Eutelsat impresses

Chris Forrester

One has to be even-handed – at least in terms of the story headline (see SES report in this issue), but on a day when both SES and Eutelset deliver their numbers it is difficult not to compare and contrast. Eutelsat’s end-of-year results made a praiseworthy endorsement to Giuliano Berretta’s final full year as CEO.

Berretta stays in post until November (Michel de Rosen will succeed him), and will then continue as Chairman. But he leaves an impressive legacy, not least with these numbers, but also with a fleet of satellites in position that is the envy of rivals.

This year’s results show a revenue growth of 7.2% to €940.5m, and a net income increase of 43.6% to €247.3m. This last figure is important and is more or less equal to the replacement cost of a new satellite, complete with launch and insurance costs. Eutelsat, along with its rivals, will continue to borrow cash to build its satellites but here for the first time Eutelsat could go and buy a ‘bird’ with this year’s net income.

The overall revenue numbers mean that Eutelsat is now very definitely in the rare €1bn ‘club’ of operators. This current 2009-2010 trading year will see Eutelsat trading at these levels, and a long way from the altogether more modest amounts when he was appointed as Director General back in 1999. Eutelsat would not be the organisation it is without Berretta, who pushed for privatisation and independence to act as a business and not the cosy club it had been.

Eutelsat’s contractual backlog at June 30, 2009, amounted to €3.9bn, up an impressive 15% from a year ago and representing some 4x annual revenues. There are also solid indications that Eutelsat is steadily increasing its transponder rental process, and moving away from supplying capacity to third-party wholesalers and dealing directly with clients. This is not a new strategy, but it is now gaining traction.

On June 30, 2009, 589 transponders are operational, 88 or 18% more than on Dec 2008, and 523 of those were in use, 35 or 7.2% more than in December. The fill rate thus is somewhat down to 88.8% from 97.6% in December. This also reflects Berretta’s long-held maxim that it was no point having a pretty shop window if there was nothing to buy! This extra capacity gives Eutelsat some operational head-room.

Berretta also confirmed that it would be looking closely at the ProtoStar assets now in Chapter 11 bankruptcy.

Eutelsat’s core numbers:

• Strong growth of all business applications: revenues up 7.2% to €940.5m
• EBITDA margin of 78.9% maintained
• Group share of net income: up 43.6% to €247.3m
• New targets for 2009-2012:
o CAGR revenues of 7%, with 2009-2010 revenues above €1bn
o EBITDA objective of more than €780m for 2009-2010
o EBITDA margin maintained at a high level in the range of 77% for each financial year to June 2012