Having set out its strategy of pivoting towards data and connectivity for some time now, and taking a significant stake in the OneWeb project, leading satellite operator Eutelsat claims to have achieved its objectives in its 2022/23 financial year, announcing strong commercial momentum in its connectivity verticals.
In its fiscal year 2022/23, the Paris-based satellite operator saw the successful entry into service of three satellites: Hotbird 13F and Hotbird 13G, addressing service continuity at the flagship 13° east video hotspot, with Hotbird 13G hosting an incremental EGNOS GEO-4 payload; Eutelsat E10B, with incremental 35 Gbps of HTS Ku-band capacity addressing demand in mobile connectivity, with pre-commitments from Intelsat and Panasonic; also ensuring service continuity for customers of Eutelsat 10A.
The financial results for the year showed that for the period ended 30 June 2023, Eutelsat had generated total revenues of €1.131bn, down 1.8% on an annual basis, with operating verticals’ revenues falling 1.1% to €1.136bn on a reported basis and €1.093bn at constant currency.
While making up 10% of revenues, mobile connectivity was the company’s growth standout leader, with revenues of €110m increasing 26.8% year-on-year, reflecting the ongoing positive momentum, notably in maritime. Fourth quarter revenues stood at €27m, up 20.7% year-on-year and by 2.9% quarter-on-quarter, reflecting, said Eutelsat, the positive impact of the commercialisation in the first half of the third beam on Eutelsat Quantum for a maritime mobility customer.
Fixed connectivity revenues stood at €178m, 16% of business and down by 2.3% year-on-year. In broadband, 40% of this application, revenues were broadly stable as the comparison basis included the contribution from the wholesale agreements with Orange, TIM, and recently Hispasat and Swisscom, as well as, to a lesser extent, the growth of the African operations. Eutelsat completed the disposal of its European broadband retail activities after the success of its wholesale go-to-market model to distribute satellite broadband capacity over Europe.
Government services, 12% of revenues, totalled €143m in 2022/23, down by 7.2% year-on-year. Fourth quarter revenues stood at €45m, up by 25.8% year-on-year and by 45% quarter-on-quarter. This increase was mainly due to a one-off contract of €14m with the German space agency, DLR, whereby Eutelsat Hotbird 13F provided a service from April at the 0.5°E orbital position, prior to its commissioning at 13°E, expected in the third quarter of calendar 2023.
Excluding this impact, fourth quarter revenues declined by 14.2% year-on-year, a level consistent with the trend of the third quarter (-13.4%), albeit representing a slightly improved trend compared with the first half, thanks to a superior renewal rate in the Spring 2023 US Department of Defense campaign of above 70%, following the 65% rate of the Fall 2022 campaign.
This strategy will be further supported by the entry into service of Konnect VHTS expected in the second half of 2023. In fixed data, 60% of this application, improved volume trends partly offset the negative impact of the ongoing competitive pressure on prices. Fourth quarter revenues stood at €41m. On a like-for-like basis, they were down by 16% year-on-year, and by 6.9% quarter-on-quarter, reflecting a tougher comparison basis including a positive one off of around €2.5m in the fourth quarter in the previous year. Excluding this one-off, they were broadly stable on a sequential basis.
However, the company’s video line, representing 62% of revenues, saw continued falls in business. Financial year 2022/23 video revenues were down by 8.3% to €705m, reflecting, said Eutelsat, 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. Professional video revenues, which account for around 10% of the video vertical, also decreased, reflecting structural headwinds as well as the seasonality of some events.
Assessing the big picture of fiscal year 2022/23, Eutelsat Communications CEO Eva Berneke said it had been a very solid year for the company, with revenues at the top end of expectations, a high level of profitability and “robust” free cash flow generation.
“Operationally, Eutelsat has proven its technological credentials with a record level of satellite launches and service entries,” she said.
“In parallel, OneWeb, who we are working closely with to prepare our proposed combination, has seen a similar commercial dynamic, with a 50% increase in its backlog since October 2022.
“On the basis of the performance of the past year, Eutelsat confirms its standalone objectives for the current and outer years, and notably the long-awaited return to top-line growth,” said Berneke. “With its industry-leading profitability and confirmed ability to generate a high level of Free Cash Flow, Eutelsat is in a strong position to make the combination with OneWeb a true success, and I look forward to our joint future with confidence.”