Eutelsat Communications Sa · EURONEXT:ETL
Eutelsat Communications Sa — Investor Presentation (March 2021)
63 slides from Eutelsat Communications Sa's investor presentation, March 2021
Slide 1: Eutelsat Communications Investor Presentation March 2021
EUTELSAT COMMUNICATIONS Investor Presentation March 2021
Slide 2: Agenda
AGENDA 1. FSS Industry 2. Eutelsat in a snapshot 3. H1 FY 21 performance 4. Outlook 5. Appendix 2 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 BROADCAST DATA & PROFESSIONAL VIDEO GOVERNMENT SERVICES UNDERLYING RESILIENCE STRUCTURALLY CHALLENGED POCKETS OF OPPORTUNITY Slight growth in emerging markets • Global demand driven • US DoD demand stabilizing, albeit • Channel and HD growth by increasing connecti
Slide 6: Long-Term Potential in Connectivity
LONG-TERM POTENTIAL IN CONNECTIVITY FIXED MOBILE CONNECTIVITY INTERNET OF THINGS BROADBAND Demand for high quality, ubiquitous and • Impact • of Covid-19 on airline Connected objects to represent 10s • reliable internet connectivity higher than & cruise traffic on short/medium term … of billions of
Slide 7: 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 8: 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 9: 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 10: 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 11: Agenda
AGENDA 1. FSS Industry 2. Eutelsat in a snapshot 3. H1 FY 21 performance 4. Outlook 5. Appendix 11 1
Slide 12: 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 39 satellites; global coverage Unallocated an
Slide 13: 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 14: Eutelsat's Global Network
EUTELSAT’S GLOBAL NETWORK 14
Slide 15: 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 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: Resilience of Core Broadcast
RESILIENCE OF CORE BROADCAST BROAD STABILITY CHANNEL KPIs LEADING TO OF CORE BROADCAST SLIGHT GROWTH IN MBPS (CAGR of c. -1.3%) CONSUMPTION Includes EVOLUTION OF CORE BROADCAST REVENUES €2m one-off 6,548 + 1% 6,608 197 197 198 197 196 195 197 197 193 192 196 194 CHANNEL 189 188 COUNT June 2017 ex. 2
Slide 18: Bond & Bank Debt Maturity Schedule
BOND & BANK DEBT MATURITY SCHEDULE BOND & BANK DEBT MATURITY ONGOING DEBT OPTIMISATION SCHEDULE Net Debt/EBITDA ratio of 3.09x in H1 FY 2020-21 • To refinance vs 3.05x as of 30 June 2020 and 3.20x as of 31 December 2019 Average cost of debt after hedging reduced to 2.3% • €800m vs 2.4% in FY 201
Slide 19: 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 • 19 2 Fonds Stratégique de Participations
Slide 20: Agenda
AGENDA 1. FSS Industry 2. Eutelsat in a snapshot 3. H1 FY 21 performance 4. Outlook 5. Appendix 20 2
Slide 21: Highlights
HIGHLIGHTS H1 performance allowing to absorb negative perimeter effect • and to raise the low end of current year revenue objective • Ongoing resilience against Covid-19 context Robust EBITDA margin of 76.7% despite revenue decline • and ramp-up of Broadband costs including BBB High level of Free Ca
Slide 22: Ongoing Resilience in Covid-19 Context
ONGOING RESILIENCE IN COVID-19 CONTEXT Q3 FY20 Q4 FY20 Q1 FY21 Q2 FY21 Compounded QoQ % QoQ % QoQ % QoQ % average Quarterly revenues down at just -0.6% % average since onset of Covid-19 crisis 1.2% • Decline of just -0.3% excluding Mobililty Recovery in Occasional Use -0.2% -0.3% -0.6% Slower
Slide 23: H1 2020-21 Revenues
H1 2020-21 REVENUES Total revenues of €629m, down 1.3% H1 YoY revenue bridge (€m) Negative currency effect • €/$ rate of 1.17 vs 1.11 last year -2.1% +15 Slightly positive perimeter effect +3 (12) (14) • Contribution of BBB Europe in Q2 Positive swing of €15m in ‘Other Revenues’ 637 629 • O/
Slide 24: Large Commercial Wins Supporting Long-Term Outlook
LARGE COMMERCIAL WINS SUPPORTING LONG-TERM OUTLOOK Broadcast Fixed Broadband In Africa incremental capacity for Wholesale agreement with TIM for Multichoice and extension with ZAP Italian capacity on KONNECT and KONNECT VHTS Contract for connectivity services to the Post Office Fixed Data in I
Slide 25: Paving the Way for Return to Growth in Fixed Broadband
PAVING THE WAY FOR RETURN TO GROWTH IN FIXED BROADBAND MoU with - Wholesale agreement with TIM for Italian capacity on KONNECT and Schoolap in DRC, BBB acquisition1 adding KONNECT VHTS showing potential retail pilar in Europe - Disposal of stake in EBI to of B2G segment rationalize assets March 20 J
Slide 26: H1 FY 2020-21 Revenues by Application
H1 FY 2020-21 REVENUES BY APPLICATION REVENUE REVENUES LIKE-FOR-LIKE2 CONTRIBUTION1 (€m) YOY CHANGE BROADCAST 62% 379 -1.8% DATA & 13% PROFESSIONAL 81 -4.5% VIDEO GOVERNMENT 13% SERVICES 77 +2.5% FIXED BROADBAND 7% 42 +2.3% MOBILE CONNECTIVITY 5% 34 -13.9% TOTAL OPERATING VERTICALS 613 -2.1% OTHER R
Slide 27: Broadcast
BROADCAST 62% H1 revenues of €379m, down 1.8% YoY like- 389 785 379 for-like1 • Reflecting mainly impact of the renegotiation of contract terms with Greece’s Forthnet Q2 revenues Q2 195 188 Q2 • Down 2.1% YoY1 • Stable QoQ excluding €2m one-off recorded in Q1 Positive dynamic in African Market
Slide 28: Data & Professional Video
DATA & PROFESSIONAL VIDEO 13% H1 revenues of €81m, down 4.5% YoY like- for-like1 88 81 • Q2 revenues down 2.7% YoY and up 7.2% QoQ Improved trends in Fixed Data: • Improving volumes notably in MENA Q2 45 • Partially offsetting ongoing pricing pressure and highly 42 Q2 competitive environment P
Slide 29: Government Services
GOVERNMENT SERVICES 13% H1 revenues of €77m, up 2.5% YoY like-for- 78 77 like1 161 • Negative carry-forward effect of the past 18 months’ USG renewals • More than offset by contribution of EGNOS payload Q2 39 39 Q2 and new business Q2 revenues up 4.5% YoY and 2.1% QoQ 1 Second Half facing toug
Slide 30: Fixed Broadband
FIXED BROADBAND 7% H1 revenues of €42m, up 2.3% like-for-like1 • Increased demand for consumer broadband 42 • Positive trend for European customer base over LTM 39 77 • Higher sales of terminals Q2 revenues up 0.8% YoY; down 6.5% QoQ1 22 Q2 • High level of terminal sales in Q1 Q2 19 Ongoing en
Slide 31: Mobile Connectivity
MOBILE CONNECTIVITY 5% H1 revenues of €34m, down 13.9% YoY like-for- 41 like1 79 34 Impact of Covid-19 crisis on aero mobility • Low level of airtime-related revenues on KA-SAT • Renegotiation of contract terms with affected service Q2 22 providers 16 Q2 Maritime revenues remain well-oriented
Slide 32: Backlog & Fill Rate
BACKLOG & FILL RATE BACKLOG (€BN) OPERATIONAL & UTILIZED TRANSPONDERS Fill rate 69.7% 69.7% 70.1% 4.3 4.1 4.4 1,387 1,376 1,380 966 960 967 Operational Transponders Broadcast 68% 68% 67% Utilized Transponders 31 Dec. 2019 30 June 2020 31 Dec. 2020 31 Dec. 2019 30 June 2020 31 Dec. 2020 • Backlog up
Slide 33: Agenda
AGENDA 1. FSS Industry 2. Eutelsat in a snapshot 3. H1 FY 21 performance 4. Outlook 5. Appendix 33 3
Slide 34: Reminder: Our Strategic Roadmap
REMINDER: OUR STRATEGIC ROADMAP STEP 1 STEP 2: RETURN TO GROWTH GROW TOPLINE MAXIMIZE EXTRACT VALUE CAPTURE FREE CASH-FLOW FROM THE CORE THE CONNECTIVITY GENERATION VIDEO BUSINESS OPPORTUNITY 34
Slide 35: Update on Key Priorities for FY 2020-21
UPDTATE ON KEY PRIORITIES FOR FY 2020-21 ► Execute on LEAP 2 cost savings plan and Well on track deliver the C-Band clearing MAXIMIZE FREE ► Improve WCR Positive variation in H1 CASH-FLOW GENERATION ► Maintain all other levers of Free Cash-Flow generation under tension H1 DFCF of €257m amply coverin
Slide 36: Low End of Revenue Objective Raised
LOW END OF REVENUE OBJECTIVE RAISED OPERATING VERTICALS ► Between €1,190m to €1,220m in FY 2020-211 REVENUES1 Absorbing negative perimeter effect Vs. between €1,180m to €1,220m previously ► Not exceeding average of €400m2 per year CASH CAPEX for the period July 2020 to June 2022 ADJUSTED ► Between €
Slide 37: Targeted Growth Capacity to Progressively Support Topline
TARGETED GROWTH CAPACITY TO PROGRESSIVELY SUPPORT TOPLINE Incremental capacity Key markets CY 2020 CY 2021 CY 2022 CY 2023 Video Jan 19 Ku Sub-Saharan EUTELSAT 7C Africa Jan Nov. ‘20 to March 21 EUTELSAT 65 Ka spotbeams Broadband KONNECT 75 Gbps Europe/Africa Q2 Q3 EUTELSAT 8 “QUANTUM” Government QU
Slide 38: Future Launches
FUTURE LAUNCHES EUTELSAT KONNECT EUTELSAT EUTELSAT 10B NAME HOTBIRD 13F VHTS HOTBIRD 13G Orbital 48°East 13° East TBD 13° East 10° East Position Approx . Launch Q2 2021 H2 2021 H1 2022 H1 2022 H2 2022 date1 Manufacturer Launcher TBD TBD TBD Coverage Flexible Europe Europe Europe EMEA, Atlantic & Ind
Slide 39: Agenda
AGENDA 1. FSS Industry 2. Eutelsat in a snapshot 3. H1 FY 21 performance 4. Outlook 5. Appendix 39
Slide 40: Appendix
5. APPENDIX 5.1 2020-21 half year financials 5.2 Miscellaneous 40
Slide 41: 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 42: 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 43: 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 44: 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 44
Slide 45: 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 46: Appendix
5. APPENDIX 5.1 2020-21 half year financials 5.2 Miscellaneous 46
Slide 47: Broadband Market Large Enough for Multiple Players
BROADBAND MARKET LARGE ENOUGH FOR MULTIPLE PLAYERS Substantial long-term (2030+) core adressable Demand for ubiquitous connectivity market of premises durably beyond the reach of boosted by Covid-19 induced lock- terrestrial infrastructure (4G, 5G, Fiber) downs • ~4M premises in Europe Positiv
Slide 48: 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 49: Retail Strategy Being Rolled Out
RETAIL STRATEGY being rolled-out 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 • Accessible upfront f
Slide 50: 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 51: 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 52: 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 53: Channel Count
CHANNEL COUNT 6,879 • Lower line up at 5°W following E5WA end of life in stable orbit -3.9% 6,608 • Decrease in Sky Italia line-up CHANNEL • Negative impact of “technical” events (dual illumination, contribution) COUNT • Natural churn not offset by new business in Europe as expected Dec. 2019 Dec. 2
Slide 54: '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 55: Testing Market Traction in IoT
TESTING MARKET TRACTION IN IOT TO ADD A FUTURE GROWTH LEVER TO CONNECTIVITY SIGNIFICANT MARKET ELO: AN UNMATCHED VALUE COMPELLING RISK / OPPORTUNITY PROPOSITION RETURN PROFILE Strong growth in demand Nano-satellite constellation Fully scalable Connected objects to offering global coverage First
Slide 56: 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 57: 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 58: 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 59: KONNECT Africa Sample Packages
KONNECT AFRICA SAMPLE PACKAGES Example for Ivory Coast 59
Slide 60: 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 61: 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 62: Satellite Economic Model: Regular Capacity
SATELLITE ECONOMIC MODEL1: REGULAR CAPACITY •1 For a greenfield satellite, using chemical propulsion 62
Slide 63: 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 63
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