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Investing.com -- Eutelsat shares fell Wednesday after Starlink rival reported first-quarter revenue below expectations on Tuesday, as weakness in its video segment outweighed solid growth in government services, particularly in Ukraine.
First-quarter revenue totaled €293 million, down 2.2% on a reported basis and nearly flat at minus 0.3% like-for-like.
Revenue from the four main operating segments came in at €283 million, declining 1.2% like-for-like when excluding a €10 million currency headwind, and falling 11% from the previous quarter.
This figure missed analysts’ average forecast of 295 million euros, according to company data.
Shares in Eutelsat dipped more than 6% in Paris trading.
The video division, which provides satellite broadcasting to more than a billion viewers and represents nearly half of total revenue, fell 10.5% from a year earlier. The company cited the ongoing structural decline in the video market and the impact of sanctions on Russian channels.
French regulators recently ordered Eutelsat to stop broadcasting two such channels, a move the company said would cost about 16 million euros this year.
"We still see a strong progress of Starlink on the broadband and B2C (business-to-consumer) segments," finance chief Christophe Caudrelier told analysts, adding that “the demand for connectivity by satellite is growing fast.”
Government services remained the best-performing business, with revenue rising 18.5% to 52.4 million euros. Eutelsat reaffirmed its annual and long-term financial targets.
Kepler Cheuvreux analyst Alessandro Cuglietta reiterated a Hold rating on Eutelsat following the release.
“We remain cautious,” he said. “The business model is structurally capital-intensive, with sustained negative free cash flow expected through the end of the decade."
Cuglietta said Eutelsat’s return on invested capital (ROIC) is unlikely to turn positive before fiscal 2030, "and even then, should remain below 10%.”