Eutelsat results ‘reassuring’ in face of satellite sector difficulties

Eutelsat continues to face a series of serious difficulties despite turning in “reassuring” first-half financial results, according to analysts at Berenberg.

Eutelsat last week reported a 5.7% decline in like-for-like revenues to €697 million. EBITDA dropped by 7.4% to €545 million.

According to Berenberg’s analysts, Eutelsat should see a boost in the second half from the entry into service of Eutelsat 172B and a number of new contract wins, but said it was taking a “wait and see” approach to the company. Berenberg predicts negative growth of 2% this year and placed a hold recommendation on Eutelsat’s stock.

Noting that “the whole satellite subsector is disappointing on revenue growth” Berenberg sid that Eutelsat’s LEAP cost-savings programme is nevertheless ahead of schedule, although it is not yet clear what impact cost-cutting will have on growth. However, EBITDA and free cash-flow are likely to be boosted in the near term, it said.

Eutelsat’s peers SES and Intelsat have also suffered from falling revenues and a declining order backlog in their most recently-reported quarters. Operators have attempted to focus on new growth areas to compensate for declines elsewhere.

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