Eutelsat Communications Sa · EURONEXT:ETL
Eutelsat Communications Sa — Investor Presentation (May 2021)
68 slides from Eutelsat Communications Sa's investor presentation, May 2021
Slide 1: Eutelsat Communications Investor Presentation
EUTELSAT COMMUNICATIONS Investor Presentation May 2021
Slide 2: Agenda
AGENDA 1. FSS Industry 2. Eutelsat in a snapshot 3. Q3 FY 21 performance 4. Outlook 5. Appendix 2
Slide 3: The Satellite Value Chain
THE SATELLITE VALUE CHAIN TV broadcasters, Satellite Satellite Satellite Telecoms, Consumers manufacturers launchers operators Governments & businesses 3
Slide 4: 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 have already been developed High upfront CAPEX before operations High technology and technical expertise through
Slide 5: Trends in Our Heritage Businesses
TRENDS IN OUR HERITAGE BUSINESSES DATA & GOVERNMENT BROADCAST PROFESSIONAL VIDEO SERVICES Resilient channel line-up Global demand increase driven Bandwidth-hungry usages, by rising connectivity needs increasing defence budgets and Ongoing HD growth remote connectivity needs to Improved com
Slide 6: Significant Broadband Market for Satellite
SIGNIFICANT BROADBAND MARKET FOR SATELLITE Substantial long-term (2030+) core adressable Demand for ubiquitous connectivity market of premises durably beyond the reach of boosted by Covid-19 induced lock-downs terrestrial infrastructure (4G, 5G, Fiber) • ~4M premises in Europe • ~5M premises in
Slide 7: Substantial Long-Term Opportunity in Non-Broadband Connectivity
SUBSTANTIAL LONG-TERM OPPORTUNITY IN NON-BROADBAND CONNECTIVITY Addressing multiple verticals worth almost $10bn VERTICALS KEY APPLICATIONS DRIVERS 2029 MARKET1 10Y-CAGR2 Network extension Mobile backhaul Growing Data usages FIXED DATA Corporate networks Ubiquitous coverage need $3.2bn +7%
Slide 8: 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 >22,600 CAGR: ETL footprint 41% 26% +0.1% Russia and 24% 2024 2019 ~22,500 Central Asia 12% 21% SSA 9% 47% MENA 32% 53% LATAM 33% Central 45% 2019
Slide 9: 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 UHD DVB-S
Slide 10: Video: Satellite's Competitive Advantage over OTT / IP
VIDEO: SATELLITE’S COMPETITIVE ADVANTAGE OVER OTT / IP COST-EFFICIENCY UNIVERSAL REACH SERVICE QUALITY FTTH/B HOUSEHOLDS PENETRATION1 BANDWIDTH REQUIREMENT (Mbps) OTT 49% 52% 43% 1 UHD channel in HEVC 20 COST 1 HD channel in MPEG 4 7 Satellite 21% 1 SD channel in MPEG 2 3 17% 7% Italy Poland EU 28 A
Slide 11: Satellite Continuing to Gain Share in Our Footprint
SATELLITE CONTINUING TO GAIN SHARE IN OUR FOOTPRINT Expansion of satellite households in most regions Region Satellite 2015-2019 Satellite Satellite HH (m) CAGR penetration Rank WEU 47m -1.5% 27% #2 CEU1 40m +0.1% 31% #1 MENA 58m +2.4% 66% #1 AFRICA 24m +11.8% 29% #1 EUTELSAT FOOTPRINT 169m +1.7% 36
Slide 12: Agenda
AGENDA 1. FSS Industry 2. Eutelsat in a snapshot 3. Q3 FY 21 performance 4. Outlook 5. Appendix 12
Slide 13: Eutelsat in a Snapshot
EUTELSAT IN A SNAPSHOT KEY DATA REVENUE BREAKDOWN BY APPLICATION • FY 20 revenues of €1.28bn BY GEOGRAPHY Western Europe 9% • FY 20 DFCF1 of €474m 7% 26% Central Europe MENA 10% RCA • Dividend per share of €0.89 SSA 10% 9% Americas APAC 7% 22% • Fleet of 38 satellites; global coverage Unallocated an
Slide 14: Breakdown of Revenues by Application
BREAKDOWN OF REVENUES BY APPLICATION 61% → Direct-to-Home (DTH) BROADCAST → Cable headends → Mobile backhaul DATA 14% CORE & PROFESSIONAL → Corporate networks BUSINESSES VIDEO → Professional Video → Military GOVERNMENT 13% SERVICES → Security → Internet access for households FIXED 6% & corporates BR
Slide 15: Eutelsat's Global Network
EUTELSAT’S GLOBAL NETWORK 15
Slide 16: DFCF/Revenue Ratio Doubled in Five Years
DFCF/ REVENUE RATIO DOUBLED IN FIVE YEARS Reported DFCF / revenue 16% 28% 29% 31% 37% ratio 1,529 1,478 1,408 1,321 1,278 415 474 408 408 247 FY 2015-16 FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20 Adjusted DFCF growth1 +65% +12% +10% +6% Total revenues Reported Discretionary Free Cash Flow 16 1 grow
Slide 17: Bond & Bank Debt Maturity Schedule
BOND & BANK DEBT MATURITY SCHEDULE BOND & BANK DEBT MATURITY ONGOING DEBT OPTIMISATION SCHEDULE €800m Net Debt/EBITDA ratio of 3.09x in H1 FY 2020-21 • 1.125% vs 3.05x as of 30 June 2020 and 3.20x as of 31 €600m €600m December 2019 €67m Average cost of debt after hedging reduced to 2.3% • €200m €5
Slide 18: Shareholder Structure
SHAREHOLDER STRUCTURE EUTELSAT SHAREHOLDING STRUCTURE AS OF 31 DECEMBER 2020 Bpifrance 19.98% CIC1 Free float 6.73% and others 65.71% FSP2 7.58% 1 China Investment Corporation • 18 2 Fonds Stratégique de Participations
Slide 19: Equity Story in a Nutshell
EQUITY STORY IN A NUTSHELL Consistent delivery on below-topline objectives despite challenging environment for core businesses Successful execution of cash generation strategy with cash flow/revenue ratio more than doubled in four years Substantial medium term growth opportunities in Connectivity, w
Slide 20: Entering LEO Space through OneWeb
ENTERING LEO SPACE THROUGH ONEWEB Attractive entry point to considerable LEO opportunity: $550m for a 24% stake in an almost fully • funded promising growth asset just ahead of partial commercial rollout Oneweb ideally positioned to be among the winners in NGSO landscape thanks to strong spectrum •
Slide 21: Agenda
AGENDA 1. FSS Industry 2. Eutelsat in a snapshot 3. Q3 FY 21 performance 4. Outlook 5. Appendix 21
Slide 22: Highlights
HIGHLIGHTS • Q3 revenues of €301m, in line with expectations €4.5bn backlog up 6% year-on-year and representing 3.5 • years of revenues Favourable outturn of Spring 2021 renewal campaign with • USG at a record-high 95% renewal rate Sustained progress in our Fixed Broadband rollout • Nine month perfo
Slide 23: Q3 Revenues in Line with Expectations
Q3 REVENUES IN LINE WITH EXPECTATIONS Total revenues of €301m, down -6.4% Q3 YoY revenue bridge (€m) Slightly positive perimeter effect • €2m contribution from BBB Europe -6.1% +2 +8 Negative currency effect (11) • €/$ rate of 1.22 vs 1.10 last year (20) Positive swing of €8m in ‘Other Reven
Slide 24: Robust Commercial Activity
ROBUST COMMERCIAL ACTIVITY Fixed Data Fixed Broadband Multi-year contract with New Multiple agreements strengthening Zealand's’ operator for African distribution capabilities backhaul with E172B Government Services Mobility Spring 2021 renewal rate with USG Contract with Global Eagle for at
Slide 25: Sustained Progress in Fixed Broadband Rollout
SUSTAINED PROGRESS IN FIXED BROADBAND ROLLOUT PROGRESS IN WESTERN EUROPE STRENGTHENING DISTRIBUTION IN AFRICA EUTELSAT KONNECT now at full coverage South Africa: Wholesale agreement with Vox following agreement Retail operations extended to new areas with Paratus • Extended to the full territo
Slide 26: Q3 FY 2020-21 Revenues by Application
Q3 FY 2020-21 REVENUES BY APPLICATION REVENUE REVENUES LIKE-FOR-LIKE2 CONTRIBUTION1 (€m) YOY CHANGE BROADCAST 62% 182 -6.8% DATA & 13% PROFESSIONAL 40 -6.7% VIDEO GOVERNMENT 13% SERVICES 37 -0.3% FIXED BROADBAND 7% 21 +1.9% MOBILE CONNECTIVITY 5% 16 -17.2% TOTAL OPERATING VERTICALS 294 -6.1% OTHER R
Slide 27: Broadcast
BROADCAST 62% Q3 revenues of €182m, down 6.8% YoY like- 785 for-like1 in line with expectations • Impact of the renegotiation of contract terms with Greece’s Forthnet Q4 196 • Anticipated slowdown in the pace of new business due to Covid-19 crisis affecting notably distributors • Q3 2019-20 includ
Slide 28: Data & Professional Video
DATA & PROFESSIONAL VIDEO 13% Q3 revenues of €40m, down 6.7% Y-o-Y like-for-like1 175 Revenues down 4.0% Q-o-Q Fixed Data Q4 43 • Highly competitive environment Q3 45 • Growth in volume notably in MENA and APAC 40 Q3 partly offsetting price pressure Q2 45 42 Q2 Professional Video still in de
Slide 29: Government Services
GOVERNMENT SERVICES 13% Q3 revenues of €37m, down 0.3% Y-o-Y like-for-like1 161 • Contribution of EGNOS payload on E5WB • New business with USG customers • Negative carry-forward effect of 2020 USG Q4 43 renewals Q3 40 37 Q3 Record high spring 2021 USG renewal rate of c. 95% Q2 39 39 Q2 Q1 39 38
Slide 30: Fixed Broadband
FIXED BROADBAND 7% Q3 revenues of €21m, up 1.9% Y-o-Y like-for-like1 77 77 • Initial revenues from Konnect Europe including Orange contract Q4 19 • Growth at our African operations • Decline in the contribution of KA-SAT 21 Q3 Q3 19 Revenues down 12.9% QoQ 19 22 Q2 • Q2 included a high level of
Slide 31: Mobile Connectivity
MOBILE CONNECTIVITY 5% Q3 revenues of €16m, down 17.2% YoY and stable QoQ like-for-like1 79 79 On-going impact of Covid-19 crisis on aero mobility Q4 17 • Lower airtime-related revenues on KA-SAT • Lower revenues from certain service providers 21 Q3 16 Q3 Maritime remaining on an upward trend
Slide 32: Backlog & Fill Rate
BACKLOG & FILL RATE BACKLOG (€BN) OPERATIONAL & UTILIZED TRANSPONDERS Fill rate 69.7% 70.1% 69.5% 4.2 4.4 4.5 1,377 1,380 1,366 959 967 950 Operational Transponders Broadcast 67% 67% 64% Utilized Transponders 31 March 2020 31 Dec. 2020 31 March 2021 31 March 2020 31 Dec. 2020 31 March 2021 • Backlog
Slide 33: Agenda
AGENDA 1. FSS Industry 2. Eutelsat in a snapshot 3. Q3 FY 21 performance 4. Outlook 5. Appendix 33
Slide 34: A Two-Pronged Strategy
A TWO-PRONGED STRATEGY 1. MAXIMISE 2. LEVERAGE CASH GENERATION THE CONNECTIVITY VERTICALS OF THE HERITAGE BUSINESSES TO DELIVER REVENUE GROWTH Funding our transition towards • Grow Fixed Broadband via our • high growth verticals… GEO assets, EUTELSAT KONNECT and KONNECT VHTS …whilst continuing to ge
Slide 35: Revenue Objective Raised Once Again
REVENUE OBJECTIVE RAISED ONCE AGAIN OPERATING VERTICALS ► Between €1,200 to €1,220m in FY 2020-211 REVENUES1 Vs. between €1,190m to €1,220m previously ► Not exceeding average of €400m2 per year CASH CAPEX for the period July 2020 to June 2022 ADJUSTED DISCRETIONARY ► Between €390m and €420m in FY 20
Slide 36: Future Launches
FUTURE LAUNCHES EUTELSAT KONNECT EUTELSAT EUTELSAT 10B EUTELSAT 36D NAME HOTBIRD 13F VHTS HOTBIRD 13G Orbital 48°East 13° East TBD 13° East 10° East 36° East Position Approx . Q3 2021 H2 2021 H1 2022 H1 2022 H2 2022 H1 2024 Launch date1 Manufacturer Launcher TBD TBD TBD TBD Coverage Flexible Europe
Slide 37: Agenda
AGENDA 1. FSS Industry 2. Eutelsat in a snapshot 3. Q3 FY 21 performance 4. Outlook 5. Appendix 37
Slide 38: Appendix
5. APPENDIX 5.1 2020-21 half year financials 5.2 OneWeb 5.3 Miscellaneous 38
Slide 39: Profitability
PROFITABILITY EBITDA (€m) H1 EBITDA margin of 76.7%1 down 1.1 points YoY 496 482 • Lower revenues • Higher costs for Broadband activity including slightly dilutive impact from the consolidation of BBB Europe Strong cost discipline in the core business Margin 77.8% 76.7% 77.4 77.4 77.5 • LEAP 2 p
Slide 40: Net Income
NET INCOME Extracts from the H1 H1 consolidated income CHANGE statement in €m1 2019-20 2020-21 Revenues 637 629 -1.3% EBITDA2 496 482 -2.7% Operating ► Broadly stable D&A income 225 214 -4.9% Financial result (41) (47) +14.5% ► Positive impact of previous refinancing ► Negative non-cash impact relat
Slide 41: Adjusted Discretionary Free Cash Flow
ADJUSTED DISCRETIONARY FREE CASH FLOW In €m 275 18 FX, Hedging & one-offs (117) related to LEAP 2 and to HQ move 435 (61) 1 (1) 257 Net Cash Flow from Cash Capex (1) Interest and Other fees paid Discretionary Free Cash Flow operations net of interests received Change as per financial objectives +158
Slide 42: Net Debt Stable Despite Dividend and BBB Acquisition
NET DEBT STABLE DESPITE DIVIDEND AND BBB ACQUISITION In €m (9) 56 (257) 205 2,999 2,994 Net Debt as of Reported Dividend Equity Other Net Debt as of 30/06/20 DFCF investments 31/12/20 42
Slide 43: Financial Structure
FINANCIAL STRUCTURE Net Debt/EBITDA ratio of 3.09x NET DEBT / EBITDA RATIO • Versus 3.20x as of 31 December 2019 Ongoing optimization of debt structure • €600m Eurobond with 8-year maturity and 1.5% coupon 3.20 3.09 • €200m 8-year EIB term loan to finance KONNECT VHTS at a rate of 0.49% • Early
Slide 44: Appendix
5. APPENDIX 5.1 2020-21 half year financials 5.2 OneWeb 5.3 Miscellaneous 44
Slide 45: Key Terms of the Transaction
KEY TERMS OF THE TRANSACTION $550m investment 100% cash-funded Investment in ordinary shares via a capital increase (no selling shareholder), resulting in a 24% stake in OneWeb Eutelsat will become a main shareholder of OneWeb, jointly with HM Government and Bharti Eutelsat will be the only
Slide 46: OneWeb in a Snapshot
ONEWEB IN A SNAPSHOT LEO CONSTELLATION SOLID CAPITAL BACKING ALMOST FULLY FUNDED WITH UNIQUE FEATURES OPENING OPPORTUNITIES LOW FUNDING TO GO Capital structure post Eutelsat investment • 648 sats in Low-orbit ~$5bn total funds raised 1.1 Tbps of capacity (Ow $.1.4 bn since Chap. 11) Fully glob
Slide 47: Cutting Edge Technical Features
CUTTING EDGE TECHNICAL FEATURES LOW-LATENCY Relevant for latency sensitive apps incl. Cloud /5G GLOBAL COVERAGE Uninterrupted service and access to untapped markets LOW LOOK ANGLE Enhanced signal reception in all configurations HARDWARE SIMPLICITY Easy-to-install and low-cost vs. MEO COST-EFFECTIVE
Slide 48: OneWeb Right to Win in Non-Geostationary
ONEWEB RIGHT TO WIN IN NON-GEOSTATIONARY 6 GHz of globally harmonized bandwidth secured from ITU PRIORITY SPECTRUM Highest priority in Ku-band RIGHTS Other LEOs have the burden of coordination to not interfere in Ku-band FIRST ENTRANT WITH Fully global coverage by end-2022, ahead of any othe
Slide 49: An Attractive Entry Point in LEO for Eutelsat
AN ATTRACTIVE ENTRY POINT IN LEO FOR EUTELSAT Number of possible global constellations is limited to 4-6 by regulatory, OPPORTUNITY physical and operational constraints The total cost for a standalone constellation amounting to several $bn OneWeb now almost fully funded with ~$5bn already fund
Slide 50: Consistent with Our Financial Framework
CONSISTENT WITH OUR FINANCIAL FRAMEWORK 100% Cash financed by C-Band proceeds and cash on balance sheet $507m C-Band proceeds to be fully received ahead of schedule in FY 22 €1.9bn liquidity as of end-March 211 No change to dividend policy Stable to progressive dividend confirmed Commitment to
Slide 51: Compelling Economic Potential
COMPELLING ECONOMIC POTENTIAL Potential of at least 10-20% long-term market share in key verticals Revenues expected to reach c.$1bn per annum in 3 to 5 years following the full deployment of the constellation Highly profitable wholesale approach Largely self-financing in the medium term I
Slide 52: A Major Step in Our Connectivity Strategy
A MAJOR STEP IN OUR CONNECTIVITY STRATEGY Combination of Eutelsat and OneWeb getting the best of GEO and LEO Eutelsat will continue maximizing cash-flow extraction from its high-profitable heritage business… ……underpinning delivery of strong returns to shareholders … and grow its Fixed Broadband ver
Slide 53: Appendix
5. APPENDIX 5.1 2020-21 half year financials 5.2 OneWeb 5.3 Miscellaneous 53
Slide 54: Structuring European Broadband Strategy
STRUCTURING EUROPEAN BROADBAND STRATEGY Launch of Major wholesale Acquisition of BBB Disposal of our stake KONNECT agreements European business1 in EBI Gradually operating from Major wholesale agreements with Direct distribution essential to Rationalizing broadband assets November 2020 Orange and TI
Slide 55: Wholesale Commitments Securing Capacity Ramp-Up
WHOLESALE COMMITMENTS SECURING CAPACITY RAMP-UP Customer Application Satellite Coverage EUTELSAT KONNECT Mainly Fixed • KONNECT VHTS France Total contract value: >€450m • Broadband Average duration: ~12 years Fixed • EUTELSAT KONNECT Italy Broadband KONNECT VHTS • Over 20% of total capacity Governme
Slide 56: Acquisition of European Activities of Bigblu Broadband
ACQUISITION OF EUROPEAN ACTIVITIES OF BIGBLU BROADBAND1 BBB IN A STRATEGIC FINANCIAL TERMS SNAPSHOT RATIONALE Largest distributor in Europe with Limitations of previous indirect proven track record Acquisition price of c£38m model Strong success of PPP since 2019 Fragmented base of subscale ~50k
Slide 57: Retail Strategy Being Rolled-Out in Fixed Broadband
RETAIL STRATEGY being rolled-out in Fixed Broadband Retail packages indicative prices Integration of BBB Europe well on track Launch of initial retail offers across Maximum speed1 Europe offering a compelling value proposition 30 50 100 • Retail prices including terminal lease Mbps Mbps Mbps • A
Slide 58: Financial Impacts of Changes in Perimeter
FINANCIAL IMPACTS OF CHANGES IN PERIMETER ACQUISITION OF DISPOSAL OF COMBINED IMPACT BBB EUROPE STAKE IN EBI ON FINANCIAL OBJECTIVES Consideration of c.£38m • 51% stake sold for an initial consideration • Net impact of the combined operations • of €140m1 for the first full FY following completion of
Slide 59: Konnect Africa to Connect Thousands of Schools in DRC
KONNECT AFRICA TO CONNECT THOUSANDS OF SCHOOLS IN DRC • MoU to provide high speed connectivity to 3,600 schools in DRC as part of Schoolap project • Access to a digital platform of high quality teaching materials provided by local partners • Scope to expand in the future > 20,000 rural schools in
Slide 60: Konnect Africa Sample Packages
KONNECT AFRICA SAMPLE PACKAGES Example for Ivory Coast 60
Slide 61: Robust Channel KPIs
ROBUST CHANNEL KPIS Stable • Slight decline in Europe including lower line up at 6,867 6,608 6,864 5°W following E5WA end of life in stable orbit and decline in Sky Italia line-up +4% CHANNEL COUNT • Progression in emerging markets, in particular March Dec. March LATAM (BluTV) and SSA (Multichoice)
Slide 62: Significant Progress on All Components of Cash Generation Since FY 16
SIGNIFICANT PROGRESS ON ALL COMPONENTS OF CASH GENERATION SINCE FY 16 Item Achievement Status Cash Capex Guidance reduced from €500m to €400m Delivered LEAP 1 program generated €32m savings in Opex FY 19. LEAP 2 targeting a further €20-25m by In Progress FY 22 > €60m savings through Cash interest De
Slide 63: 'LEAP 2' Cost Savings Program
‘LEAP 2’ COST SAVINGS PROGRAM Objective of €20 to 25m • savings by FY 22 confirmed Half of this amount to be delivered by the end of current fiscal year • Multiple measures addressing mainly staff costs Reduction of c.100 in headcount outside of France Global hiring freeze in the legacy busine
Slide 64: Robust Asset Disposal Program
ROBUST ASSET DISPOSAL PROGRAM H2 2016 H1 2018 H2 2018 2017 / 2021 70% stake in 34% stake in Interest EBI* Wins/DHI Hispasat in EUTELSAT 25B (KA-SAT satellite) €42m €302m €135m €273m >€750m asset sold in five years at a ~8x average EBITDA multiple * Including completion of the disposal of Eutelsat’s
Slide 65: Satellite Programme Capex Profile
SATELLITE PROGRAMME CAPEX PROFILE TYPICAL TIMING OF CAPEX PAYMENTS BREAKDOWN OF CAPEX 30% Other 6.0% YEAR 1 Satellite Insurance 50.0% 10% 30% YEAR 2 ► Capex generally40% split equally over three years prior to launch YEAR 3 ► Insurance paid in Launcher year three 34% Capex generally split equally ov
Slide 66: Hotbird Constellation Replacement Showcasing Design-to-Cost Policy
HOTBIRD CONSTELLATION REPLACEMENT SHOWCASING EFFECTIVENESS OF OUR DESIGN-TO-COST POLICY COMPELLING PROCUREMENT TERMS ENHANCED QUALITY OF SERVICE Two large satellites replace three for the same Improved wide-beam performance number of operational transponders Additional high-power superbeam Improved
Slide 67: Satellite Economic Model: Regular Capacity
SATELLITE ECONOMIC MODEL1: REGULAR CAPACITY •1 For a greenfield satellite, using chemical propulsion 67
Slide 68: IR Contacts
IR CONTACTS Joanna DARLINGTON T: +33 1 53 98 31 07 E: jdarlington@eutelsat.com Cédric PUGNI T: +33 1 53 98 31 54 E: cpugni@eutelsat.com Alexandre ILLOUZ T: +33 1 53 98 46 81 E: aillouz@eutelsat.com 68
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