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Eutelsat financials show why it bought part of OneWeb

TAMPA, Fla. — French satellite operator Eutelsat said revenue numbers will look much better than it expected come the end of June, despite reporting a decline in sales in its latest quarterly results.

The operator May 11 pointed to momentum behind fixed broadband, the only one of its verticals reporting an increase for the first three months of this year when compared to last year. By the time its current quarter fiscal year closes June 30, Eutelsat said, full-year revenue should come in higher than previously forecast.

Its plan to buy 24% of low Earth orbit (LEO) broadband startup OneWeb will further boost this part of its business, after the $550 million deal closes in the second half of 2021, underlining how important connectivity is becoming for a company that for the moment gets 62% of revenues from broadcast services.

Fixed broadband revenues increased 1.9% on a like-for-like basis to 20.5 million euros ($25 million) for the first three months of 2021, what it calls Q3 2020-21, compared with the corresponding period the year before.

The increase comes in spite of Eutelsat recently selling out of its part of Euro Broadband Infrastructure, a Europe-focused wholesale broadband services business, to its one-time U.S. partner Viasat. That deal closed April 30.

A wholesale contract with French telecoms giant Orange and growth in Eutelsat’s African operations lifted the fixed broadband unit.

Eutelsat said May 7 it will expand its partnership with Facebook in Africa, using more of the social media giant’s Express Wi-Fi platform to provide broadband services via satellite across several regions in the sub-Saharan part of the country.

The two companies have previously conducted Democratic Republic of Congo pilots of Express Wi-Fi, which gives service providers access to local communities and entrepreneurs to extend coverage.

Fixed broadband currently represents 7% of Eutelsat’s revenues, up from 6% in the first three months of 2020.

Mobile connectivity revenues, however, plummeted 17.2% year-on-year to 15.7 million euros for the first three months of 2021, representing 5% of total sales. Eutelsat said this reflects the impact of the COVID-19 crisis on sectors such as aero mobility. Maritime revenues remained on an upward trend thanks to contracts secured in the last couple of years, it added.

Broadcast revenues were down 6.8% year-on-year at 182 million euros for the quarter, driven by a slower pace of new business and the renegotiation of contract terms with Greece pay-TV company Forthnet.

Declines elsewhere helped pull Eutelsat’s total revenues for the quarter down 5.9% to 301.3 million euros, compared with the same period the year before. 

However, the company raised the bottom end of its full-year guidance after the first nine months generated 930 million euros, compared with 958 million euros the previous year.

It raised it to between 1,200 million and 1,220 million euros, versus its previous forecast of between 1,190 million and 1,220 million euros.

The company also recorded a backlog of 4.5 billion euros, which is up 6% and represents 3.5 years of revenues.

“The outturn of our Third Quarter revenues performance is fully in line with our expectations and enables us once again to raise the bottom end of our objective range for the year as a whole, as well as to reconfirm all other elements of our financial guidance,” Eutelsat CEO Rodolphe Belmer said in a statement May 11. 

“From a strategic perspective, recent weeks have been marked by our entry into the LEO space through our investment in OneWeb, which represents a compelling entry point to address the considerable LEO opportunity as well as an additional growth engine for the Group’s connectivity activities.”

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