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OneWeb drives Q4 revenue beat Eutelsat''s Q4 revenues came 5% ahead of consensus, driven by solid 31.5% organic revenue growth in the group''s LEO revenues (mostly OneWeb). Government Services, helped by solid demand from Ukraine, Taiwan and other non-US governments, grew 41% in Q4 25 and underpins our view that European Satellite operators including Eutelsat are well positioned to benefit from increased spending on European Defence as well as from ongoing geopolitical trends. FY25 adj. EBITDA came in 2% ahead and net debt 2% below consensus. Shares were up ~12% at the close. Outlook reaffirmed Management has reaffirmed all elements of its short-term and medium-term guidance, including its forecasts of more than 50% organic revenue growth for LEO revenues in FY26 as well as EUR1.5-1.7bn of FY29 revenues with at least 60% adj. EBITDA margins. We have increased our medium-term forecasts for FY29 revenues and EBITDA by 7% and 13% respectively. Improving balance sheet prospects With confirmation of a EUR1.5bn capital increase by year-end and guidance of a net debt to EBITDA of c2.5x by year-end FY26, Eutelsat''s balance sheet structure is improving at a time when OneWeb revenues are taking off. LEO revenues accounted for 15% of FY25 revenues and we estimate will account for 24% and 30% of Eutelsat group revenues for respectively FY26 and FY27. TP revised up to EUR2.9 but Underperform rating maintained Our new forecasts reflect the EUR1.5bn capital raise (55% placed to government shareholders at a 21% premium to the last closing price) and improving medium-term prospects. We raise our TP from EUR1.0 to EUR2.9 (using 3x ''26e EV/sales on higher forecasts vs 2.5x before) but retain our cautious view in a context of growing competitive pressure from LEO new entrants. We prefer SES (+) which benefits from higher exposure to Government, a solid MEO infrastructure and more C- band upside.
Eutelsat Communications Eutelsat Communications SA
What happened? Eutelsat reported stronger than expected Q4 revenues of EUR326m, 5% ahead of the company-compiled consensus. Eutelsat has increased the granularity of its financial disclosure and now reported LEO revenues and organic revenue growth. OneWeb generated EUR70.5m of revenues in Q4 up 31.5%, beating our EUR51.5m Q4 25 estimate and explaining most of the Q4 group revenue beat in our view. Q4 group revenues fell by 2% driven by Video revenues declining by 6.8%, Fixed Connectivity by 14.5% and Mobility by 7% with Government Services up 41% (driven by OneWeb and partly by Ukraine). Eutelsat FY25 revenues of EUR1244m came in 3% ahead of consensus and helped group EBITA beat by 2% to EUR676m. Net debt at June 25 was 2% below consensus at EUR2627m Management has reaffirmed all the elements of its guidance for FY26 (''revenues in line with FY25 and EBITDA margin slightly lower'') and for the medium term (FY29 revenues of EUR1.5-1.7bn and EBITDA margins of at least 60%''). It has also confirmed that it plans to conclude its capital increase of EUR1.5bn by the end of this calendar year. BNPP Exane View: OneWeb revenues accounted for 22% of Q4 25 revenues. Management reaffirmed its forecast of 50% organic revenue growth in OneWeb FY26 revenues. This would imply EUR280m of FY26 revenues, ahead, but consistent with our EUR263m. OneWeb is guided to account for 23% of group revenues in FY26. The strong performance of Government Services underpins our view that satellite operators are likely to play a key role in the ramp up of European defence. With a solid Q4 performance, with increased disclosure on OneWeb and its solid performance, with the FY26 and mid term outlook confirmed, we expect a positive share price reaction today.
What happened? Management has just confirmed that it plans to execute a capital increase of EUR1.35bn by calendar year end 2025. This balance sheet restructuring will include a reserved capital increase of EUR716m at a price of EUR4 per share subscribed by the French State for EUR526m, Bharti Space Limited for EUR31m, CMACGM for EUR100m and FSP for EUR58m. The French State will own 29.99% of the capital and voting rights, while Barthi, CMG CGM and FSP will own 18.7%, 7.81% and 5.22% respectively. In addition, Eutelsat will make a EUR634m rights issue of which 61% has also been secured through Eutelsat anchor shareholders. Discussions with the UK Government are still ongoing. In addition, management provided mid term guidance indicating FY26 revenues would be in line with FY25 (FYE June 25) and EBITDA margin would be slightly below. Management also guided for EUR1.5-1.7bn of revenues for FY29 with double-digit growth in Connectivity and with an EBITDA margin of at least 60% (including a negative EUR75-80m EBITDA impact from the part-disposal of the passive ground segment). For FY26 Gross capex is guided at EUR1.0 to EUR1.1bn. Thanks to this capital increase management is expecting a net debt to EBITDA ratio of c 2.5x for the end of FY26 (ie June 26). BNPP Exane View: As we had discussed in EUTELSAT, SES: Space catalysts, Eutelsat capital increase does not come as a surprise. At EUR1.35bn the total amount is below the EUR2bn we had hypothesized and below the EUR1.5bn recently reported on Bloomberg. With 53% of the total capital raise reserved at a rate of EUR4 per share and assuming the current share price for the 47% rights issue suggest the total number of shares will increase by 84% from 475m to 872m. Our revenue forecasts are broadly in line with guidance for FY26 and FY29 as we forecast EUR1357m of revenues in FY29 (our forecasts do not yet have the EUR1bn 10-year contract with the French Army announced yesterday). Our 57% FY29 EBITDA margin...
What happened? Yesterday at the Paris Air Show, the French Ministry of Defence (Ministere des Armee) announced it had signed a capacity procurement deal with Eutelsat to use the group''s satellite capacity including OneWeb for the next 10 years. The contract has been valued at EUR1bn. BNPP Exane View: We see this as a supportive development for Eutelsat as it indicates strong commercial traction for OneWeb with governments and will support the financial profile of the group at a time when it needs capital to invest in IRIS2 and the OneWeb constellation extension. We expect a solid positive share price reaction today.
What happened? Last Friday night, Bloomberg reported that Eutelsat was in talks with the French government and other investors to raise EUR1.5bn of fresh capital. BNPP Exane View: Bloomberg report is consistent with our analysis recently laid out in EUTELSAT, SES: Space catalysts. In this report, we had conducted a sensitivity analysis on EUR2bn raised at EUR3.66 per share and concluded fair value would be around EUR0.3/sh. The amount talked about in the press (EUR1.5bn) is lower than our assumption but so is the current share price. Raising EUR1.5bn at EUR3.2 per share would result in a fair value of EUR0.35/sh on our numbers. We remain cautious on the shares.
What happened? With EUR300m of Q3 25 revenues and a 2.2% organic revenue decline driven by 2.7% organic growth in Connectivity and 6% decline in Video, Eutelsat reported numbers in line with expectations. Management has also reaffirmed its FY25 guidance BNPP Exane View: However, we expect the shares to react negatively to the disclosure of a EUR16m revenue and cEUR16m EBITDA hit from the French ARCOM regulator expanding the scope of sanctions on Russian media. Note that Eutelsat guidance excludes the impact of Russian sanctions. We also expect some pressure from a poor contract renewal rate with the US DoD in the Spring 2025 campaign. Eutelsat renewed 50% of its contract value (vs. a 5-year average of 75-80% and 70% last year) with the US DoD. This underpins the idea that the US DoD demand is moving away from GEO satellites. Management also indicated that it expects Export Credit Financing is unlikely to resolve the liquidity issue the balance sheet is facing and Eutelsat is looking at options to reinforce their capital structure
What happened? Eutelsat has just announced the appointment of Jean Francois Fallacher as its new CEO. Mr. Fallacher was head of Orange France and has a long career in telecommunications. Eutelsat has also reaffirmed FY guidance and confirmed that its Q3 trading was in line with expectations. BNPP Exane View: FY guidance reiteration is a positive. However, the appointment of a new CEO is likely to raise question marks. While his profile of a long standing telecom industry top executive fits well into the strategic direction of the company as a network connectivity provider, the timing of his appointment intrigues. Outgoing CEO Eva Berneke was appointed in January 2022 and is leaving after less than three and a half years at the helm at a time when press reports suggest ongoing difficult discussions with shareholders regarding a capital increase needed to finance EUR4bn+ of upcoming investments in IRIS2 and the OneWeb upgrade. While geopolitical tensions may provide new opportunities for the group (i.e. Eutelsat augmenting its services in Ukraine and Italy), the ability to finance upcoming investments in a minority shareholder friendly way has us remain Underperform after the strong year to date share price performance.
Eutelsat reports H1 results in line with expectations Eutelsat reported revenues of EUR606m for H1 25 with Q2 25 organic revenue growth rate of 2.9%. This was driven by a 5.6% lfl decline in Video and 12.7% lfl revenue growth in Connectivity with OneWeb-driven 16% and 23% lfl in Fixed Connectivity and Government Services respectively. Mobility was down 4.5%. Revenues were in line with expectations while adj. EBITDA of EUR335m was up 5% proforma and 3% ahead of consensus expectations. FY25 guidance maintained with EUR200m capex cut Management has reaffirmed its FY25 outlook and cut the gross capex target for FY25 to EUR500-600m from EUR700-800m. This reflects the timing of LEO investments (pushed to later years) and management''s claim of ''increased vigilance on GEO capex''. GEO trends weaker than expected We believe that the ''increased vigilance on GEO capex'' as well as a EUR535m impairment on Eutelsat''s GEO satellite fleet reflect weaker-than-expected operating trends in GEO. We think this is due to both the transition of client demand from GEO to LEO (see OneWeb revenue growth) coupled with increased competition from Starlink both in B2C and B2B segments. Management argues that geopolitical reasons (ie avoiding dependence on US or Chinese satellites) as well as customer demand for resilient services (ie having multiple competing satellite network operators) are reasons to expect Eutelsat can remain commercially relevant in the age of Mega constellations. Underperform; TP cut to EUR1 We have cut our EBITDA25 forecast by 6%. Weaker GEO trends including Konnect VHTS in B2C lead us to cut our DCF terminal value and Eutelsat Connectivity SOTP multiple. We set our new TP at EUR1 (from EUR3.5) and remain Underperform on the stock pending signs that OneWeb revenue growth can offset declines in Video and GEO Connectivity.
Strong FY24 EBITDA profitability Strong Q4 orgrev growth of 13% led to 6% annual organic revenue growth with FY revenues broadly in line with expectations. The revenue decline in Video was in line with expectations (-7% orgrev growth) while Fixed Connectivity was 9% ahead of cons. fueled by the OneWeb contribution. Group adjusted EBITDA of EUR719m was 9% ahead of consensus forecasts on solid cost control. Net income was significantly below on higher depreciation and financial results. Regulatory delays put pressure on OneWeb revenue ramp up Management guided for weaker-than-expected FY25 revenues to be around the same level as in FY24. It blamed this on delays in OneWeb market access rights (in particular in India and Thailand) and the ground network roll out. Despite the slow ramp up, it is guiding only marginally lower EBITDA margins than in FY24 which we take as indicative of stronger than expected profitability. Looking for partnerships to finance Gen 2 Management guided for EUR700-800m of FY25 capex in line with expectations. It has suspended its mid-term capex guidance and pointed that the amount to invest would depend on the type of partnerships the company can secure to fund OneWeb Gen 2. Preserving the balance sheet has taken priority in our view. The exit of Airbus and Thales from SpaceRise increases the chance of a positive IRIS2 outcome for Eutelsat in our view. Partnership with infrastructure investors could alleviate Eutelsat''s capex requirement. Past false starts suggest it is too early to turn positive We think competitive pressure, balance sheet risk, high investment requirements, structural pressure in Video, exposure to Russia outweigh the revenue growth opportunities from OneWeb for now. We have cut our FY25and26 revenues by c15% but increased our profitability assumptions. Our FY25 and 26 EBITDA is relatively unchanged. We remain cautious on the shares for now and maintain UPF.
H1 24 revenues and EBITDA broadly in line with expectations Eutelsat reported EUR573m of revenues in H1 24 driving EUR366m of EBITDA. Video was down 8% and came at the higher end of expectations. Government and Fixed Connectivity were slightly higher while Mobility was slightly lower. Excluding OneWeb, Eutelsat delivered on guidance of a return to positive growth thanks to the entry into service of 10B and Konnect VHTS. OneWeb commercial success remains solid despite delays in ground network roll out OneWeb backlog grew 23% over the previous quarter to EUR700m (excl. intra company agreements) with commercial successes with Telstra in Australia and Airbus amongst others. This came despite the recently announced delays in the ground network deployment. OneWeb is delivering a solid customer experience with latency of 70ms and download speeds of c200 Mbps. 30 of the 43 required gateways have been rolled out. Management expects to be close to 40 by July. Gen 2 capex reduction Management has reduced its capex guidance from a 5y average of EUR725-875m to EUR600-700m. We estimate this implies a c. EUR700-800m in Gen 2 total capex envelope and c1x reduction in Net debt to EBITDA. We believe it reflects a more progressive approach to OneWeb Gen 1 upgrade. As discussed here we believe that protecting the balance sheet is positive for the equity value of the group. We note management comment of incremental cost synergies as another positive. TP revised up from EUR3 to EUR3.5 Eutelsat is making good progress and reducing balance sheet risk but is not out of the woods yet. While we remain cautious on the shares in the context of management withdrawing its FY25 guidance as well as refinancing and investment requirements (hence our UPF rating), we see some positive short-term catalysts ahead (IRIS2, improving H2 revenue trends in Video and Connectivity) and increase our TP to EUR3.5 on largely unchanged revenue and EBITDA forecasts.
Eutelsat warns on OneWeb''s financial trajectory This morning, Eutelsat issued a surprise trading update indicating that OneWeb''s near term financials were below management expectations. Excluding OneWeb, management has confirmed that Eutelsat would return to revenue growth in FY23/24 thanks to new capacity. However, OneWeb revenues are running behind schedule relative to its original roadmap. Its order backlog has progressed by some 15% from ''close to USD1bn'' at the end of Q1 24 to over USD1.1bn now. FY23/24 EBITDA cut by 15% at the mid point Management is now guiding for FY23/24 revenues of EUR1.25-1.3bn (at USDEUR of 1.00) vs. EUR1.32-1.42bn previously and group EBITDA of EUR650-680m (vs. EUR725-825m) previously. It has suspended its FY24/25 financial outlook but indicated that it remains confident on the long-term growth trajectory of the asset. We have cut our EBITDA FY23/24 and FY24/25 by 7% and 19%. Delays in ground network deployment OneWeb''s revenue issues are driven by a combination of logistical issues and regulatory delays. Due to the lack of inter satellite links OneWeb needs a large ground network of gateways. 90% of the network has been deployed but several Maritime contracts require close to 100% deployment to be operational. Market access authorisations have been obtained at a slower pace than anticipated. India, Thailand, Saudi Arabia, Turkey are large markets where market access is pending or has been provided later than expected (India in November 2023). OneWeb revenue mix has a higher proportion of low margin terminal sales (vs. high margin service sales). Preference for SES (+) over ETL (-) maintained OneWeb issues are specific and provide no read-across to SES mPower. Given its legacy O3B constellation, SES has market access rights. Given its altitude, mPower has a much less complex ground network architecture. As discussed here, we continue to prefer SES (+) over ETL (-).
Eutelsat Group posted Q1 24 revenue figures 2% above the consensus, driven largely by its Mobile Connectivity division. Following the approval of the merger with OneWeb, the company has also provided new targets for both the short- as well as the medium-term.
Eutelsat published full year results in-line with the guidance. As expected, the Video segment delivered the weakest performance. However, a positive surprise came from the one-off contract in Government Services with the German space agency, which also led to the company’s out performance compared to the consensus. Additionally, Eutelsat also announced that the OneWeb transaction will be completed by next month, which we see as a key milestone (almost) for the company.
Eutelsat H1 23 results lead to confirmation of guidance Eutelsat reported H1 revenues in line with consensus. Government Services was weaker due to the poor renewal campaigns of 2022. But Mobility came in much stronger, driven by growth in Maritime. Management has confirmed all elements of its outlook for FY23 and continues to expect a return to growth in FY24. We note that it guided for worsening top-line trends in Video, Government and Fixed Broadband in H2 23, all in the framework of the reaffirmed guidance. IRIS2 project on track The EU Parliament recently approved funding for the IRIS2 constellation of European satellites, a project aimed at reinforcing the competitive appeal of European space assets in the context of the new ongoing space race. Eutelsat expects bid tenders to be issued in March. It is currently in discussion with players in the space industry to form a bidding consortium. Our central scenario is for SES and Eutelsat to jointly work on and benefit from this project. OneWeb GEN2 on track Management expects OneWeb GEN1 to be fully operational (vs. 85% now) in January 2024. It reported good growth in OneWeb''s order backlog (from USD0.6bn in October to USD0.8bn at the end of December). The EUR4bn capex envelope for GEN2 has been confirmed with initial spending in FY24 and full ramp-up in later years for an entry into service in 2027 or 2028. Management continues to expect closing of the OneWeb merger in calendar Q2 or Q3 2023. Forecasts largely unchanged Our revenues forecasts are largely unchanged. We have trimmed EBITDA margins to reflect investments in Eutelsat''s commercial offering in Connectivity (i.e., Eutelsat Advance). EPS is revised down to reflect the impact of the scrip dividend. FCF guidance is maintained.
Eutelsat held a Capital Markets Day to discuss the OneWeb transaction Eutelsat and OneWeb management shared the stage to present the merger announced a few weeks ago. The company provided detailed financial guidance for OneWeb stand-alone revenues as well as for the combined entity. Management expects EUR150m of annual revenue synergies by year 4, EUR80m of pretax annual cost savings by year 5 mostly through cost avoidance as well as EUR80m of annual capex synergies from year 1. Gen 2 to cost around EUR4bn and offer c5 Tbps of capacity Management guided for a total cost of around EUR4bn for OneWeb generation 2 systems. This next generation network will have more advanced technology using optical satellite interlinks. It will deliver around 5x more capacity (5-5.5Tbps) of global capacity than Generation 1 with a satellite design life of 10 years and a lower cost per bit. Management claims OneWeb owns attractive priority rights Satellite spectrum rights are delivered on a first come, first served basis. Management pointed that OneWeb ranks first for LEO Ku band rights and ranks high in Ka priority filings. Competitors will incur greater costs as they need to coordinate to avoid interference. As a result, the number of LEO systems likely to operate will be limited. Eutelsat will become the only vendor with a multi-orbit LEO/GEO offering. Deal timeline Management expects to obtain all regulatory clearances by March 2023 and plans to have an EGM in calendar Q2 23 for a deal seen completing in H2. ETL Q1 results in line with consensus Eutelsat reported 4.3% orgrev decline in Q1 with revenues of EUR291m in line with consensus.
Eutelsat provided its sales figure for its first quarter which were in line with consensus. Business is proceeding as usual, with a strong decline in Broadcast while its niche segments Fixed Broadband and Mobile Connectivity are performing strongly. The group reiterated its short-, medium- and long-term guidance following the integration of OneWeb. The only negative aspect is that dividend payments will only resume after 3 years minimum.
º Q1 2023 sales broadly in line with expectations º Guidance reiterated º Strategic update
Eutelsat has posted FY21-22 results that stood broadly in line with consensus on all metrics. However, investors have looked past the reported figures and straight into the expected cash consequence of the OneWeb acquisition. Though the acquisition makes operational sense, Eutelsat will sacrifice years of profitability before seeing a return on its investment. It will also sacrifice its minority shareholders’ returns, as dividends have disappeared with no official return date. Eutelsat has become a high-risk growth bet.
Eutelsat has announced that it could merge with OneWeb to become more competitive with the American major LEO constellations such as Starlink or Kluiper. Despite the potentially interesting operational synergies, the short-term financial impact on the stock involves a material dilution of both EPS and DPS. Overall, we believe governments are realising the strategic geopolitical importance of LEO constellations and that OneWeb will become key for the EU. An interesting long-term bet.
Eutelsat slightly beat consensus with its reported Q3 sales. The Broadcast segments’ structural decline was partly offset by strong momentum in Fixed Broadband and Mobile. It has also signed a partnership with OneWeb to combine their fleets to propose an adaptable offer. However, the headwinds from Russia are worrying and could impact the coming quarters for Eutelsat, which has reiterated its FY22 guidance.
Despite sales in line with consensus, the outlook for Eutelsat has been disappointing. The return to growth, that investors have been patiently waiting for, has now been pushed one year back and is expected by FY23-24.
Eutelsat’s FY21 is disappointing. Sales came in line with the consensus (at the higher end of guidance), but EBIT came in 14% below, which represents a 30% decline yoy. Eutelsat is trying to reassure its investors through an increased dividend plan and a higher cash guidance.
Q3 21 showed zero surprises. Revenues were in line with expectations with growth reported in Fixed Broadband, and the rest is decreasing yoy. Eutelsat acquired part of the OneWeb project in April.
Eutelsat has managed to release first-half figures for FY20-21 that were better than anticipated, on the back of a better performance overall. This allowed the company to upgrade marginally its FY guidance.
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