Eutelsat Communications Sa · EURONEXT:ETL

Eutelsat Communications Sa — Investor Presentation (November 2023)

63 slides from Eutelsat Communications Sa's investor presentation, November 2023

  1. Slide 1: Investor Presentation November 2023

    Investor Presentation November 2023 ©2023 Eutelsat Group. All rights reserved.

  2. Slide 2: Agenda

    Agenda Eutelsat in a snapshot Key market trends Combination with OneWeb Q1 2023-24 performance* Strategy and Outlook Appendix Appendix FY 2022-23 financials* OneWeb combination Outlook & Financials ©2023 Eutelsat Group. All rights reserved. *Eutelsat standalone •

  3. Slide 3: Eutelsat in a snapshot

    Eutelsat in a snapshot ©2023 Eutelsat Group. All rights reserved.

  4. Slide 4: The satellite value chain

    The satellite value chain TV broadcasters, Satellite Satellite Satellite Telecoms, Consumers manufacturers launchers operators Governments & businesses ©2023 Eutelsat Group. All rights reserved. 4

  5. Slide 5: Business characteristics

    Business characteristics  High barriers to entry • Finite resource of orbital positions and frequencies, heavily regulated at international level with key commercial orbital positions already into use • High upfront CAPEX before operations • High technology and technical expertise through satellite

  6. Slide 6: Eutelsat in a snapshot

    Eutelsat in a snapshot1 KEY DATA REVENUE BREAKDOWN BY APPLICATION -1% FY 23 revenues of €1.13bn • 3% 6% France BY GEOGRAPHY Italy 10% 11% United Kingdom FY 23 DFCF2 of €518m • 17% 6% Europe (others) Americas Middle East Fleet of 363 satellites; global coverage • 30% Africa 20% Asia Others Operating

  7. Slide 7: Combination between Eutelsat and OneWeb is live

    Combination between Eutelsat and Oneweb, source of growth and value creation, is live MASSIVE GROWTH POTENTIAL IN SATELLITE CONNECTIVITY Satellite Connectivity market at c. $16bn in 20301 HIGH-GROWTH AND ONEWEB IS A UNIQUE ASSET ROBUST FINANCIAL PROFILE One-of-only two global LEO Double digit revenu

  8. Slide 8: Breakdown of revenues by application (FY 2022-23)

    Breakdown of revenues by application (FY 2022-23) → Direct-to-Home (DTH) VIDEO 62% → Cable headends → Professional Video → Military GOVERNMENT → Security SERVICES 12% → Internet access for households FIXED & corporates 16% CONNECTIVITY → Mobile backhaul → Corporate networks → In-flight Connectivity

  9. Slide 9: Eutelsat's global GEO network today

    Eutelsat’s global GEO network today ©2023 Eutelsat Group. All rights reserved. 9

  10. Slide 10: €2.3bn aggregated DFCF generated over 5 years on a standalone basis

    €2.3bn aggregated DFCF generated over 5 years on a standalone basis Reported DFCF / revenue 31% 37% 38% 38% 41% ratio Incl. €86m 1,321 1,278 1,234 of E5WB insurance proceeds 1,152 1,131 408 474 467 443 462 FY 2018-19 FY 2019-20 FY 2020-21 FY 2021-22 FY 2022-23 Total revenues Reported Discretionary F

  11. Slide 11: Bond & Bank Debt maturity schedule

    Bond & Bank Debt maturity schedule BOND & BANK DEBT MATURITY SCHEDULE 1 2.000% 1.125% 2.250% 1.500% €53m €50m At end June 2023: €53m €53m €800m €200m • Average cost of debt after hedging of 2.96% €450m €600m €600m €400m • Average weighted maturity of 3.6 years €53m €53m €200m €200m €65m €75m €75m 20

  12. Slide 12: Shareholder base

    Shareholder base DISTRIBUTION OF EUTELSAT COMMUNICATIONS CAPITAL AS OF SEPTEMBER 29TH 2023 Free float and others, 28.3% Bharti, 21.2% FSP, 4.2% Bpifrance, 13.6% Secretary of State Hanwha, 5.4% for Science, Innovation and Technology, CMA-CGM 10.9% Participations, Softbank, 10.9% 1 Fonds Stratégique d

  13. Slide 13: CSR approach

    CSR approach Four major areas of focus: 1 2 3 4 Respecting all our Bridging the stakeholders, embracing Caring about the Committed to the communications divide diversity, fostering inclusion environment, on earth and responsible use of Space across the World and striving to ensure equal in space opp

  14. Slide 14: Continuously improving ESG rating

    Continuously improving ESG rating CSR POLICY RECOGNISED BY ESG RATING AGENCIES Given the nature of its activities, the Group has a limited impact on greenhouse gases emissions ©2023 Eutelsat Group. All rights reserved. 14

  15. Slide 15: Key market trends

    Key market trends ©2023 Eutelsat Group. All rights reserved.

  16. Slide 16: Market trends in our heritage businesses

    Market trends in our heritage businesses VIDEO DATA GOVERNMENT SERVICES  Underlying trend in the last few  Global demand increase driven  Bandwidth-hungry usages, years has been a mid single digit by rising connectivity needs increasing defence budgets and decline remote connectivity needs to  O

  17. Slide 17: Video drivers: Channel growth and image quality

    Video drivers: Channel growth and image quality CHANNEL GROWTH INCREASED IMAGE QUALITY TV CHANNELS IN EMEA AND LATAM HD PENETRATION RATE BY MAJOR REGION >22,500 40% CAGR: ETL footprint 28% +0.1% Russia and 21% 2024 2020 Central Asia 13% ~22,400 SSA 23% 11% MENA 48% 36% LATAM 49% 37% Central 44% 2020

  18. Slide 18: Video drivers: Capacity requirements versus compression technology

    Video drivers: Capacity requirements versus compression technology EVOLUTION OF IMAGE QUALITY NUMBER OF CHANNELS (NUMBER OF CHANNELS) PER 36 Mhz TRANSPONDER 25,000 FORMAT MODULATION MPEG-2 MPEG-4 HEVC 20,000 DVB-S ~15 - - 15,000 SD DVB-S2 - ~26 - 10,000 DVB-S - - - HD 5,000 DVB-S2 - ~9 ~15 0 UHD DVB

  19. Slide 19: Fiber penetration is progressing…

    Fiber penetration is progressing… … but is far from reaching all households, even in Europe and even in 2026 % FTTH/B Subscriptions • (out of total households) 86% 49% 54% 29% 35% 26% 20% 10% Italy Poland France EU 27 + UK Eutelsat main markets 2021 2026 Source : Idate FTTH Forecast for EUROPE / Mar

  20. Slide 20: Leading to a $16bn connectivity market opportunity for satellites

    Leading to a $16bn connectivity market opportunity for satellites Satellite connectivity market expected to more than triple by … mainly driven by NGSO growth 2030 …  NGSO expected to grow c. 2.5x faster than overall market  NGSO to represent c. 50% of the market by 2030, mostly captured by LEO co

  21. Slide 21: $16bn opportunity – four key verticals

    $16bn opportunity – four key verticals VERTICAL KEY APPLICATIONS DRIVERS 2030MARKET 10-Y CAGR  Network extension FIXED  Mobile backhaul  Seamless integration in enterprise networks DATA  Corporate networks  Growing data usages $3.9bn +10%  Ubiquitous coverage need  Defense budget increases 

  22. Slide 22: Mobility usages are set to increase more than tenfold

    Mobility usages are set to increase more than tenfold MARITIME CONNECTIVITY DEMAND IN-FLIGHT CONNECTIVITY DEMAND Projected number of connected ships by Projected number of connected planes by 2030 2030 4,310 North America 8,941 2020 2030 Western 1,350 2020 2030 Europe 5,319 614 MENA 2,157 69,846 338

  23. Slide 23: Significant broadband market for satellite

    Significant broadband market for satellite  Substantial long-term (2030+) core adressable  Demand for ubiquitous connectivity boosted market of premises durably beyond the reach of by Covid-19 induced lock-downs terrestrial infrastructure (4G, 5G, Fiber) • ~4M premises in Europe  Positive consume

  24. Slide 24: Combination with OneWeb

    Combination with OneWeb ©2023 Eutelsat Group. All rights reserved.

  25. Slide 25: OneWeb at a glance

    ONEWEB AT A GLANCE Overview Assets Velocity ► One-of-only two global broadband ► Global stakeholders ► Revenue generating LEO ► c. $5bn deployed on Capex ► 5x usage growth on Network ► 634 satellites at 1,200 kms ► Highly skilled organization ► c. 55 distribution partners ► 1.4 Tbps sellable capacit

  26. Slide 26: OneWeb has secured priority rights over Premium Spectrum bands

    OneWeb has secured priority rights over Premium Spectrum bands ► OneWeb has secured about 6 GHz of Strong Spectrum Positioning in Ku- and Ka-bands bandwidth − Ku-band (User links) Ku-Band Ka-Band − Ka-band (Gateway links) Bandwidth 2.5 GHz 3.3 GHz ► Highest priority in Ku-band (2.5 GHz) ► Strong Pri

  27. Slide 27: Eutelsat / OneWeb Combination is now live

    Eutelsat / OneWeb Combination is now live OneWeb secured backlog ($m) (1) +$400m since Approval of the combination on October 2022 28 September 2023 c. 1000 Strong synergy potential to be tapped from Day 1 600 Continued commercial momentum for LEO-based connectivity solutions On track to reach globa

  28. Slide 28: Alaska – Connecting communities: one of many applications

    Alaska – Connecting communities: one of many applications OneWeb office and customer demonstration centre One of the largest ground station sites serving the in Anchorage Arctic circle Regional Need Connectivity is not equally available in rural Alaska c. 48% of the Arctic Circle and c. 40% of Alask

  29. Slide 29: Gen-2 to unlock significant value at optimized cost

    Gen-2 to unlock significant value at optimized cost Development to begin as soon as 2024 - Market-informed design process Bottom-up market analysis for right-sizing Ancillary payload to enable fleet expansion at minimum marginal cost - From 3 to 5 times the capacity of Gen-1 Bulkier and fewer satell

  30. Slide 30: Two highly complementary businesses

    Two highly complementary businesses GEO + LEO Geographical Capacity density: ability to focus capacity over high- Full global coverage expected by Q4 2023 advantage demand regions Key value Low-cost sellable capacity: higher fill-rates than Low latency: critical for some applications and proposition

  31. Slide 31: The right combination at the right time

    The right combination at the right time Satellite connectivity market at an inflexion point, expected to deliver high levels of sustained growth OneWeb successful service launch, ramping up to full global deployment expected by Jan 24 Seizing early cost synergies: leveraging Eutelsat resources and e

  32. Slide 32: Clear roadmap to integration

    Clear roadmap to integration 2022 2023 2024 2025 2026 2027 2028 Advance Fully integrated LEO/GEO Offering LEO/GEO LEO & GEO hybrid services (1 single LEO/GEO antenna) Phases LEO/GEO hybrid services (separated LEO & GEO antennae) LEO & GEO services distributed by Eutelsat (distribution agreement and

  33. Slide 33: Generating strong value creation

    Generating strong value creation Average annual expected  Leverage Eutelsat sales forces, geographical reach and existing customer base to accelerate Revenue synergies of commercial ramp-up REVENUE SYNERGIES c. €150m  One-stop-shop for customers looking both for ubiquity and capacity density by Ye

  34. Slide 34: Growth for the combined entity

    Growth for the combined entity Revenues (€m) Adjusted EBITDA (€m) Capex Leverage  Front-end loaded Capex c.4.0x c.3.0x with average of €725 – 875m p.a. over FY24 - FY30 including synergies c.2,000  Adjusted EBITDA-Capex 1,550-1,750 c.1,400 back in positive territory FY23PF Mid-term in FY25 - FY26

  35. Slide 35: Q1 2023-24 performance*

    Q1 2023-24 performance* ©2023 Eutelsat Group. All rights reserved. *Q1 2023-24 performance standalone •

  36. Slide 36: Highlights

    Highlights • Operating Verticals down -2.4% like-for-like on a year-on-year basis, up +2.9% on a sequential basis1 • Continued robust double-digit growth in Mobile Connectivity on the back of strong commercial momentum • Commercialization of the final beam of EUTELSAT QUANTUM. All of the satellite’s

  37. Slide 37: EUTELSAT QUANTUM fully commercialized

    Record commercial performance by EUTELSAT QUANTUM EUTELSAT QUANTUM fully commercialized Software-defined satellite with real-time adaptability to address customers’ business needs, including in-orbit full reconfiguration and beam customization Final beam commercialized in the summer of 2023 All of t

  38. Slide 38: Driving connectivity growth

    Successful entry into service of EUTELSAT KONNECT VHTS Driving connectivity growth Most advanced very high-throughput satellite (VHTS) system to support the development of our European Connectivity businesses With a Ka-band incremental capacity of 500 Gbps, making it the largest ever European geosta

  39. Slide 39: First Quarter 2023-24 revenues

    First Quarter 2023-24 revenues Q1 YoY revenue bridge (€m)  Total revenues of €274m, down -0.8% like-for-like  Negative currency effect -2.4% • €/$ rate of 1.09 vs 1.02 last year 5 (8) (3) (7)  Positive swing of €5m in ‘Other Revenues’ • Of which €5m related to hedging 287 274  Revenues of the Op

  40. Slide 40: Q1 revenues by application

    Q1 revenues by application REVENUE REVENUES LIKE-FOR-LIKE2 YOY CHANGE CONTRIBUTION1 (€m) VIDEO 164 -9.5% 60% GOVERNMENT 12% 34 +1.1% SERVICES MOBILE 35 +44.1% 13% CONNECTIVITY FIXED 15% 40 -2.6% CONNECTIVITY 1 Share of each application as a percentage of total revenues excluding “Other TOTAL OPERATI

  41. Slide 41: Video

    Video 60%  Q1 revenues of €164m, down 9.5% YoY like-for-like1 785 • Impact of the early non-renewal of the Digitürk contract from mid- November 2022 705 • Effect of sanctions against certain Russian and Iranian channels • Lower occasional use in Professional video Q4 170  Revenues down 3.4% QoQ Q3

  42. Slide 42: Government Services

    Government Services 12%  Q1 revenues of €34m, up 1.1% YoY like-for-like1 • Contribution of the EGNOS GEO-4 contract on HOTBIRD 13G 144  Revenues down 25.2% QoQ • One-off contract of €14m with the German space agency, DLR, Q4 booked in Q4 FY 2022-23 45  Excluding this impact, +9.5% QoQ like-for-li

  43. Slide 43: Mobile connectivity

    Mobile connectivity 13% 110  Q1 revenues of €35m, up 44.1% YoY like-for-like1 • Commercialization of the final beam on EUTELSAT QUANTUM for a maritime mobility client • Entry into service of EUTELSAT 10B, with significant pre- Q4 27 commitments and recent deals, especially in Maritime, such as the

  44. Slide 44: Fixed connectivity

    Fixed connectivity 15%  Q1 revenues of €40m, down 2.6% YoY like-for-like1 178 • Wholesale agreements with Orange, TIM, Hispasat and Swisscom fully embarked Q4 41  Revenues up by 6.5% QoQ • Resale of OneWeb capacity for data usages in Alaska Q3 44  Set to deliver double-digit growth over the Full

  45. Slide 45: Backlog

    Backlog OPERATIONAL & UTILIZED TRANSPONDERS BACKLOG (€BN) Excluding Managed services  Broadly stable versus end-June 2023  Consumption of the Video backlog, in the absence of 4.3.90 major renewals, compensated by strong commercial 3.4 3.4 momentum in Connectivity  Representing 3.0 years of revenu

  46. Slide 46: Strategy and Outlook

    Strategy and Outlook ©2023 Eutelsat Group. All rights reserved.

  47. Slide 47: All in place for a successful combination

    All in place for a successful combination • Rebalancing of our business towards Connectivity, where demand is booming Reorganization along two business units to enhance customer- • centricity, is now live Substantial growth capacity with E10B and KONNECT VHTS already • in service, to address surging

  48. Slide 48: Eutelsat Group Financial Objectives confirmed

    Eutelsat Group Financial Objectives confirmed ► Between €1.32-1.42bn in FY 2024, GROUP REVENUES ► Between €1.55-1.75bn in FY 2025, ► Circa €2.0bn in FY 2027 ADJUSTED EBITDA ► Between €725-825m in FY 2024, ► Between €900m-1.1bn in FY 2025, ► Circa €1.4bn in FY 2027 ► €725-875m per annum on average, o

  49. Slide 49: Upcoming launches

    Upcoming launches NAME EUTELSAT 36D FLEXSAT AMERICAS Orbital 36° East Position Approx. Entry into service date1 H2 2024 2026 (delivery) Manufacturer Coverage Africa, Russia, Europe, Middle East Americas Video Connectivity Applications Government Total capacity 70 transponders in Ku-band Over 100 Gbp

  50. Slide 50: Appendix

    Appendix FY 2022-23 financials* OneWeb combination Outlook & Financials ©2023 Eutelsat Group. All rights reserved. *FY 2022-23 Financials standalone •

  51. Slide 51: FY 2022-23 Financials*

    FY 2022-23 Financials* ©2023 Eutelsat Group. All rights reserved. *FY 2022-23 Financials standalone •

  52. Slide 52: Profitability

    Profitability Adjusted EBITDA  FY 2022-23 Adjusted EBITDA margin of 72.9% at constant (€m) currency1 down 1.9 point YoY • Lower revenues, especially in the Video vertical 862 825  Higher operating costs Margin at constant 74.8% 72.9% • Increased staff and technical costs due changing revenue mix a

  53. Slide 53: Net income

    Net income Extracts from the FY FY consolidated income CHANGE statement in €m 2021-22 2022-23 Revenues 1,152 1,131 -1.8% Adjusted EBITDA1 862 825 -4.2% ► Lower D&A due to lower in-orbit and on-ground Operating depreciation. H13F and H13G in service end of period 425 573 +35.0% ► Other operating inco

  54. Slide 54: Adjusted Discretionary Free Cash-Flow

    Adjusted Discretionary Free Cash-Flow 94 In €m 518 One-off costs related to specific projects, notably COMETE and (271) 56 Eutelsat-OneWeb combination 735 (95) 1 (1) 462 (1) (2) Net Cash-Flow from OW take-or-pay Cash Capex Interest and Other fees Discretionary Free Cash- operations paid net of inter

  55. Slide 55: Net Debt Evolution

    Net Debt Evolution In €m (109) 190 (462) 143 2,814 81 2,766 Net Debt as of Reported Dividend Equity Other Net Debt as of 30/06/22 DFCF investments 30/06/2023 (mainly OneWeb) ©2023 Eutelsat Group. All rights reserved. 55

  56. Slide 56: Financial Structure

    Financial Structure  Net Debt/Adjusted EBITDA ratio of 3.35x NET DEBT / Adjusted EBITDA RATIO • Versus 3.27x as of 30 June 2022 and 3.55x at end December 2022  Average cost of debt after hedging of 2.96% 3.27x 3.35x • Versus 2.55% in FY 22  Average weighted maturity of 3.6 years • Versus 4.3 y at

  57. Slide 57: OneWeb combination Outlook & Financials

    OneWeb combination Outlook & Financials ©2023 Eutelsat Group. All rights reserved.

  58. Slide 58: Overview of OneWeb revenue prospects

    Overview of OneWeb revenue prospects OneWeb standalone revenue prospects Key enablers before synergies (€m) Chart Title Gen 2 commercial launch targeted by early 2028 Coverage Sellable Capacity >600 35o N Latitude now 450 Gbps now Global during FY24 1.3 Tbps during FY24 300 – 500 Verticals Distribut

  59. Slide 59: Capex savings from right-sizing of Gen 2 constellation

    CAPEX SAVINGS FROM RIGHT-SIZING OF GEN 2 CONSTELLATION Illustrative CAPEX OPTIMIZATION POTENTIAL  High volumes of connectivity demand concentrated in specific geographical areas  On a stand-alone basis, LEO constellations able to accommodate such local demand peaks only at the cost of deploying si

  60. Slide 60: Gen 2 opening new revenue opportunities

    Gen 2 opening new revenue opportunities Proof points Gen 2 benefits Adaptable • Scalable • Evolutive Higher capacity Longer lifetime Optical • Smaller/cheaper ground segment (circa 5x vs. Gen 1) (10 years) intersatellite • Higher network utilization links • Allowing smart traffic landing • Enabling

  61. Slide 61: Demand growth continuing beyond 2030

    Demand growth continuing beyond 2030 VERTICAL CURRENT USE CASES EMERGING FUTURE APPLICATIONS  Mobile backhaul: up to ~35% of sites still in 2G/3G in 2030, leaving FIXED potential x10 increase in capacity per site  Digital Twin of remote industrial sites (e.g., mining, O&G) DATA  Corporate network

  62. Slide 62: IR contacts

    IR contacts Thomas CARDIEL T: +33 6 99 07 86 47 E: tcardiel@eutelsat.com Christine LOPEZ T: +33 1 53 98 47 02 E: clopez@eutelsat.com Hugo LAURENS-BERGE T: +33 6 70 80 95 58 E: hlaurensberge@eutelsat.com ©2023 Eutelsat Group. All rights reserved.

  63. Slide 63: Disclaimer

    Disclaimer • NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO, OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF THAT JURISDICTION. • This presentation (including any oral briefing and any question-and-answer in connection with it

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