EUTELSAT COMMUNICATIONS (EPA:ETL) EUTELSAT COMMUNICATIONS - FIRST QUARTER 2013-2014 REVENUES
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29/10/2013 17:38
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PR/88/13EUTELSAT COMMUNICATIONS - FIRST QUARTER 2013-2014 REVENUES
Quarterly revenues in line with objectives:
Revenues up 2.9% to EUR323.5 million (+4.0% at constant currency and excluding
non-recurring revenues)
* Video Applications up 0.4%, reflecting the lack of incremental capacity and
a high fill-factor at the Group's key video neighbourhoods
* Data and Value-Added Services up 8.5%, with strong growth of Value-Added
Services (+42.4%)
* Multi-usage up 8.1% with the integration of EUTELSAT 172A Backlog at
EUR5.4 billion, up 3.9 % year-on-year
Outlook: current year and three year targets confirmed, excluding Satmex, and
pending outcome of on-going discussions with SES relating to disputed
frequencies at 28.5° East
Paris, 29 October 2013 - Eutelsat Communications (ISIN: FR0010221234 - Euronext
Paris: ETL) today reported revenues for the first quarter ended
30 September 2013.
First quarter
Business applications ended 30 September
In millions of euros 2012 2013 Change
Video Applications 216.3 217.1 +0.4%
Data & Value Added Services 61.1 66.3 +8.5%
Data Services 44.9 43.2 -3.8%
Value Added Services 16.2 23.0 +42.4%
Multi-usage 34.1 36.8 +8.1%
Other revenues 3.0 3.0 +1.6%
Total excluding non-recurring revenues 314.4 323.2 +2.8%
Non-recurring revenues - 0.3 NS
Total revenues 314.4 323.5 +2.9%
Note: unless otherwise stated, al growth indicators or comparisons are made
against the first quarter of the previous fiscal year or 30 September 2012.
The share of each application as a percentage of total revenues is calculated
excluding "other revenues" and "non-recurring revenues".
Commenting on the first quarter, Michel de Rosen, Eutelsat Chairman and CEO
said:
"Eutelsat delivered first quarter 2013-2014 revenues in line with objectives.
The performance of Video Applications reflects the lack of available capacity
for this activity, which will be addressed with future fleet deployments. The
Group's main video neighbourhoods saw good channel growth, demonstrating the
positive underlying trend in our main application. Data and Value-A dded
Services revenues were underpinned by the growing contribution from Value-
Added Services, up 42% in the quarter. Revenues also factored in the effect of
the acquisition of EUTELSAT 172A for Data Services and Multi-usage.
This quarter saw the announcement of the acquisition of Satmex which, together
with our multi-band EUTELSAT 65 West A satellite to be launched to 65° West
will equip us to scale up our presence in the dynamic Latin American markets.
Our inorbit resources for North Africa, Middle East and Central Asia markets
continues to expand with the entry into service today of the EUTELSAT 25B
satellite launched in August. Our deployment plan for the remainder of the
current and the coming two years is on track, bringing additional capacity
that will principally serve video markets in the fastest growing regions,
notably Russia, the Middle East and Africa.
Our financial objectives remain unchanged for the current and following two
years. They will be adjusted once the Satmex acquisition is closed, and if
necessary in the context of the current discussions with SES on the 28°5 East
situation."
FIRST QUARTER 2013-2014 REVENUE ANALYSIS
First quarter revenues stood at EUR323.5 million, up 2.9%. Excluding
non-recurring revenues and at constant currencies, revenues increased 4.0%.
VIDEO APPLICATIONS (67.8% of revenues)
Revenues from Video Applications were virtually stable at EUR217.1 million,
reflecting the lack of incremental capacity and a high fill-rate at key video
neighbourhoods.
* Channels broadcast from the 7°/8° West neighbourhood rose by 17% during the
year to 688 (+101) at 30 September 2013. This neighbourhood, serving
broadcasters in the Middle East and North Africa, benefitted from contracts
signed with clients that include Al Jazeera, Gulfsat, MBC, Nilesat and
Noorsat in the previous fiscal year. Although resources were reinforced with
the redeployment of EUTELSAT 8 West C (formerly HOT BIRD 13A) to 7/8° West in
midSeptember, transponders contracted on this satellite contributed only
marginally to first quarter revenues.
* Channels broadcast from the 16° East neighbourhood rose by 23% during the
year to 728 (+137) at 30 September 2013. New contracts signed at this
neighbourhood, which serves broadcasters in sub-Saharan Africa, Indian Ocean
Islands and Central Europe include one towards the end of the quarter with
Telekom Austria Group to support the launch of its new white label DTH
platform for Central and Eastern Europe.
* Channels broadcast from the 36° East neighbourhood, serving broadcasters in
Russia and sub-Saharan Africa rose by 9% during the year to 786 (+63) at 30
September 2013. The DTH business at this neighbourhood continues to expand,
with a new contract signed with Lybid TV in Ukraine.
At 30 September 2013, the total number of channels broadcast by Eutelsat's
satellites was 4,713, up 7.0% (+310 TV channels) year-on-year. 439 of these
channels were in HD (from 379, or +15.8%), implying an HD penetration rate of
9.3% compared to 8.6% at 30 September 2012.
Professional video revenues were slightly down as the first quarter of the
previous fiscal year benefitted from additional demand for capacity generated
by broadcasters and service providers delivering coverage of the 2012 London
Olympic Games.
Coverage of Russia will be further enhanced with the entry into service of
Express-AT1 (at 56° East) and Express-AT2 (at 140° East) in the second half of
the current financial year, on which 16 transponders have already been
contracted to TricolorTV.
DATA AND VALUE ADDED SERVICES (20.7% of revenues)
Data Services revenues declined by 3.8% to EUR43.2 million, reflecting the
on-going competitive environment as point-to-point services continue to be
under pressure from the roll-out of terrestrial networks and, specifically in
Africa, from the existing supply of satellite capacity. This application is
also impacted by the on-going expected negative impact of the transfer of a
Data customer from 7° East to 10° East in order to prepare for the expansion
at 7° East of a broadcast customer. This was not offset by the integration of
EUTELSAT 172A into the fleet (acquisition closed on 25 September 2012).
Value Added Services revenues amounted to EUR23.0 million, up 42.4%.
Broadband services on KA-SAT performed well, reflecting the continuing success
of the intensified marketing efforts and the enhanced broadband offer launched
in the last financial year. Around 108,000 terminals were activated at
30 September 2013 (from 91,000 at 30 June 2013).
* On the consumer broadband side, distributors in France and Spain were the
major contributors to net adds, while distributors in the Ukraine and in
Russia started to show traction. Training of consumer equipment installers
has continued, with a total of 4,000 trained installers in October 2013.
* On the professional side, the roll-out of corporate networks continues, with
notably a contract allowing Montenegro's police headquarters to connect with
the country's border control stations. VPN services on KA-SAT specifically
target corporates and administrations requiring centralised control over
geographically dispersed offices.
Mobile connectivity services for the maritime market, notably through WINS,
also contributed to year-on-year revenue growth in Value Added Services.
MULTI-USAGE (11.5% of revenues)
Revenues from Multi-usage services stood at EUR36.8 million, up 8.1%, with the
integration of EUTELSAT 172A into the fleet and new contracts together more
than offsetting the carry forward effect of the February / March 2013 renewal
campaign. The September / October 2013 contract renewal campaign was in line
with expectations. Budgetary constraints in the United States are still
on-going, leading Eutelsat to confirm a degree of caution on the evolution of
revenues for this application.
OTHER AND NON-RECURRING REVENUES
Other revenues, which mainly comprise contributions from service contracts with
partners and the Group's foreign exchange hedging programme, were stable at
EUR3.0 million.
Non-recurring revenues stood at EUR0.3 million.
OPERATIONAL AND LEASED TRANSPONDERS
The fill rate stood at 75.2% at 30 September 2013, compared to 74.0% at
30 June 2013 and 75.8% at 30 September 2012. The year-on-year evolution
reflects the entry into service of new satellites (EUTELSAT 21B, EUTELSAT
70B and EUTELSAT 3D) and the redeployment of EUTELSAT 8 West C at the 7°/8°
West neighbourhood in mid-September 2013. EUTELSAT 25B, launched on
29 August 2013, became operational on 29 October 2013 and is therefore not
included in the table below.
At 30 September 2012 2013
Number of operational transponders(1) 801 859
Number of leased transponders(2) 607 646
Fill rate 75.8% 75.2%
Note: KA-SAT's 82 spot beams are considered transponder equivalents. The
satellite's fill rate is considered to be at 100% when 70% of the capacity is
taken up.
BACKLOG AT EUR5.4 BILLION (93% VIDEO)
The order backlog stood at EUR5.4 billion at 30 September 2013, up 3.9%
year-on-year and equivalent to 4.2 times 2012-2013 revenues. The backlog
represents future revenues from capacity lease agreements and can include
contracts for satellites not yet in operation.
As of September 30 2012 2013
Value of contracts (in billions of euros) 5.2 5.4
In years of annual revenues based on last fiscal year 4.2 4.2
Share of Video Applications 91% 93%
OUTLOOK FOR FISCAL YEAR 2013-2014 AND TWO FOLLOWING YEARS
Eutelsat confirms the outlook published on 30 July 2013 for the current and
next two years to June 2016, as follows:
Revenues (at constant currency and excluding non-recurring revenues)
Based on a nominal satellite deployment plan, the Group targets organic revenue
growth above 2.5% for the current year. With the deployment of additional
capacity, mainly in 2014 and 2015, average revenue growth should be above 5%
for the two subsequent years to 30 June 2016.
EBITDA
The EBITDA margin is targeted at around 77% for each fiscal year until 2016.
Active and targeted investment policy
The Group will continue to pursue a targeted investment policy. Average
investments will stand at around EUR550 million a year over the three fiscal
years to 30 June 2016. This includes capital expenditures and payments under
export credit facilities and under long-term lease agreements on third party
capacity.
Sound financial structure
The group will maintain a sound financial structure to support an investment
grade credit rating. Over the long term, it aims at a net debt / EBITDA below
3.3x.
(1) Number of transponders on satellites in stable orbit, back-up capacity
excluded
(2) Number of transponders leased on satellites in stable orbit
Attractive shareholder remuneration
The Group remains committed to sharing its profits with its shareholders over
the fiscal years 2013-2016, with a pay-out ratio of 65% to 75% of Group share
of net income.
Revenues, EBITDA and Capex targets are given excluding the impact of the
acquisition of Satmex.
In a press release dated 4 October 2013, Eutelsat indicated that revenues from
the disputed frequencies at 28.5° East were estimated at some EUR20 million for
the remainder of the current fiscal year 2013-2014 and approximately EUR25
million for each of the two following years; the potential loss of these
revenues was not taken into account in the above objectives. They will be
adjusted, if and when necessary.
FLEET DEVELOPMENT UPDATE
Launch of EUTELSAT 25B and redeployment of EUTELSAT 25C
EUTELSAT 25B satellite, a joint venture satellite with Es'hailSat from Qatar,
went into commercial service on 29 October 2013 at 25.5° East. The satellite
was launched on 29 August by an Ariane 5 rocket.
Traffic on Eutelsat's EUTELSAT 25C satellite at 25.5° East was transferred
onto Ku-band transponders commercialised by Eutelsat on the new EUTELSAT 25B
satellite in the night of 28 to 29 October. This transfer has released EUTELSAT
25C for a new mission at 33° East. It will be copositioned next month with
EUTELSAT 33A at 33° East to bring additional capacity to this orbital location.
EUTELSAT 25B brings additional capacity to 25.5° East to serve broadcasters,
businesses and public agencies operating in the Middle East, North Africa and
Central Asia. The new satellite operates in both Ku and Ka-bands.
Satellite redeployments and strengthening of in-orbit security
Following the entry into service of EUTELSAT 3D at 3° East, EUTELSAT 3C was
redeployed in early July to the HOT BIRD position at 13° East. Renamed HOT BIRD
13D, it is now colocated with the identical HOT BIRD 13B and C satellites. With
each satellite equipped with 64 high-power Ku-band transponders, they together
span the entire range of 102 Ku-band frequencies at 13° East and deliver
broadcast customers industry-leading levels of security and 100% in-orbit
redundancy.
The reconfiguration of the HOT BIRD constellation released the HOT BIRD 13A
satellite which has since been deployed to 7°/8° West. Renamed EUTELSAT 8 West
C, it has enabled Eutelsat to switch on additional transponders at the key
neighbourhood for broadcasting in North Africa and the Middle East. This
orbital position will get a further boost in the second half of 2015 with the
launch of EUTELSAT 8 West B.
In October 2013, EUTELSAT 4B was de-orbited after reaching the end of its
operational life.
Estimated satellite launch schedule (satellites generally enter into service
one to two months after launch.
Satellite Orbital Estimated Main Main Transponders
position launch applications coverage
(calendar targeted geographic
year)
Express AT1(1) 56° East Q4 2013 Video Siberia 19 Ku
Express AT2(1) 140° Q4 2013 Far East
East Video Russia 8 Ku
EUTELSAT 3B(2) 3° East H1 2014 Telecoms, Europe, 30 Ku /
Broadband Africa, 9 Ka /
Middle East, 12 C
Central Asia,
Latin America
EUTELSAT 9B 9° East Q1 2015 Video Europe,
North Africa,
Middle East 60 Ku
EUTELSAT 8
West B 7°/8° West Q3 2015 Video, Data Middle East,
Africa, 40 Ku /
South America 10 C
EUTELSAT 36C 36° East H2 2015 Video, Data, Russia, Up to
(1) Broadband Sub-Saharan 52 Ku /
Africa 18 Ka
EUTELSAT 65 Video, Data, Up to 58
West A 65° West H1 2016 Broadband Latin America (Ku, Ka, C)
(1) Partnership satelites with RSCC. For Express-AT1 & AT2, transponders
indicated for Eutelsat portion only
(2) When launched to 3° East, EUTELSAT 3B wil release EUTELSAT 3D to 7° East
to address video markets in Turkey
RECENT EVENTS
Acquisition of Satmex
Eutelsat Communications announced on 31 July 2013 it had reached an agreement
to acquire 100% of Satélites Mexicanos, S.A. de C.V. ("Satmex") for an
enterprise value of US$1,142 million. This acquisition, together with the
recently ordered EUTELSAT 65 West A satellite, will position the Group as a
major satellite operator in Latin America, reflecting its strategy to expand
in high growth markets.
The closing of the transaction is expected by year-end 2013.
In September 2013, the acquisition financing was finalised at attractive terms
through a 2-year $850 million bridge term loan. The EUR450 million revolving
credit facility of Eutelsat S.A. was also refinanced through a new EUR450
million revolving credit facility maturing in September 2018 at improved terms.
Operations at 28°5 East
Following the decision of the Arbitral Tribunal constituted under the rules of
the International Chamber of Commerce of Paris that concluded the first phase
of arbitration in September 2013 and a preliminary injunction by the regional
civil court of Bonn, SES and Eutelsat Communications collaborated in the best
interest of customers to ensure a smooth transition of operations on
frequencies at 28.5° East under a German filing. As of October 4, SES was
operating and Eutelsat had ceased operating on these frequencies. The transfer
was successfully completed in the night of 3-4 October.
SES and Eutelsat are in discussions to find a solution regarding the subject
matter of the arbitration.
Update on tax audit
As disclosed in the Eutelsat Communications 2012-2013 consolidated accounts,
the French tax authorities notified Eutelsat on 20 December 2012 of a total
EUR27.5 million tax reassessments over a 3-year period. These were challenged
by Eutelsat in view of the strong arguments held. On 11 October 2013, the
company was informed that the French tax authorities abandoned certain of the
reassessments for a total of approximately EUR5.5 million. The remaining
reassessment was confirmed and Eutelsat continues to contest it.
GOVERNANCE
At its meeting of 16 September 2013, the Board of Eutelsat Communications
(Euronext Paris: ETL) was informed by its Chairman, Jean-Martin Folz, that he
would not seek to renew his mandate, which expires at the General Assembly of
Shareholders of 7 November 2013, in order to respect corporate governance
recommendations on multiple directorships by the Afep-Medef. To enable the
Board to immediately appoint a successor and to avoid uncertainty during a
period of transition, Jean-Martin Folz has resigned as Chairman. He will remain
a Board member until the General Assembly. The board expressed its appreciation
for Jean-Martin Folz's contribution to the strategic directions pursued by the
Group over the last two years.
Noting that the recent developments of Eutelsat and the reorganisation of
shareholders no longer justifies the separation of the roles of Chairman and
CEO, the Board decided to merge the two functions, reverting to the practice in
place from 2004 to 2009. The Board subsequently unanimously decided to appoint
Michel de Rosen, who has been CEO since 2009, as Chairman and CEO.
* * *
First quarter revenues presentation for analysts and investors
Eutelsat Communications will hold an analysts and investors conference call in
English on Tuesday, 29 October 2013 to present its first quarter 2013-2014
revenues. The conference call will begin at 6:30 pm Paris time (London:
5:30 pm, New York: 12:30 pm).
You can follow this presentation live (in English) by connecting via the
following telephone numbers:
* + 33(0) 1 76 74 24 28 (from France)
* +44 (0)1452 555 566 (from the UK or elsewhere)
* +1 631 510 7498 (from United States)
Access code: 84320201 #
Instant replay number will be available from 29 October midnight to
7 November, midnight (Paris time):
* + 44 (0) 1452 550 000 (from the U.K or elsewhere)
* +1 866 247 4222 (from the United States)
Access code: 84320201 #
Financial calendar
The financial calendar below is pro vided for information purposes only. It is
subject to change and will be regularly updated.
- November 7, 2013: Annual General Shareholders Meeting
- February 14, 2014: First Half 2013-2014 Financial Results
- May 15, 2014: Third Quarter 2013-2014 Revenues
About Eutelsat Communications
With capacity commercialised on 31 satellites delivering reach of Europe, the
Middle East, Africa, Asia, significant parts of the Americas and the
Asia-Pacific, Eutelsat Communications (Euronext Paris: ETL, ISIN code:
FR0010221234) is one of the world's leading satellite operators. As of 30
September 2013, Eutelsat's satellites were broadcasting more than 4,700
television channels to over 200 million cable and satellite homes in Europe,
the Middle East and Africa. The Group's satellites also provide a wide range of
services for TV contribution, corporate networks and fixed and mobile broadband
markets. Headquartered in Paris, Eutelsat and its subsidiaries employ over 780
commercial, technical and operational professionals from 30 cou ntries.
www.eutelsat.com
For further information Press
Press
Vanessa O'Connor Tel. : + 33 1 53 98 37 91 voconnor@eutelsat.fr
Frédérique Gautier Tel. : + 33 1 53 98 37 91 fgautier@eutelsat.fr
Marie Sophie Ecuer Tel. : +33 1 53 98 37 91 mecuer@eutelsat.fr
Investors and analysts
Léonard Wapler Tel. : +33 1 53 98 31 07 lwapler@eutelsat.fr
Cédric Pugni Tel. : +33 1 53 98 31 54 cpugni@eutelsat.fr
APPENDIX
Revenue breakdown by application (in percentage of revenues)*
3 months ended 30 September 2012 2013
Video Applications 69.4 67.8
Data & Value-Added Services 19.6 20.7
...of which Data Services 14.4 13.5
...of which Value-Added Services 5.2 7.2
Multi-usage 10.9 11.5
Total 100% 100%
*excluding other revenues and one-off revenues (EUR3.0 million in Q1 2012-2013
and EUR3.3 million in Q1 2013-2014) Quarterly revenues by business application
3 months ended
In millions of euros 30/09/2012 31/12/2012 31/03/2013 30/06/2013 30/09/2013
Video Applications 216.3 214,4 216,4 218.5 217.1
Data & Value-Added
Services 61.1 63.8 60.8 67.1 66.3
...of which Data
Services 44.9 48.8 46.7 47.1 43.2
...of which
Value-A dded
Services 16.2 15.0 14.1 20.0 23.0
Multi-usage 34.1 38.6 35.4 37.4 36.8
Other revenues 3.0 2.4 2.6 2.5 3.0
Sub-total 314.4 319.2 315.1 325.5 323.2
Non-recurring
revenues(3) - - 7.7 2.1 0.3
Total 314.4 319.2 322.9 327.6 323.5
Note: At a constant euro-dollar exchange rate, revenue growth would have been
4.1% (+2.9% at variable currencies) in Q1 2013-2014 compared with Q1 2012-2013.
Channel growth at neighbourhoods serving Central and Eastern Europe, Russia,
Middle East, Africa
Orbital position Markets 30/09/2012 30/09/2013 Growth
7°/8° West North Africa,
Middle East 587 688 +17.2%
7° East Turkey 218 222 +1.8%
16° East Central Europe,
Indian Ocean
islands 591 728 +23.2%
36° East Russia, Africa 723 786 +8.7%
Total 2,119 2,424 +14.4%
(3) Non-recurring revenues comprise late delivery penalties and outage
penalties.
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