Eutelsat 'exceeds objectives'

Paris-based Eutelsat reported sustained increases in all its *** areas, with video demand helping boost revenues by 5.9% y-o-y. CEO Giuliano Berretta said that an overall increase of 20% in Eutelsat fleet capacity had helped deliver an EBITDA margin of 79.3%, up 0.6%, which he claimed was the highest in the Fixed Satellite Services sector.

Company guidance was raised six per cent for the 2008-2011 period, “and are consequently targeting revenues of more than one billion euros in fiscal year 2010-2011,” said the company.

Eutelsat now has 468 leased transponders, or transponder equivalents, up 15.8% from 404 a year ago. Operationally it has 501 available transponders, down fractionally on last year’s 505. Fill rate is a claimed 93.4%, up from 80% a year ago.

Revenues grew 5.9% to €877.8m, from €829.1m, helping push EBITDA forward 6.6% (at €695.7m, from €652.6m). Eutelsat is now beaming out 3120 channels.

“The decrease of the number of operational transponders from 505 units at June 30, 2007, to 501 at June 30, 2008, is due to the technical incident on the W5 satellite in June 2008, which resulted in the switch-off of four transponders,” said the Company. This incident, which has generated much comment in the press, resulted in a controversial Chinese channel being removed from W5.

“This performance enables us to pursue one of the industry’s most important investment programmes, with seven satellites to launch by end 2010. A number of significant contracts underscore our commercial achievements, notably for capacity at our 9 deg E video neighbourhood less than one year after it was opened for business. Customers at this new neighbourhood can capitalise on the benefits of the audience of our Hot Bird position,” said the Company. “Emerging markets in our Second Continent have also experienced continued strong growth. Our major video neighbourhoods, which in particular address these markets, are now broadcasting over 1,500 channels, matching the success of Hot Bird and Eurobird 1 neighbourhoods in Europe. In total, our satellites are now broadcasting over 3,120 TV channels.”

Berretta also praised the progress of HDTV within the fleet, which he claimed meant that Eutelsat now held the number one position in HD across “extended Europe”. “The number of commercial HDTV channels broadcast by Eutelsat’s fleet grew almost threefold y-o-y, to 49 channels at June 30, 2008, compared with 17 commercial channels at June 30, 2007. HDTV channels broadcast by Eutelsat’s fleet represent almost half of the total number of 113 HDTV channels broadcasting in extended Europe at June 30, 2008. This increase came from across all of the Group’s markets.”

Berretta said HD was by no means the monopoly of so-called “Western” countries, with excellent growth coming out of Russia and countries like Tur***. At the end of fiscal year 2007-2008, Eutelsat’s fleet was broadcasting:

• 21 HDTV channels from its Hot Bird and Eurobird 1 video neighbourhoods;
• 28 HDTV channels from major video neighbourhoods9 serving emerging markets of which seven channels at 7 degrees East (Tur***), five channels at 36 degrees East (Russia and Africa), five channels at 16 degrees East (central Europe) and eight channels at the new 9 deg E neighbourhood (western and central Europe).

As to future demand for HDTV, Eutelsat is looking to take its share of an estimated 480 channels being on air by 2012 (over extended Europe).

Eutelsat enjoyed growth right across its transmission arc, none more so than at 7 deg W, an orbital position it shares with Nilesat and where Eutelsat’s client roster has grown from 172 channels to 253.

Satellite operators love to quote the contract backlog they have secured. Eutelsat’s backlog has reduced somewhat over the past few years from €4bn in 2006, to €3.7bn in 2007 and further down to €3.4bn in the year to June 30 2008. “Compared with one year ago, the slight erosion of backlog reflects a higher average fleet age, a major part of the backlog being composed of contracts which are generally concluded or renewed upon entry into service of new satellites for their entire operational life,” said the Company.

As to Eutelsat’s current objectives, the results statement said “At the end of its 2007-2008 fiscal year Eutelsat is ahead of the three-year objectives disclosed in November 2007. As a result of this performance, the fill rate of the fleet has reached a record level of more than 93% at June 30, 2008. Given the progressive entry into service of additional satellite capacity expected during the second half of 2008-2009, the Group is confident of exceeding €900m of turnover for fiscal year 2008-2009.”

As well as an aggressive build programme for a total of seven new satellites under construction (and representing a cap-ex of more than €2bn), Eutelsat has a couple of other interesting milestones over the next few months. Not least of these is the launch of its j-v with SES of Solaris Mobile, the craft that will deliver S-Band capacity on W2A, scheduled for the Spring of 2009. As well as the potential for TV to mobiles and cellular devices, it has a bi-directional role which could, for example, marry its services to the European Galileo positioning satellites. W2A is progressing well, says Berretta, and will launch around February next year.