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Eutelsat Communications reported a slight decline in revenue for the third quarter of fiscal year 2025, reflecting ongoing strategic adjustments and geopolitical challenges. The company’s revenue reached €300 million, a 1.9% decrease year-over-year. Despite the revenue drop, Eutelsat’s government services segment showed robust growth, and the company reaffirmed its financial objectives for the full year. The stock remained unchanged at €4.26, reflecting market stability in response to the earnings report. According to InvestingPro data, the company maintains impressive gross profit margins of nearly 81%, though current analysis suggests the stock may be overvalued at current levels.
Key Takeaways
- Total Q3 revenue was €300 million, down 1.9% year-over-year.
- Government services revenue grew by 10.2%, offsetting declines in other segments.
- Eutelsat confirmed its full-year financial objectives despite challenges.
- The company’s backlog decreased to €3.6 billion from €3.9 billion.
- Stock price remained stable post-earnings announcement.
Company Performance
Eutelsat’s overall performance in Q3 2025 was marked by a slight revenue decline, attributed largely to shifts in its video segment and the impact of geopolitical factors. The company is navigating a complex satellite connectivity market, with increased demand for non-geostationary capacity, particularly in government and non-US markets. This strategic focus is expected to bolster future growth despite current revenue challenges. InvestingPro analysis reveals the company’s annual revenue growth of 10.3%, with an EBITDA of €693 million in the last twelve months.
Financial Highlights
- Revenue: €300 million, down 1.9% year-over-year
- Video segment: €152 million, down 6.4%
- Fixed Connectivity: €60 million, up 1%
- Government Services: €50 million, up 10.2%
- Mobile Connectivity: €40 million, down 2.7%
- Backlog: €3.6 billion, down from €3.9 billion
Outlook & Guidance
Eutelsat remains committed to its financial objectives for the fiscal year 2024-2025, anticipating operating vertical revenues to remain stable compared to the previous year. The company expects an adjusted EBITDA margin slightly below last year’s figures, with capital expenditures projected between €500-600 million. Eutelsat is targeting a leverage ratio of around 3x in the medium term. InvestingPro subscribers have access to additional insights, including 8 more ProTips and detailed financial health scores that help assess the company’s future prospects.
Executive Commentary
Christophe Gaudiere, Group CFO, expressed optimism about the company’s strategic direction, stating, "We are now moving into a new era." Joanna Darlington, Chief Communications Officer, highlighted the strategic importance of satellite capacity, noting, "Satellite capacity has become a central strategic part of the toolkit when it comes to sovereignty and defense." Darlington also expressed confidence in the government business segment’s future growth.
Risks and Challenges
- Geopolitical tensions impacting revenue from Russian media channels.
- Competitive pressures in the satellite connectivity market.
- Dependence on government contracts, particularly outside the US.
- Potential delays in LEO and multi-orbit constellation development.
- Financing challenges for future investments.
Q&A
During the earnings call, analysts inquired about the impact of reduced US Department of Defense contracts and the company’s financing strategies. Eutelsat is exploring equity and Export Credit Agency financing options, with potential coverage of 50-70% of investments through ECA financing, ensuring continued development of its satellite infrastructure.
Eutelsat’s Q3 2025 results reflect a company in transition, balancing short-term revenue challenges with strategic investments in future growth areas.
Full transcript - Eutelsat Communications SA (ETL) Q3 2025:
Alan, Call Coordinator: Welcome to the Eutelsa third quarter and nine months two thousand twenty four and twenty five revenues call. My name is Alan, and I’ll be your coordinator for today’s event. Please note this call is being recorded. And for the duration, your lines will be on listen only. However, you will have the opportunity to ask questions at the end.
This can be done by pressing star one on your telephone keypad. If you require assistance at any time, I will now hand you over to your host, Christophe Caudelier, to begin today’s conference. Thank you.
Christophe Gaudiere, Group CFO, Eutelsat: Hello, everyone. Welcome, and thank you for joining us today for EUTELSAT’s third quarter twenty fourtwenty five revenues presentation. I’m Christophe Gaudiere, Group CFO, and I’m joined today by Joanna Darlington, Chief Communications and Investor Relations Officer. On today’s agenda, we will cover recent highlights, Q3 performance and outlook and financial objectives. Let’s start with the highlights.
Third quarter revenues of the four operating verticals, I. E, excluding other revenues, stood at EUR 300,600,000.0. They were down 2.2% on a like for like basis. Revenues of the four operating verticals for the first nine months were up 1.8% on a like for like basis. Connectivity applications continue to see double digit growth on the back of LEO enabled solutions.
With all this, we confirm all our full year 2425 financial objectives. Let’s turn specifically to the Q3 performance. First, as a reminder, all commentary is on a like for like basis, I. E. At constant currency and perimeter.
Total revenues for the third quarter stood at €300,000,000 down 1.9% on a like for like basis. They reflected first, a €7,000,000 positive currency effect and second, a €1,000,000 negative swing in other revenues mainly from hedging. Excluding other revenues, revenues of the four operating verticals were down 2.2% on a like for like basis. Let’s look at revenues in more detail. Video representing 50% of revenues stood at €152,000,000 a decline of 6.4%.
Fixed connectivity revenues representing 20% of the group total rose 1% to €60,000,000. Government services 17% of revenues stood at €50,000,000 a rise of 10.2%. Mobile connectivity revenues representing 13% of the group total stood at €40,000,000 down 2.7%. I will come back to this. Let’s start with video.
Third quarter video revenues amounted to €152,000,000, down 6.4% year on year, are in line with the broader market trend. On a quarter to quarter basis, revenues were down 4.8%, reflecting the linearization of revenue recognition on certain contracts in Q2. On the commercial front, EUTELSAT renewed a video capacity agreement with its long standing partner, ATSS, in the MENA region. EUTELSAT also expanded its services for professional video, committing significant new resources at the flagship HOTBIRD constellation at thirteen degree east. Elsewhere, EUTELSAT renewed its partnership with UAE based content distribution specialist, BHS, for satellite contribution services across The Middle East and North Africa, extending capacity leased on EUTELSAT twenty one p and EUTELSAT seventy b.
Let’s move and have a word on Russia. EUTELSAT is implementing EU regulation 269 slash 2,014 concerning the denial of resources to Russian entities, which since March 2025 is being applied to selected media groups by the French regulator, ARCOM. Following the recent removal of two channels, STS and CANAL five belonging to JFC National Media Group, Eutelsat is in the process of removing further channels controlled by this company as well as those controlled by VJTRK from EUTELSAT capacity. At this stage, the impact on the group’s revenue of the removal of these channels is being estimated at around EUR 16,000,000 on an annualized basis and a similar amount at the EBITDA level prior to any mitigation measures. Due to the timing, this action has a very limited impact on EUTELSAT’s objective for fiscal year twenty twenty four-twenty twenty five.
As a reminder, EUTELSAT’s financial objectives exclude the impact of sanctions imposed on Russian customers by external authorities. Moving to connectivity. Third quarter fixed connectivity revenues stood at €59,700,000, up 0.8% year on year. They mainly reflected, on the one hand, the continued growth of LEO enabled connectivity solutions and, on the other, the more challenging conditions for geo enabled consumer broadband in Europe, and notably, the cessation of revenue recognition from a specific customer on the CONNECT VHTS satellite. Quarter on quarter, revenues were down 7.3%, reflecting a one off impact from catch up revenues from a LEO customer in Q2, as well as the above mentioned cessation of revenue recognition from a GEO customer.
On the commercial front, the transfer of EUTELSAT connect capacity to the African market has been completed. Take up of the additional capacity has been dynamic, notably with the multiyear partnership with Orange for connectivity in Africa and The Middle East. Elsewhere, EUTELSAT and INTERSATs Inc, a new multiyear agreement for Ku capacity on EUTELSAT seven c for the delivery of fixed data services over Central And Eastern Africa and renewed their existing capacity contracts on EUTELSAT seven t p. The two companies are in discussions aimed at adding LEO capacity for East Africa. Third Quarter government services revenues stood at EUR49.5 million, up 10.2% year on year.
This mainly reflected the growth of LEO enabled solutions revenues as well as increased demand from non US governments. Quarter on quarter, revenues were down 4.2% notably due to slowdown in geo activity. The spring twenty twenty five renewal campaign with US Department of Defense resulted in an estimated renewal rate of less than 50%, below the high rate of previous quarters. It reflects the change in the new presidential administration geographic prioritization for the defense department with the additional context of efforts to cut government spending overall. In particular, it embarks a nonrenewal of a single sizable contract.
Excluding this one off, the renewal rate would have been close to 70%. Third quarter mobile connectivity revenues stood at €39,700,000 down 2.7% year on year, reflecting lower TEO revenues, partly offset by growing demand for LEO based solutions. Quarter on quarter, revenues were up 14.3% underpinned by ramp up on LEO. On the commercial front, EUTELSAT confirmed the traction of LEO enabled services for commercial and business aviation with over 100 certified n t nine installations already completed out of a backlog close to 1,000 aircrafts and the first aircraft now in service. In addition to its GEO offering, EUTELSAT is delivering multi orbit connectivity through key partners such as Intelsat, YOOX, Panasonic, and Gogo.
Air Canada became the first airline to deploy the multi orbit GEO LEO service through Intelsat. Separately, EUTELSAT signed a multiyear multimillion dollar extension of its capacity agreement with Panasonic on EUTELSAT ten b, and the deployment of CONNECT DHDS capacity for the mobility market is also progressing well, notably with a new multiyear, multimillion dollar agreement with Turkcell for Ka band services. Both showcase the ongoing pertinence of a state of the art geo capacity to deliver high quality, cost effective in flight connectivity services. Moving now to the backlog. The backlog at the March stood at EUR 3,600,000,000.0 versus EUR 3,900,000,000.0 a year ago and EUR 3,700,000,000.0 at the December 2024, reflecting its net natural erosion, especially in the video segment in the absence of major renewals.
It was equivalent to three times fiscal year twenty twenty four revenues with connectivity representing 57% of total. Let’s now turn to the outlook. On the back of the performance of the first nine months, we confirm our objectives for the full year twenty fourtwenty five of operating vertical revenues around the same level as fiscal year twenty twenty four and adjusted EBITDA margin slightly below the level of fiscal year twenty twenty four. Elsewhere, gross capital expenditure in fiscal year twenty twenty fourtwenty twenty five remains expected in a range between €500,000,000 and €600,000,000. EUTELSAT also continues to target leverage of around three times in the medium term and continues to work actively on the financing plan in line with its strategic road map and its leverage objective.
With that, I I would like to thank you for your attention. And together with Joanna, we are now ready to take your questions and to to answer your questions.
Alan, Call Coordinator: Thank you. If you like to ask a question or make a contribution on today’s call, please press star one on your telephone keypad. We will take our first question from Roshan Ranjit, Deutsche Bank. Your line is open. Please go ahead.
Roshan Ranjit, Analyst, Deutsche Bank: Oh, evening, everyone. Thanks for the questions. I’ve got, three, please. On the government, renewal rate where you say less than 50%, supposed to get a sense of, is is is there a scope, you know, for further resizing? You you mentioned this single sizable contract.
Are there other types of of contracts of that nature within your base? And just to confirm that government rev US government revenues is around 65% of overall government revenues at the group, please. Secondly, within video, you’re flagging the 16,000,000 annualized impact from Russia. Again, is that assuming all Russian channels are removed from your base? Or is there a scope for that number to potentially be higher if you have to switch off further channels?
And lastly, last quarter, you mentioned you’re working on a financing plan. I I I didn’t see an update in the release today. I assume that is still something which you’re working on, but anything you could say on that front and any progress would be very helpful. Thank you.
Christophe Gaudiere, Group CFO, Eutelsat: Okay. Thanks, Rashaan, so for your question. So starting with the first one on the renewal rate on the on the government. So and and I guess your question was related to the percentage that the US government was representing in the total. So it’s it’s the proportion of the US government is decreasing, and it’s, I would say, roughly between 50 to 60%.
The reason why it’s decreasing is also because we with the development of the LEO activity, we also have a lot of appetite from other governments, and we see a significant increase of our business with governments other than the US government. On the US government side, I mean, we don’t see any dramatic change of the the business again for this quarter or for this for the spring session, it’s really rated to one specific contract with the US government. I mean, as as we see, I mean, we you know, with the change in the presidential the The US President’s strategy and and the the cost cutting plan, I mean, we we see some changes, but no major impact on the on our business.
Joanna Darlington, Chief Communications and Investor Relations Officer, Eutelsat: I see some sorry. Yeah. Just to add one thing. I mean, in terms of timing, those renegotiations took place just at the time or just after the the the start of the new US administration. So there was, as you know, right at the beginning of the administration, there was a lot of pressure on on departments to cut costs.
And so, you know, we we think that the the, you know, the unusually low renewal rate was, if you like, partly a knee jerk reaction to that impetus. I think your your other question, and it’s why we singled this out. I mean, it’s that that there’s one contract that wasn’t renewed that represents around half of of of the delta between the type of renewal rate we would normally see and the the renewal rate that we we just reported. So to to answer your question, Roshan, no. It’s unusual.
I mean, they they generally the renewals tend to be made up of of smaller contracts, and it it’s unusual to have one that’s that chunky and has that big an impact.
Christophe Gaudiere, Group CFO, Eutelsat: On this your second question related to Russia, no. It it rip I mean, the the the channels that we are we that that we are removing or we will be will be removing from the from our satellites are not all the the the channels or not the or the business with Russia. It’s a few tenth of of channels that we are removing. And they are really related to two specific groups that are that are in the list of the of of our com, and and it takes us also some time to to identify all the channels that that are belonging to those two groups, to those two media groups. And that’s the reason why it takes a bit of time too because, you know, we need to really identify those channels that are really belonging to to those two companies.
Joanna Darlington, Chief Communications and Investor Relations Officer, Eutelsat: Yeah. Just just to yeah. Just to add, in case it’s not clear, so up till now, the the sanctions that we’ve complied with have been on specific channels, and those have been identified by ARCOM. And and the the the reason behind taking them down is is because of the content, the the nature of the content of those channels. The I I would say that the ARCOM has now since March, so in the past couple of weeks, it’s now expanded the scope of how it imposes sanctions, And it’s expanded it to cover not just specific channels because of the content, but but actually companies, content producers, who are part of a list of of of companies in Russia where, you know, where where the French government has decided to to freeze or deprive them as of assets, if you like.
So so it’s more complicated because instead of Arkham just sending us a list and saying, right, you know, this, you need to bring down this, this, and this, what they’re saying is you have to stop broadcasting the the content which is provided to our customers, which are, you know, still Trickle or an NTV plus, which are provided by these companies. And and so we have to identify those ourselves, and and that’s what’s taking longer. But but we expect it to be completed by, I would say, the end of the end of June.
Christophe Gaudiere, Group CFO, Eutelsat: On the financing plan, so coming back, as we mentioned in February for our h one results, We continue to work actively on the financing plan in order to take into consideration and to cover our strategic road map as well as our medium term target of leverage ratio around three times. In this context and as we speak, we are in active discussions, I would say, with potential capital providers, and we are assessing various solutions. And this is the what I can say at this point. And and as as we we mentioned back in February, and we will come back to the market as soon as we have, you know, a settled a clear action plan.
Roshan Ranjit, Analyst, Deutsche Bank: That that that’s very helpful, guys. Thank you. If I could just follow-up on the first question, the renewal rate that will impact your fiscal year twenty six numbers? Is that the right way to think about it in terms of the timing and the lag effect?
Joanna Darlington, Chief Communications and Investor Relations Officer, Eutelsat: Well, it will it will impact from q four of this year. And then, yes, for for it it will impact into full year ’26.
Alexander Peter, Analyst, Bernstein: Great. Thank you.
Joanna Darlington, Chief Communications and Investor Relations Officer, Eutelsat: But I I think
Christophe Gaudiere, Group CFO, Eutelsat: it’s been embedded in the also in the for the for the for full year 2425 Yeah. At this point. So it it doesn’t Yeah. Yeah. Change anything in our guidance.
Joanna Darlington, Chief Communications and Investor Relations Officer, Eutelsat: Yep. And I think, you know, the the other point to make is is, you know, as Christophe said, that the the proportion of of the US DOD within our government services revenues is is obviously is is proportionately a lot less than it has been in in recent years.
Roshan Ranjit, Analyst, Deutsche Bank: Got it. Thank you.
Alan, Call Coordinator: We will take our next question from Stefan Beersen, ODDO BHF. Your line is open. Please go ahead.
Stefan Beersen, Analyst, ODDO BHF: Thank you. Thank you very much. What about three, if that’s possible? The first one is, regarding the financing plan, and and I fully understand that, you know, you’re you’re you’re not in a position to, say say too much, for sure about it. But let me try push my luck a little bit there.
I’d like to understand, you know, how much credit export can be a solution there. So I guess my question is, do you you know, how much theoretically do you think you can cover of your future investment plans? Thanks to credit export either at the French level or at the European level. And and, you know, do you feel you have a strong case to be in a position to obtain, these, credit exports? My second question is regarding the order book, that is, that is down.
I mean, you just mentioned that you you’re getting a lot of interest from other governments than the US government. So, you know, are you currently in in in discussion in indeed with with, you know, some governments about future contract? And and do you think that they can be quite sizable? You know, anything you could say, about, about that? And finally, it’s a question I asked already, and I’d be very interested to have an answer.
But do have an idea of how much of the, current OneWeb order book is not yet activated and and therefore contributing to the revenues? Thank you.
Christophe Gaudiere, Group CFO, Eutelsat: Okay. Thanks, Stephane. On the first question related to ECAs, I mean, we are already working very actively on ECAs. As you know, we we we have communicated that we had contracted with Airbus for an additional batch of 100 satellites. And and, clearly, we are in the in the process to and we are discussing with the ECA agencies on on on in order to be able to to include those in in the in the scheme.
I need to mention that we already have some ECAs. I mean, we we at the one web level, we already have ECA contracts and financing with India Exynbank on one side. Do we so how much do we think that we can this this is really depending on the future investment and and the on those investments. But all in all, I would think that I mean, we we we we can plan between 5070% well, I would say 50 to 70 of the investment being part of the ACA financing plan. And and, yes, we believe that we have a strong case with this.
It will also it it will obviously depend on several factors. First of all, I mean, what are the who are the providers of the industry for those for those future investments, being on the satellite side, but also on the on the launchers. So, clearly, this needs to be taken into consideration. But overall, for both, again, satellites and launchers, because we’ve already done it, we we think that we have a very strong case for the ECA financing. We are just in our discussion with the different agencies, I mean, we really are in the heart of the, you know, of the of this program.
Moving to the government question, I mean, we we have, I would say, a lot of discussion with different governments. I mean, as you clearly know, with the current geopolitics, there are many interest from many countries. I mean, starting with the European countries, but not only. I mean, you know, I would say many nonaligned or or or countries seeking for, you know, alternative solutions or, you know, non American, no Chinese solutions for, you know, this type of service. And and, clearly, there are a lot of interests.
Having said that, it’s clear that it will take some time, and it will it will you know, I mean, we are in the in processes that needs to go through a lot of administrations and and approvals. So definitely, again, we are really confident that the the market is significantly increasing for for the many reasons that you know. But it would be a progressive increase, and it will be a you know, it would take a bit of time to really convert into real business. But as we see, I mean, we already have some significant contracts. As I just mentioned before, I mean, the we were a few years ago or even, yeah, not so long ago, US government represented the vast majority of our government business.
I mean, today, you know, we have a significant increase of other governments into this. Donna, do you want to add something? And the last question is related to the OneWeb order book and how much of this has been activated. I mean, it if the the question is, I would say, I mean, obviously, it it this is going not to be you know, it’s it’s it’s a then the monthly rev monthly revenues, but I would say around between 170 and €200,000,000 that have been from the current order book that it translated into monthly revenues.
Stefan Beersen, Analyst, ODDO BHF: Thank you. That’s very helpful. And just a quick follow-up regarding credit export. Obviously, Iris Square is also, I guess, even if that’s at the European level, that would also be eligible to, credit export, I would I would guess, but at the European level in terms of financing.
Christophe Gaudiere, Group CFO, Eutelsat: Well, you mean you mean our investment into iOzquare. Right?
Alan, Call Coordinator: Yes.
Christophe Gaudiere, Group CFO, Eutelsat: I mean, yeah, it it it it’s a different scheme, but it would be eligible. But could be I mean, again, depending on the provider, it would either be, I would say, regular ECA or strategic operations. But in both cases, they are very similar.
Stefan Beersen, Analyst, ODDO BHF: That’s all very clear. Thank you very much.
Alan, Call Coordinator: We will take our next question from Ben Rickett, New Street Research. Your line is open. Please go ahead.
Ben Rickett, Analyst, New Street Research: Hi, Christophe and Joanna. Thanks for the questions. I have two. The first one, just to follow-up on the ECA discussion. Do you think ECA financing, is that sufficient, do you think?
Or are you also looking to raise equity capital, for example? And if so, much equity capital do you think you would need to raise? And then second question just around Iris Squared. I think there’s still quite a lot of skepticism around the commercial revenue projections for Iris Squared, the the 6,500,000,000.0. Do you think there’s any prospect of the European Union committing more of the revenues for that project so that you’re less reliant on commercial revenues?
Thank you.
Christophe Gaudiere, Group CFO, Eutelsat: K. So so clearly, for for the first question then, clearly, ECA are not going to be sufficient to cover the needs, I mean, for for for many reasons. First, because of the capacity, and secondly, because it won’t solve as as as we, you know, as we said, I mean, our medium term target is to go back to a leverage ratio around three times. And clearly, ECA are accounted as debt definitely. So if if it’s only ECA, I mean, this would solve the issue of liquidity and the capacity of of financing our investment needs.
But, obviously, in that case, I’m not sure that we would have a strong case with the ECA because the structure of the balance sheet of the company wouldn’t be sufficient. So so clearly, ECA is one of the, you know, of the it’s one part of the financing plan for sure, but it’s not the sole part. And and, clearly, in our financing financing plan, we are clearly looking, as I mentioned, for capital investors. It’s too early, I think, for me to disclose any type of, you know, range or amount in what we are seeking for as a, as you know, reinforcement of our balance sheet structure. But but I can say that it’s it’s a significant amount.
On the second question I require, just to maybe just to come back quickly on on what is I risk where and how it is managed. I mean, clearly, it’s a multi orbit constellation. Within this multi orbit constellation, there is a dedicated European payload, which is not, you know, what the operators are going to sell. You know? Next to this, I would say, payload specific payload for the European community, there is a commercial payload of which the d o one is is will be for Eutelsat to to to to commercialize and and to manage.
Having said that, do we have significant prospect? I mean, we are talking first of all, we are talking of remind you that Iris Square is due in 2030. So it’s quite a long time away from from now. And and and for us, Iris Square would be, you know, the commercial side that will replace the current generation of our satellites. So it would be, you know, the continuation of one, the current business and continuation growth of the current business that will be covered by IR Square.
Having said that, do we have a potential also to cover some of this capacity through European requirements? I mean, requirements or needs from the European states, I would say, certainly, yes. It’s not a commitment from the the the different states of Europe as of today in the in the Irish Square project, but there are obviously, as I said before, a lot of discussions with different governments, European, but also non European governments, and there is a quite a lot of there is a lot of appetite for this. So we are we are confident to, you know, to develop the the government business including with Iris Square and before Irish Square.
Ben Rickett, Analyst, New Street Research: Thank you. That’s really helpful. And these days, the the demand doesn’t emerge for that commercial capacity, do you think the European Union would be prepared to commit some of that revenue?
Joanna Darlington, Chief Communications and Investor Relations Officer, Eutelsat: I think it’s far too early to discuss that. I mean, you know, as as Christophe said, you know, we we have a billion euro backlog on OneWeb. The LEO proportion of IRA squared will basically equate to the continuation of OneWeb, which means that in any case, when it gets launched, is not till the early part of the next decade, it will in effect, it will already be derisked, why, by the business, which is already on on OneWeb. But, yeah, I mean, I I think, you know, you’ve it it’s far too early to talk about what the you know, with the demand isn’t what it is, so that the EU will will commit further at this point. I mean, I, you know, I would also remind you if if you look at the, you know, if you look at NovaSpace or if if you look at any other of the of the agencies that, you know, that that forecast growth in our sector, I mean, the growth in demand for for non geostationary capacity is is huge.
So, you know, that there’s absolutely no reason for us to suppose that the demand won’t be there. I mean, you know, if if if people didn’t think demand for LEO was there, then, you know, we we wouldn’t be building one web, you know, Copa wouldn’t be building or Amazon wouldn’t be building Copa, you know, and and you wouldn’t have other low orbit constellations. So that that’s clearly where the demand is for the sector.
Ben Rickett, Analyst, New Street Research: Okay. Understood. Thank you both.
Joanna Darlington, Chief Communications and Investor Relations Officer, Eutelsat: We
Alan, Call Coordinator: will take our next question from Alexander Peter, Bernstein. I
Alexander Peter, Analyst, Bernstein: would have a few. So the first one is, can you or are you willing to provide additional details or any color on the reasons behind the change in in leadership? That will be my first one, and then I have a couple of follow ups. Thank you.
Christophe Gaudiere, Group CFO, Eutelsat: Nothing real to to comment on this one, Alexander. What what the the only thing the only thing I can say is the it it’s clear that we are we are in a situation or, you know, we are we are now EUTELSAT is is facing a different challenge. I mean, compared to you know, we we we went through the telecom pivot first, then we had all the PMI or all the the the the one web integration and and the development of the the start of the development of the of the LEO business. And and we are now moving a bit in terms of in our in terms of our environment. And and, clearly, we will now need to to go for a significant financing.
And, you know, it’s a it’s a new era that that is opening. I mean, Eva has been with us for a bit well, three and a half years now, and and she brought a lot of thing to the company. I mean, she really brought into life the telecom pivot, and she also developed the the the the the merge and the integration with with OneWeb. And this is, I think, the one the only thing I can comment. I don’t know if, Jo, you want to add something.
Joanna Darlington, Chief Communications and Investor Relations Officer, Eutelsat: No. I don’t think there’s anything we can add, to be honest. I mean, you know, you you’ve seen a lot of speculation amongst yourselves, as as well as the press on on, you know, what might be the reasons for that change, but we we have no comment to make.
Alexander Peter, Analyst, Bernstein: Okay. That’s that’s that’s helpful nonetheless. Thank you very much. My second question is related to the government vertical. I’d like to understand what will be the midterm effects of the geopolitical decoupling between The US and Europe.
You’ve mentioned that demand from the USDOD is lower, and that’s partly reflecting these changes. I don’t know if you agree with that, but it seems that that’s a little bit the case. At the same time, you have a pivot towards more business in Europe being the only non US controlled legal alternative for European governments. So that’s probably a tailwind, and I’d like to know how this will play out. Should we now expect more growth as a as a rule, as a abortion of doctor at least?
Joanna Darlington, Chief Communications and Investor Relations Officer, Eutelsat: Well, I think as we said, I mean, you know, the the DOD, is is is far lower than it it it used to be as as you know. I mean, you know, there was a point five years ago when it was it was up 80%. So now it it it’s it’s much lower. I mean, you know, I I think I mean, the it’s it’s difficult what you know, as we said earlier, I mean, this this this specific renewal coincided just with the, you know, the start of the new administration and, you know, just with the, you know, when when Doge was at full full speed and, you know, there there are lots of people kind of looking around to to cut costs. And so, you know, it’s it’s I mean, it’s difficult to see how it will pan out.
We we think it might be a bit of a knee jerk reaction and that, you know, that that future campaigns may go back to a a more normal rate. But at the moment, obviously, like, in a lot of industries that are affected by the, you know, the actions of the new US administration, it it’s a bit difficult to know. So, you know, not not much visibility on that. I think, you know, I I would say two things, though. I mean, you know, the the first is is obviously as and as as you know and as as we’ve communicated before, there’s obviously there’s a lot of interest coming from Europe and that will, you know, that that will take a bit of time to materialize.
But, you know, we certainly and, you know, I I think other operators have have said the same thing. We certainly think that interest is there. But it’s not only European. I mean, we we’ve seen a lot of interest, funnily enough, from Canada, you know, from from Canadian institutions as well for for different reasons, but but, you know, related to the same the same core. I mean, you know, we’ve mentioned in the past, we, you know, we we’ve got quite a big contract with Taiwan because, you know, they they don’t want to be reliant on a on a US operator.
So I think all of that remains. And, of course, you know, the the other thing, I think, more broadly, which is positive is is what’s going on now, what’s going on with Ukraine, and now what’s going on in in the political sphere is is really showing that satellite capacity in space have become a a much more strategic or I’d say a central strategic, you know, part part of the of the toolkit when it comes to sovereignty and defense. So, I mean, yes, the, you know, the specific actions of The US are a bit difficult to, you know, to to kind of fathom in the short term. But I think, generally speaking, we’re we’re still very confident about the the government business.
Alexander Peter, Analyst, Bernstein: And just as a follow-up to that, isn’t it the case that there’s also migration to legal services in in government, and therefore, The US will naturally pivot to exclusively Starlink, I suppose, for the time being, whereas Europeans will go to you. Is is that what’s gonna happen? I mean, how quick is the migration to LEO for government services?
Joanna Darlington, Chief Communications and Investor Relations Officer, Eutelsat: Well, I mean, you know, like like everything. I mean, there’s, you know, there there’s definitely there’s a migration to to LEO. We, you know, we we’ve I mean, I, you know, I don’t think that’s specific to government. I think, you know, eve even with the the you know, even with with US companies, it’s not certain that anybody wants to be dependent on a a monopoly. So, you know, I think that holds.
I mean, they you know, all of all of these people, particularly in government where you need a high level of security, you know, in in some cases, guaranteed minimum service levels, then it it’s quite possible that they would use several providers for for backup. So so yeah. I mean, I, you know, I I I don’t think that I would say anything specific about government migrating to to to LEO. There there are still government, you know, things like troop welfare and and other there are still other applications which which can still be served by by GEO.
Christophe Gaudiere, Group CFO, Eutelsat: Okay. Thank you. And then
Alexander Peter, Analyst, Bernstein: just a last point on Iris Squared. Can you give us an idea how much of the total LEO capacity that’s that will be built is going to be sellable commercial capacity for you, and how much is going to stay with the EU? And as a part of that question, I understand that SCS has access to the LEO Iris credit capacity as well. They say they will commercialize 10% of it, if I’m not wrong. Is there any reciprocation with your access to their MEO?
Are these squareds part of the capacity? Is that of any interest to you at all, or do you see no point in it? Thanks.
Christophe Gaudiere, Group CFO, Eutelsat: So to to answer first, to answer your question, Alexander, there are two different capacities, and the the European capacity in is is quite small actually in terms of because of the business cases, the applications. So so the vast majority of the capacity is a commercial capacity, and it’s a capacity that is bigger than the current available capacity with our current constellation, one. Second, yes, you are right. SES has access to part or small part of the LEO capacity as well as we could have access to a small part of the LEO capacity. I mean, it’s a bit early at this point to to really position ourselves whether we are going to use or not the MEO the the MEO capacity.
But, I mean, really, our focus is, you know, to be a multi orbit provider, essentially combining LEO and GEO. And and anyway, LEO would be if if it was to happen, it would be, you know, a very small part of the business.
Alexander Peter, Analyst, Bernstein: Okay. That’s very clear. Thank you very much. That was all I had. Thank you.
Alan, Call Coordinator: We will take our final question from Wolfgang Felix. Sorry, your line is open. Please go ahead.
Wolfgang Felix, Analyst: Yes, hi. Thank you. I’ll make the thought then. I was going to ask you that your your Department of Defense sort of remaining contracts making up, I understand, are now approximately 56% of your government services division. What’s the average duration on these contracts from here on?
I have absolutely no idea. Would it would it be one year, three years, five years? Then could you just tell me one more time the the Russia timing? Why does it have no effect on 2025 or 2025, ’20 ’6? And if can you my third question would be, what is your geo constellation only geo constellation capacity utilization right now?
Is there any way that I can calculate that? And my fourth and final question, can you tell us a bit more about your LEO business right now, I. E, OneWeb? And what is roughly, I guess, revenue in the various segments for the third quarter? Thank you.
Christophe Gaudiere, Group CFO, Eutelsat: Maybe just just I I’m will answer on the on on Russia First. So the reason why it has no very limited impact there there is a small impact. As as as you know, we have already removed two channels from our satellites, but but those the the impacts, I mean, are negligible compared to to our business. And and and this is the reason why we say there’s no significant impact for this year. The the yeah.
And and and the the the again, you know, it’s we are only talking of a couple of a couple of months or three months for the remaining part of the year because our our fiscal year will end at the June. So it it’s only a a couple of months or three months impact. And and second, the full year impact when we mentioned the the €16,000,000 full year impact. I mean, then we are talking also of further channels that should be removed. And and as Joanna mentioned before, I mean, there is a a a process of identifying, you know, the channels that are really impacted by by the sanctions.
And this is why also it takes a bit more time to do so. And and and as such, the expected impact for this fiscal year twenty five is nil or very limited.
Alexander Peter, Analyst, Bernstein: Okay. Thank you.
Joanna Darlington, Chief Communications and Investor Relations Officer, Eutelsat: So on the US DOD, I mean, the the contracts vary in length, but but a lot of them so with with the there are two renewal seasons, the fall and the spring. I mean, typically, without going into a lot of detail, I mean, we we we we typically, the way it works with with the procurement is that they sign a kind of a five year framework agreement. But within that framework agreement, they have the possibility to renew or or they they confirm on an annual basis. So in fact, the only thing that we take into the backlog, for example, for those contracts is is a year. But we we can I mean, I I think probably it’d be easier if if we took that question offline?
And similarly, for for your questions about, you know, can we speak about OneWeb? Yes. The fact I mean, specifically on on figures, we don’t break out OneWeb. We we don’t report OneWeb separately from the group. But if you want to go into more I mean, you know, if you if you want to have a more detailed chat about OneWeb, I suggest you you well, we I’ll I’ll ping you after this call, and then we can we can do that offline if that’s okay with you.
Wolfgang Felix, Analyst: Oh oh, fantastic. Yes. Absolutely. And then I think the geo capacity utilization. I’m also happy to take that offline.
Joanna Darlington, Chief Communications and Investor Relations Officer, Eutelsat: No. No. I mean, geo capacity, it varies. I mean, we we don’t we don’t we don’t provide a fill rate. It varies.
I mean, we we don’t provide the fill rate because it it’s not actually a very helpful indicator because it it’s more, you know, it’s more the value than than the volume. I mean, it it just depends. There are video satellites where the capacity utilization is still very high, so, you know, probably above 75, 80 percent. And there are some geo connectivity satellites where the utilization rate is or or some of the older satellites, I would say, the utilization rate is is lower. I mean, if if you take something like Quantum, the the utilization rate is very high.
Some of the older connectivity would be lower than that, maybe 50%.
Wolfgang Felix, Analyst: Alright. Okay. Well, that’s it for me for today. Thank you very much.
Joanna Darlington, Chief Communications and Investor Relations Officer, Eutelsat: Thanks. Wolfgang.
Alan, Call Coordinator: That is all the time we have for question and answer session for today. So I’ll now hand you back to your host for closing remarks.
Christophe Gaudiere, Group CFO, Eutelsat: Okay. Thank you very much for your attention. And now we will meet next time for our full year results at the August. So with that, we wish you a very nice evening, and and talk to you very soon. Thank you.
Bye bye.
Alan, Call Coordinator: Thank you for joining today’s call. You may now disconnect.
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