Eutelsat Communications Sa · EURONEXT:ETL

Eutelsat Communications Sa — H1 2020-21 Earnings Presentation

34 slides from Eutelsat Communications Sa's earnings presentation, Feb 12, 2021

  1. Slide 1: First Half 2020-21 Revenues

    FIRST HALF 2020-21 REVENUES 12 February 2021

  2. Slide 2: Agenda

    AGENDA 1. Key Events 2. Operational performance 3. Financial performance 4. Outlook 2

  3. Slide 3: 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

  4. Slide 4: Key Financial Data

    KEY FINANCIAL DATA YoY Change First Half 2020-21 Reported Like-for-like Total Revenues €629m -1.3% -1.6%1 Operating Verticals Revenues €613m -3.6% -2.1%1 EBITDA margin2 76.7% -1.1 pts Cash Capex2 (€117)m +€72m Reported Discretionary Free Cash-Flow2 €257m +€149m Adjusted Discretionary Free Cash-Flow2

  5. Slide 5: 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

  6. Slide 6: 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

  7. Slide 7: 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

  8. Slide 8: Agenda

    AGENDA 1. Key Events 2. Operational performance 3. Financial performance 4. Outlook 8

  9. Slide 9: 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/

  10. Slide 10: 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

  11. Slide 11: 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

  12. Slide 12: 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

  13. Slide 13: 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

  14. Slide 14: 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

  15. Slide 15: 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

  16. Slide 16: 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

  17. Slide 17: 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

  18. Slide 18: 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

  19. Slide 19: Agenda

    AGENDA 1. Key Events 2. Operational performance 3. Financial performance 4. Outlook 19

  20. Slide 20: 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

  21. Slide 21: 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

  22. Slide 22: 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

  23. Slide 23: 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 23

  24. Slide 24: 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

  25. Slide 25: Agenda

    AGENDA 1. Key Events 2. Operational performance 3. Financial performance 4. Outlook 25

  26. Slide 26: 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 26

  27. Slide 27: 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

  28. Slide 28: 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

  29. Slide 29: 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

  30. Slide 30: Retail strategy being rolled-out

    RETAIL STRATEGY BEING ROLLED-OUT Retail packages indicative prices  Integration of BBB Europe well on track Maximum speed1  Launch of initial retail offers across Europe offering a compelling value 30 50 100 proposition Mbps Mbps Mbps • Retail prices including terminal lease Monthly fee2 Upfront •

  31. Slide 31: 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 €

  32. Slide 32: 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

  33. Slide 33: Disclaimer

    DISCLAIMER This presentation does not constitute or form part of and should not be construed as any offer for sale of or solicitation of any offer to buy any securities of Eutelsat Communications, nor should it, or any part of it, form the basis of or be relied on in connection with any contract or

  34. Slide 34: 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

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