Download PDF

1. Company Snapshot

1.a. Company Description

Eutelsat Communications S.A. engages in the operation of telecommunication satellites for the digital communications markets.It provides video services, such as broadcast DTH, distribution, HD and ultra HD channels, and occasional use services; connectivity services; and Internet of Things and low earth orbit solutions.The company offers its services under the Eutelsat brand directly and through distributors.


As of June 30, 2021, it operated 38 satellites in geostationary orbit.The company serves broadcasters, companies, telecom operators, individuals, and government agencies in France, Italy, the United Kingdom, rest of Europe, the Americas, the Middle East, Africa, Asia, and internationally.The company was founded in 1977 and is headquartered in Issy-les-Moulineaux, France.

Show Full description

1.b. Last Insights on ETL

Eutelsat Communications' recent performance has been impacted by several factors. The company's decision to launch a €828 million reserved capital increase, and subsequently a €670 million rights issue, to reinforce its financial structure and fund strategic ambitions, may be perceived as dilutive by investors. Additionally, the company's navigation of shifting market conditions and slowing momentum in its share price may be concerning. The equity raise, to be subscribed by major investors, aims to strengthen Eutelsat's balance sheet. Investor attention is focused on the company's strategic plans.

1.c. Company Highlights

2. Eutelsat Group Delivers Mixed Q2 and H1 2024-2025 Results Amid Strategic Transformation

Eutelsat Group reported its Q2 and H1 2024-2025 results, showing a mixed financial performance amidst significant strategic developments. The company generated €606 million in revenues for the first half, reflecting a 5.9% year-over-year increase on a reported basis and a 4.4% growth on a like-for-like basis. This growth was primarily driven by strong performances in Fixed Connectivity and Government Services, which rose by 22% each. However, this upward momentum was partly offset by a 6.4% decline in Video revenues, underscoring the ongoing challenges in this segment. Adjusted EBITDA for the period stood at €334.9 million, with a margin of 55.1%, down slightly from the previous year due to cost increases related to the consolidation of OneWeb and operational measures. Notably, the company reported a goodwill impairment of €535 million on its GEO assets, reflecting revised expectations for future cash flows in this segment.

Publication Date: Feb -27

📋 Highlights
  • LEO Strategy Progress:: Eutelsat made significant strides in its LEO strategy by procuring 100 LEO satellites and signing an agreement with the SpaceRISE consortium for the Iris2 LEO constellation, expected to generate €6.5 billion in revenues over 12 years.
  • Revenue and EBITDA Performance:: H1 revenues reached €606 million, up 5.9% year-over-year, driven by strong growth in Fixed Connectivity and Government Services, while Adjusted EBITDA margin stood at 55.1%, reflecting cost increases from OneWeb consolidation and operational measures.
  • CapEx Reduction:: Gross CapEx for the year was revised downward to €500-600 million due to delayed LEO investments and reduced GEO spending, providing near-term financial flexibility.
  • Goodwill Impairment:: The company reported a €535 million goodwill impairment on GEO assets due to lower expected future cash flows, highlighting structural challenges in the GEO segment.
  • Debt and Leverage:: Net debt stood at €2,695.8 million, with a net debt-to-EBITDA ratio of 3.92x, as the company confirmed its medium-term leverage target of 3x, supported by strategic initiatives like the Stargate put option.

Strategic Progress and LEO Ambitions

Eutelsat made significant strides in its strategic initiatives, particularly in the Low Earth Orbit (LEO) space. The company signed an agreement with the SpaceRISE consortium to design and operate the Iris2 LEO constellation, a critical component of its LEO strategy. Additionally, Eutelsat procured its first batch of 100 LEO satellites and exercised a put option for the sale and leaseback of passive ground infrastructure, expected to generate €500 million in net proceeds by H1 2026. These moves highlight Eutelsat's commitment to diversifying its portfolio and positioning itself for future growth in the LEO market. The Iris2 constellation, slated for launch in 2030, is projected to generate €6.5 billion in revenues over its 12-year concession period, with Eutelsat's contribution to the project being back-end loaded to align with its financing plan.

Financial Outlook and Valuation Considerations

Eutelsat's gross CapEx for the year is now expected to be €500-600 million, down from initial guidance, primarily due to delayed LEO investments and reduced GEO spending. The company's net debt stood at €2,695.8 million, with a net debt-to-EBITDA ratio of 3.92x, slightly above its medium-term leverage target of 3x. Despite the cautious outlook due to GEO consumer broadband headwinds, Eutelsat reaffirmed its FY 2024-2025 revenue and profitability objectives. From a valuation perspective, the stock currently trades at an enterprise value-to-EBITDA ratio of 5.94x, reflecting the market's expectations for its strategic transformation and LEO growth prospects. The free cash flow yield of 7.25% also suggests that investors are pricing in the company's ability to generate significant cash flows as its LEO investments begin to bear fruit.

Operational Insights and Competitive Positioning

During the Q&A session, management emphasized the shifting connectivity demand from GEO to LEO, particularly in the B2C segment, though Eutelsat remains focused on B2B opportunities. The company highlighted its competitive positioning, offering a non-US, non-Chinese alternative with a higher orbit (1200 km) and fewer satellites for global coverage. OneWeb, a key subsidiary, reported a strong backlog of over 1,000 aircraft for Aero connectivity, with installations set to begin next year. Despite Starlink's entry into the B2B Aero market, OneWeb's focus on this segment and its strong backlog position it well to maintain its competitive edge. Additionally, Eutelsat is exploring partnerships, such as with Thaicom, to optimize its GEO CapEx and reduce costs.

3. NewsRoom

Card image cap

Holding(s) in Company

Nov -28

Source:

Card image cap

Director/PDMR Shareholding

Nov -28

Source:

Card image cap

Eutelsat Communications (ENXTPA:ETL): Assessing Fair Value Following Satellite Project Developments

Nov -25

Source:

Card image cap

Eutelsat and Cinecolor Group Renew Multi-Year Partnership to Deliver Cinema and Live Event Content Across Latin America

Nov -25

Source:

Card image cap

Publication of a Prospectus

Nov -25

Source:

Card image cap

Eutelsat Announces Today the Launch of a c. €670 Million Rights Issue as Part of Its c. €1.5 Billion Capital Raise to Reinforce Its Financial Structure and Fund Strategic Ambitions

Nov -25

Source:

Card image cap

Eutelsat Communications: Notice of Availability of the Amendment to the Universal Registration Document 2024-25

Nov -25

Source:

Card image cap

Combined Annual General Meeting of Eutelsat Communications

Nov -20

Source:

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (7.77%)

6. Segments

Video

Expected Growth: 8%

Eutelsat's 8% growth driven by increasing demand for satellite-based broadcasting and broadband services, particularly in emerging markets. Growing adoption of HD and UHD channels, expansion of government and military contracts, and increasing use of satellite-based IoT connectivity also contribute to growth.

Fixed Connectivity

Expected Growth: 7%

Eutelsat's Fixed Connectivity growth is driven by increasing demand for broadband services in underserved areas, government initiatives for rural connectivity, and the need for reliable backup solutions. Additionally, the growth of IoT, 5G, and cloud computing is fueling demand for high-capacity, low-latency connectivity, which Eutelsat's satellite-based solutions can provide.

Government Services

Expected Growth: 6%

Eutelsat's Government Services segment growth is driven by increasing demand for secure satellite communications, expansion of government agencies' remote operations, and rising need for disaster response and recovery solutions. Additionally, the segment benefits from long-term contracts with government agencies, providing a stable revenue stream.

Mobile Connectivity

Expected Growth: 10%

Eutelsat's Mobile Connectivity growth is driven by increasing demand for IoT, M2M, and satellite-based broadband services. Expanding 5G networks and government initiatives for rural connectivity also contribute to growth. Additionally, the company's strategic partnerships and investments in new technologies, such as LEO satellites, enhance its market position and competitiveness.

Other

Expected Growth: 5%

Eutelsat's 'Other' segment growth is driven by increasing demand for satellite-based IoT and data services, expansion into new markets, and strategic partnerships. Additionally, the company's focus on innovation, such as its LEO constellation, and growing government and institutional business also contribute to this growth.

7. Detailed Products

Video Services

Eutelsat's video services provide broadcasting and media companies with satellite capacity to distribute TV channels and on-demand content to a wide audience.

Data Services

Eutelsat's data services offer secure and reliable connectivity for businesses, governments, and organizations, enabling them to communicate and exchange data efficiently.

Government Services

Eutelsat's government services provide secure and customized satellite-based solutions for government agencies, defense organizations, and institutions.

Broadband Services

Eutelsat's broadband services offer high-speed internet access to individuals and businesses in underserved areas, bridging the digital divide.

Maritime Services

Eutelsat's maritime services provide satellite-based connectivity for the maritime industry, enabling communication and data exchange at sea.

IoT Services

Eutelsat's IoT services enable the connection of devices and sensors, facilitating the growth of the Internet of Things (IoT) ecosystem.

8. Eutelsat Communications S.A.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Eutelsat Communications S.A. is medium due to the presence of alternative satellite operators and terrestrial networks.

Bargaining Power Of Customers

The bargaining power of customers for Eutelsat Communications S.A. is low due to the company's strong market position and limited customer concentration.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Eutelsat Communications S.A. is medium due to the presence of multiple suppliers and the company's significant purchasing power.

Threat Of New Entrants

The threat of new entrants for Eutelsat Communications S.A. is low due to the high barriers to entry in the satellite industry, including significant capital requirements and regulatory hurdles.

Intensity Of Rivalry

The intensity of rivalry for Eutelsat Communications S.A. is high due to the presence of several established players in the satellite industry, leading to intense competition for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 49.82%
Debt Cost 3.95%
Equity Weight 50.18%
Equity Cost 5.51%
WACC 4.73%
Leverage 99.28%

11. Quality Control: Eutelsat Communications S.A. passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
BOS

A-Score: 5.2/10

Value: 7.4

Growth: 5.7

Quality: 6.6

Yield: 0.0

Momentum: 9.5

Volatility: 2.0

1-Year Total Return ->

View Full Report
Stock-Card
Hexatronic

A-Score: 3.8/10

Value: 7.1

Growth: 9.1

Quality: 4.6

Yield: 0.6

Momentum: 0.5

Volatility: 0.7

1-Year Total Return ->

View Full Report
Stock-Card
Ceragon Networks

A-Score: 3.6/10

Value: 6.3

Growth: 6.9

Quality: 4.9

Yield: 0.0

Momentum: 3.0

Volatility: 0.7

1-Year Total Return ->

View Full Report
Stock-Card
Eutelsat

A-Score: 3.5/10

Value: 8.3

Growth: 0.4

Quality: 1.2

Yield: 5.0

Momentum: 6.0

Volatility: 0.0

1-Year Total Return ->

View Full Report
Stock-Card
u-blox

A-Score: 3.5/10

Value: 4.4

Growth: 0.6

Quality: 3.3

Yield: 0.6

Momentum: 10.0

Volatility: 2.0

1-Year Total Return ->

View Full Report
Stock-Card
Napatech

A-Score: 2.3/10

Value: 6.0

Growth: 0.0

Quality: 4.4

Yield: 0.0

Momentum: 2.5

Volatility: 0.7

1-Year Total Return ->

View Full Report

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

2.12$

Current Price

2.12$

Potential

-0.00%

Expected Cash-Flows