Eutelsat revenues fall despite stable broadcast performance

Eutelsat reported a 7.4% decline (-3.3% on a like-for-like basis) in third quarter revenues at €337 million, despite reporting “stable” broadcast revenues.

Video applications are Eutelsat’s core business and make up 67% of its revenues. In the third quarter video revenue came to €225.0 million, down 0.2% year-on-year.

Commenting on the results, Eutelsat CEO Rodolphe Belmer said that, despite being down overalll, the company’s revenue trend in Q3 improved compared to at the half year stage.

“Video continued to progress, notably with improving trends at our Hotbird video position, while in government services the outcome of the latest US Department of Defense renewals was positive once again, at above 95%,” said Belmer.

“On the other hand, ‘other revenues’ are running behind expectations following the outturn of the third quarter. We are working on a handful of active ‘other revenues’ opportunities in the pipeline which would enable us to land at the low end of our full year total revenues objective of -1 to -2%.

“However, in the event that none of these ‘other revenues’ materialise in the fourth quarter, the decline in revenues could be up to c. -3.5%. This has no impact on our other objectives for the current and following two years which are fully confirmed.”

Analysts at Jefferies described the results as “otherworldly”, referencing both the fact that non-core ‘other’ revenue is lagging expectations and because discussion of the ‘other’ revenue line on the company’s analyst call was “idiosyncratic”.

While total revenue was weak, said Jefferies, video sales were in line with expectations. Other revenues, including consultancy fees and contract termination fees, tracked below expectations. The analyst group said that Eutelsat had engaged in an over-long discussion of this segment in its analyst call, but that this had been “an attempt to be transparent” and there was “no underlying downgrade in one of the five verticals” in which Eutelsat operates.