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Investing.com -- Eutelsat Communications (EPA:ETL) shares plummeted more than 15% after the company revised its capital expenditure forecast for the 2025 fiscal year downward.
The sharp decline followed the release of Eutelsat’s half-year financial results, which were largely in line with expectations but highlighted ongoing challenges in key business segments.
While the company maintained its revenue and EBITDA margin ambitions for fiscal year 2025, it significantly lowered its projected capital expenditures.
Initially expected to be in the range of €700-800 million, Eutelsat now anticipates spending approximately €500-600 million.
The decision to cut back on capital spending appears to be aimed at preserving financial flexibility, but it has also sparked speculation about the company’s future investment strategy and potential constraints on its expansion plans.
The results pointed to a mixed performance across Eutelsat’s business verticals. Video revenue, which has been in long-term decline due to structural shifts in the industry, fell by 5.6% year-over-year, slightly better than the 7.3% decline recorded in the previous quarter.
Mobility services, another key segment, performed below expectations, with a year-over-year revenue drop of 4.5%, reversing the 18.8% growth seen in the first quarter.
Fixed connectivity, however, remained a bright spot, posting a 15.9% year-over-year increase, though this was slower than the 30.1% growth in the previous quarter.
Eutelsat’s order backlog stood at €3.7 billion, down from €3.9 billion a year ago, reflecting the challenges the company faces in securing long-term contracts. Meanwhile, the company’s net debt to EBITDA ratio was reported at 3.9x, indicating a moderate level of financial leverage.
Investor sentiment was further dampened by broader concerns over competitive pressures in the satellite industry, particularly from emerging low Earth orbit (LEO) satellite operators.
While Morgan Stanley (NYSE:MS) analysts noted that competition from LEO players has yet to significantly impact Eutelsat’s margins, they cautioned that it remains a mid-term risk.
Adding to the uncertainty, Eutelsat announced changes to its board of directors, with four directors resigning and Michel Combes joining as a new board member.
The company stated that these changes were intended to improve decision-making agility amid a rapidly evolving satellite communications landscape.
Eutelsat’s stock has been under pressure for an extended period, with shares down over 20% year-to-date and more than 80% over the past five years.