Eutelsat should see return to growth in 2019

Satellite operator Eutelsat has more or less emerged from a period of financial turbulence and should return to growth in 2019, with video remaining a “structural growth business” despite recent declines, according to an analysis of the company by Berenberg.

According to the analysts, Eutelsat still faces about 12 months of “sluggish growth” before “the turnaround really comes to fruition”.

Berenberg said that while Q3 video revenues fell by 4.1%, there was underlying growth in the broadcast business of 2% excluding the one-off impact of the “HotBird purge” – the company’s term for non-renewal or contracts at its core position – and one-off revenues from the sale of Fransat HD cards.

“This backs up our thesis that video remains a structural growth business, even if Eutelsat’s and SES’s revenues have declined recently,” Berenberg said.

The analysts questioned whether Eutelsat’s LEAP cost-cutting programme could be realized without affecting medium-term growth, but said that the would “give the company the benefit of the doubt” for now.

Eutelsat plans to cut costs to maximize free cash flow between 2016-19 and then grow its top line thereafter.

Eutelsat reported a decline in third-quarter revenues in May, posting slaes of €364 million for the quarter to March.

Berenberg reiterated a ‘hold’ rating.