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Introduction & Market Context
Eutelsat Communications (EPA:ETL) presented its first quarter fiscal 2025-26 results on October 21, 2025, revealing a modest overall revenue decline while highlighting significant growth in its Low Earth Orbit (LEO) satellite business. The company reported total revenues of €293 million, representing a slight decrease of 0.3% on a like-for-like basis compared to the same period last year.
The satellite operator's stock remained stable at €4.26 following the presentation, as investors digested the mixed performance across different business segments. Eutelsat continues to navigate a challenging landscape in its traditional Video business while accelerating its transition toward Connectivity services, particularly through its OneWeb LEO constellation.
Quarterly Performance Highlights
Eutelsat's first quarter results showed Operating Verticals revenues of €283 million, down 1.2% year-over-year on a like-for-like basis, which aligned with management's expectations. The company noted a negative currency effect due to the €/$ exchange rate of 1.16 versus 1.09 in the previous year, which impacted reported figures.
As shown in the following revenue bridge chart, the company experienced a €10 million negative currency impact, partially offset by a positive €7 million swing in 'Other Revenues':
The revenue breakdown by vertical reveals the ongoing transformation of Eutelsat's business mix. While Video still represents the largest segment at 47% of revenues, Connectivity segments (Fixed and Mobile) combined with Government Services now account for 53% of the total, reflecting the company's strategic pivot.
Segment Analysis
The most notable performance came from Eutelsat's LEO satellite business, which saw revenues surge by 70.7% year-over-year on a like-for-like basis. LEO revenues now represent over one-third of total Connectivity revenues, highlighting the accelerating shift toward this technology.
The following table illustrates the dramatic growth in LEO services compared to traditional GEO satellite offerings:
The Video segment continued its expected decline, with revenues falling 10.5% year-over-year to €133.6 million. This decrease was attributed to the secular market decline and the negative effect of the latest sanctions imposed on Russian channels. Despite these challenges, Eutelsat secured renewal contracts in the Middle East and North Africa (MENA) region, confirming its 7/8° West position as the leading satellite neighborhood in the area.
Fixed Connectivity showed strong growth with revenues of €62.3 million, up 15.9% year-over-year, driven primarily by expanding LEO services. This growth was partially offset by the cessation of revenue recognition from TIM on K-VHTS since January 2025. Government Services also performed well, with revenues increasing 18.5% to €52.4 million, fueled by growing demand for LEO-enabled connectivity solutions for governmental applications and services delivered in Ukraine.
Mobile Connectivity was the weakest performing segment, with revenues declining 12.1% to €34.7 million. This decrease was partly due to a one-off contract in aviation worth approximately €3 million recorded in Q1 of the previous fiscal year.
The company's backlog remained stable at €3.5 billion as of September 30, 2025, representing 2.8 years of revenues. Notably, Connectivity services now account for 58% of the backlog, up from 55% a year ago, further evidencing the company's ongoing business transformation.
Strategic Initiatives
Eutelsat announced several strategic partnerships during the quarter to expand its LEO connectivity footprint. The company formed a partnership with Tussas to deliver LEO connectivity in Greenland, extending its reach into remote Arctic regions. Additionally, Eutelsat signed an agreement with Nelco, part of the Tata Group, to deliver LEO connectivity across India, positioning the company to capitalize on the growing demand for satellite internet services in one of the world's largest markets.
These partnerships align with Eutelsat's strategy to leverage its LEO constellation to address underserved markets and expand its global presence in the connectivity sector. The company's focus on LEO technology appears to be gaining traction, as evidenced by the strong revenue growth in this segment.
Forward-Looking Statements
Eutelsat confirmed its financial objectives for fiscal year 2025-26, projecting revenues from the four operating verticals to remain around the same level as the previous year. The company expects LEO revenues to increase by approximately 50% year-over-year, continuing the strong momentum observed in the first quarter.
Management anticipates the Adjusted EBITDA margin for FY 2025-26 to be slightly below the level achieved in FY 2024-25, reflecting ongoing investments in the business. Capital expenditure is expected to range between €1 billion and €1.1 billion, while the company targets a net debt to Adjusted EBITDA ratio of approximately 2.5x after the planned capital raise and ground segment disposal.
These projections suggest that Eutelsat remains confident in its strategic direction despite the challenges in certain segments. The company's continued emphasis on expanding its LEO business indicates that management views this technology as the primary growth driver for the future, as traditional satellite services face increasing competitive and market pressures.
As Eutelsat navigates this transition period, investors will likely focus on the pace of LEO revenue growth and the company's ability to manage the decline in its legacy Video business while maintaining overall financial stability.
Full presentation:
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