Eutelsat expects video decline to slow as connectivity surpasses 50% of order book

Satellite operator Eutelsat returned to top-line growth in its fiscal first half, with mobile connectivity, government services and fixed connectivity growth offsetting a sharp 8% decline in core video revenues.

Eva Berneke (Source: Eutelsat)

Speaking on a press call this morning, CEO Eva Berneke said that while Eutelsat’s video business was declining “as in all markets”, she expected this decline to slow to something like the market trend.

Berneke said that it was well known that streaming was leading to a structural decline in satellite TV, but that “we expect for the following half-years a decline rather more in line with market trend, which is in the mid-single-digit range – that’s to say 4-6%”.

Berneke also made the point that Eutelsat’s order book at the end of the year showed how successful its pivot towards telecoms has been.

She said the order books had grown from €3.7 billion to €3.9 billion, but the mix was now radically changed. While at the beginning of the year, video had accounted for 60% and connectivity 40%, the latter now accounted for over half, with video accounting for 46%.

“That really shows you the acceleration of this telecom pivot,” she said, adding that Eutelsat was “extremely confident” about its “unique” ability to combine LEO and GEO assets to deliver a compelling global connectivity proposition.

Eutelsat’s first half EBITDA was hit by the impact of delays in the ground segment to support its OneWeb LEO constellation, which limited revenue growth and changed the sales mix towards the sale of user terminals, which had a negative impact on margins.

First half video revenues, which now account for 58% of all revenues, stood at €331.1 million, reflecting the impact of the early non-renewal of a capacity contract with Digitürk from mid-November 2022 as well as lower revenues in Europe related to volume reductions with certain resellers. They were also impacted by the effect of sanctions against some Russian and Iranian channels.

Eutelsat said that comparisons in the second half would no longer be impacted by the impact of sanctions against Russian and Iranian channels nor the Digitürk non-renewal, and revenues are expected broadly in line with the wider market trend of a mid-single digit decline.

Revenues for the first half stood at €572.6 million, up 1% like-for-like, with operating verticals revenues up 1.2% to €571.1 million.

Adjusted EBITDA was down 12.7% to €419 million.