee the exclusivity of content delivered to its subscribers.

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