Eutelsat Communications SA · EURONEXT:ETL

Eutelsat Communications SA — Investor Presentation (June 2024)

54 slides from Eutelsat Communications SA's investor presentation, June 2024

  1. Slide 1: Investor Presentation June 2024

    Investor Presentation June 2024 ©2023 Eutelsat Group. All rights reserved.

  2. Slide 2: Agenda

    Agenda Eutelsat in a snapshot Key market trends Combination with OneWeb Q3 2023-24 performance Strategy and Outlook Appendix Appendix H1 2023-24 financials ©2023 Eutelsat Group. All rights reserved.

  3. Slide 3: Eutelsat in a snapshot

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

  4. Slide 4: Eutelsat within the satellite value chain

    Eutelsat within 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 Group Key data

    Eutelsat Group Key data REVENUE BREAKDOWN BY MARKET ➢ Revenues exceeding €1.2bn 3% -1% Europe ➢ Global coverage with a fleet of 361 BY GEOGRAPHY 10% Americas Geostationary satellites 17% Middle East ▪ C. 1,250 transponders 51% Africa ▪ Broadcasting c. 7,000 television channels Asia ▪ More than 690 G

  7. Slide 7: Revenues by application (FY 2022-23)

    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 MOBILE CONNEC

  8. Slide 8: Eutelsat OneWeb combination

    Eutelsat OneWeb combination ACCESS MASSIVE GROWTH POTENTIAL IN SATELLITE CONNECTIVITY Satellite Connectivity market estimated at c. $22bn in 20321 COMBINING HIGH-GROWTH POTENTIAL WITH CASH ONEWEB IS A UNIQUE ASSET GENERATIVE LEGACY BUSINESSES One-of-only two operational global LEO broadband constell

  9. Slide 9: Eutelsat Group operates global fleets of GEO and LEO satellites

    Eutelsat Group operates global fleets of 36 GEO and 634 LEO satellites GEO fleet Coverage ubiquity c.36,000 km Regional OneWeb LEO fleet 160 to 2,000 km Capacity densification Coverage ubiquity Resilience / Global availability Capacity densification Latency Resilience / availability Ease of installa

  10. Slide 10: Two highly complementary businesses

    Two highly complementary businesses GEO + LEO Geographical Capacity density: ability to focus capacity over high- 90% of global coverage expected by mid-2024 advantage demand regions Key value Low-cost sellable capacity: higher fill-rates than Low latency: critical for some applications and proposit

  11. Slide 11: New GEO assets delivering incremental capacity to address Connectivity market

    New GEO assets delivering incremental capacity to adress Connectivity market KONNECT VHTS EUTELSAT 10B  Entered service in October 2023  Entered service in July 2023  Ka-band capacity of 500 Gbps, offering capacity  Unique visibility spanning from the Americas to Asia allocation flexibility & op

  12. Slide 12: Eutelsat’s global GEO network

    Eutelsat’s global GEO network ©2023 Eutelsat Group. All rights reserved. 12

  13. Slide 13: €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

  14. Slide 14: Bond & Bank Debt maturity schedule

    Bond & Bank Debt maturity schedule 2.000% New 3y+1+1 New €600m HY bond 1.125% €450m RCF 2.250% 1.500% 9.750% Partial redemption of €53 m ➢ Average cost of debt after hedging of the €800m bond €53m 3.16%1 €623m €75m €600m €100m ➢ Average weighted maturity of 3.0 €600m €400m €450m €600m years1 €53m €1

  15. Slide 15: Shareholder base

    Shareholder base Free float, 25.5% Bharti Space, LTD, 24.1% FSP1, 4.1% Bpifrance, 13.6% Hanwha, 5.4% UK Government, CMA-CGM 10.9% Participations, 1 Fonds Stratégique de Participations 5.5% Softbank, 10.9% As of May 2024 ©2023 Eutelsat Group. All rights reserved. 15

  16. Slide 16: CSR policy

    CSR policy ©2023 Eutelsat Group. All rights reserved. 16

  17. Slide 17: High ESG ratings

    High ESG ratings 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. 17

  18. Slide 18: Market trends in our key verticals

    Market trends in our key verticals ©2023 Eutelsat Group. All rights reserved.

  19. Slide 19: Resilient long-term features of Video

    Resilient long-term features of Video Decline in channel count partly offset by rise in more bandwidth- hungry definition quality HD to grow in emerging video markets # channels per 36 Mhz 42,877 transponder 2022 2032 33,061 15 to 26 95% 84% 79% 28,080 X4.7 9,394 3 69% 56% 536 45% 46% 43% 9 to 15 40

  20. Slide 20: Strong growth prospects for satellite Connectivity market

    Strong growth prospects for satellite Connectivity market Connectivity: a $22bn opportunity 2022 2032 10 y Vertical Drivers Market Market CAGR Consumer broadband ● Internet access a fundamental need ● Universal service obligation pressure $900m $5.1bn +18% ● High cost of terrestrial rollout ● Long-t

  21. Slide 21: A $22bn NGSO-driven connectivity market opportunity for satellites

    A $22bn NGSO-driven connectivity market opportunity for satellites $21.8bn Satellite connectivity market expected to more than triple by 2032 … $16.0bn … mainly driven by NGSO growth NGSO: +34% CAGR  NGSO expected to grow c. 2.3x faster than overall market $5.4bn $0.9bn  NGSO to represent c. 70% o

  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 2032 2032 5,561 North America 11,811 2022 2032 Western 1,765 2022 2032 Europe 5,334 998 MENA 3,876 80,674 53

  23. Slide 23: Combination with OneWeb

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

  24. Slide 24: 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 ► Strong distribution network ► 1.4 Tbps sellable capacit

  25. Slide 25: OneWeb has priority rights over Premium Spectrum bands

    OneWeb has 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 Priority in

  26. Slide 26: Eutelsat / OneWeb combination is live

    Eutelsat / OneWeb combination is live  Approval of the combination in Sept 2023  Constellation operational and delivering proven performance  Strong commercial traction with deals activated with major customers  Progress on ground roll-out following delays: aiming at 90% coverage by mid-2024  S

  27. Slide 27: Landmark commercial deal with Intelsat for LEO capacity

    Landmark commercial deal with Intelsat for LEO capacity  Strategic multi-year partnership valued at up to $500 million over duration • Seven-year agreement commencing in mid-2024 • Firm commitment of $250m, including the $45m deal signed in March 2023 • Options for a further $250m  Significantly d

  28. Slide 28: Strong momentum in deals with major partners

    Strong momentum in deals with major partners Major commercial LEO wins across all applications Fixed Data Government Mobile connectivity ©2023 Eutelsat Group. All rights reserved. 28

  29. Slide 29: OneWeb ground network roll-out on track

    OneWeb ground network roll-out on track Coverage April 2024 Coverage Summer 2024 (E) Based on 34 SNPs Based on 38 SNPs NB/ Excluding Afghanistan, Belarus, China Hong Kong Special Administrative Region, Cuba, Ecuador, Iran (Islamic Republic of Iran), Republic of Korea, Russian Federation, Syrian Arab

  30. Slide 30: Constellation operational and delivering proven performance

    Constellation operational and delivering proven performance Network performance User experience HTS technology delivering up to 7Gbps Average global latency of 70ms per satellite Download speeds up to 195Mbps Robust 4G core network developed with telecom industry leaders Upload speeds up to 32Mbps S

  31. Slide 31: 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

  32. Slide 32: Q3 2023-24 Revenues

    Q3 2023-24 Revenues ©2023 Eutelsat Group. All rights reserved.

  33. Slide 33: Highlights

    Highlights ➢ Third Quarter and Nine-month revenues in line with expectations ➢ Video follows overall market trend of mid-single digit decline; base effect of non - renewal of Digitürk contract and Russian sanctions washed through from Q3 ➢ Double-digit growth in Connectivity (Government Services +22

  34. Slide 34: Q3 2023-24 revenues

    Q3 2023-24 revenues Q3 YoY revenue bridge (€m)  Total revenues of €300.8m, up +8.3% like-for-like +8.5%  Negative currency effect +24 • €/$ rate of 1.09 vs 1.07 last year  Positive swing of €0.2m in ‘Other Revenues’ +7 0 • Of which €0.7m related to hedging -3  Revenues of the Operating Verticals

  35. Slide 35: Q3 revenues by verticals

    Q3 revenues by verticals REVENUE REVENUES LIKE-FOR-LIKE2 CONTRIBUTION1 CHANGE (€m) VIDEO 53% 160.2 -4.9% GOVERNMENT 15% 43.6 +22.1% SERVICES MOBILE 13% 39.2 +48.0% CONNECTIVITY FIXED 19% 57.4 +24.2% CONNECTIVITY TOTAL OPERATING VERTICALS 300.3 +8.5% OTHER REVENUES 0.5 +€0.2m3 1 Share of each applica

  36. Slide 36: Video

    Video 53%  Q3 revenues of €160.2m, down 4.9% YoY like-for-like1 • In line with broader market trend • Wash-through of the base effect of last year’s non-renewal of 785 Digitürk contract and Russian sanctions 535 491  Q3 revenues down 3.9% QoQ1 • Non-recurrence of a one-off c.€3 million contract in

  37. Slide 37: Government Services

    Government Services 15%  Q3 revenues of €43.6m, up 22.1% YoY like-for-like1 • Reflecting the contribution of the EGNOS GEO-4 contract on HOTBIRD 13G2 118 • Integrating the carry-forward effect of recent US Department of Defence renewals, with a renewal rate of >80% in Fall 2023 98 44 Q3  Q3 revenu

  38. Slide 38: Mobile connectivity

    Mobile connectivity 13%  Q3 revenues of €39.2m, up 48.0% YoY like-for-like1 • Entry into service of EUTELSAT 10B • OneWeb growth 110  Q3 revenues up by 11.9% QoQ1 83  Extended partnership with 39 Q3 Universal Satcom for Eutelsat’s Geostationary ADVANCE maritime Q3 27 packaged solutions 36 Q2 Q2 3

  39. Slide 39: Fixed connectivity

    19% Fixed connectivity  Q3 revenues of €57.4m, up 24.2% YoY like-for-like1 • Entry into service of KONNECT VHTS 152 137 • Contribution from OneWeb  Q3 revenues by 6.7% Q-o-Q1 57 Q3 Q3 44  OneWeb gaining traction with the activation of contracts where the service is now fully operational: • South

  40. Slide 40: Backlog

    Backlog OPERATIONAL & UTILIZED TRANSPONDERS BACKLOG (€BN) Excluding Managed services  Backlog at €3.9 billion on 31 March 2024 vs. €3.5bn on 31 March 2023  Representing 3.4 years of revenues 4.3.50 3.9 3.9  Natural erosion in the Video segment, in the absence of major renewals this quarter, offse

  41. Slide 41: Strategy and Outlook

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

  42. Slide 42: A three-pillar strategy

    A THREE-PILLAR STRATEGY RELYING ON A STRONG FOUNDATION Eutelsat Telecom pivot 1 2 3 Maximize cash generation of Deliver GEO-enabled growth in legacy business Connectivity Successfully merge with OneWeb ➢ To fund our transition towards ➢ In Fixed Broadband via KONNECT ➢ To capture LEO-enabled growth

  43. Slide 43: Eutelsat and OneWeb integration progressing as planned

    Eutelsat and OneWeb integration progressing as planned Commercial momentum and synergies confirmed Technical Commercial Synergies • LEO Constellation operational • Resilient GEO activities • Integration between Eutelsat and delivering proven, robust continuing to deliver on track and OneWeb progress

  44. Slide 44: Eutelsat Group Financial objectives

    Eutelsat Group Financial objectives GROUP ► Between €1.25bn and € 1.3bn in FY 2024, REVENUES ► Double digit CAGR between 2024 and 2028 ADJUSTED ► Between €650m and €680m in FY 2024, EBITDA ► Double digit CAGR between 2024 and 2028 CASH ► Between €600m and €650m in FY 2024 CAPEX ► €600 to €700m per a

  45. Slide 45: Upcoming GEO launches

    Upcoming GEO launches NAME FLEXSAT AMERICAS Orbital N/A Position Approx. Entry into service date1 2026 (delivery) Manufacturer Coverage Americas Applications Connectivity Total capacity Over 100 Gbps (TPX2/Spotbeams) o/w expansion 2 Over 100 Gbps 1 Calendar year 2 Excludes unannounced redeployments

  46. Slide 46: Appendices

    Appendices ©2023 Eutelsat Group. All rights reserved.

  47. Slide 47: H1 FY 2023-24 Financials

    H1 FY 2023-24 Financials ©2023 Eutelsat Group. All rights reserved.

  48. Slide 48: Profitability

    Profitability Adjusted  H1 Adjusted EBITDA margin of 64.1% at EBITDA (€m) constant currency1 down 5.9 points YoY  Higher operating costs 419 • Impact of the consolidation of OneWeb 366 • Partially offset by a positive perimeter effect from the disposal of the BigBlu retail broadband operations Mar

  49. Slide 49: Net income

    Net income Extracts from the H1 H1 • Other operating expenses of -€183.9 million, compared consolidated income CHANGE to -€34.0 million last year, mainly due to fair value statement in €m 2022-23 2023-24 adjustment of shares owned by Eutelsat before the combination. Revenues 573.8 572.6 -0.2% • High

  50. Slide 50: Cash Capex

    Cash Capex CASH CAPEX (€m)  Cash Capex of €224 million, versus €194 last year 224  Reflecting perimeter effect from the 194 consolidation of OneWeb  Not representative of the decrease in Capex, reflecting phasing of satellite program delivery last year for both 77.4 77.4 77.5 Eutelsat and OneWeb

  51. Slide 51: Financial Structure

    Financial Structure NET DEBT / Adjusted EBITDA RATIO  Net Debt/Adjusted EBITDA ratio of 4.13x • Versus 3.55x at end December 2022 and 3.35x as of 30 June 2023 4.13x 3.27x  Average cost of debt after hedging of 3.16% • Versus 2.67% in H1 23  Average weighted maturity of 3.0 years • Versus 4.1 y at

  52. Slide 52: Change in net debt

    Change in net debt In €m (109) (40) 175 (3) 2,766 (330) 2,619 2,619 Net Debt as of OneWeb entry in C- Band Proceeds Structured debt Other Net Debt as of 30/06/2023 perimeter 31/12/2023 ©2023 Eutelsat Group. All rights reserved. 52

  53. Slide 53: IR contacts

    IR contacts Joanna Darlington Chief Communications and Investor Relations Officer T: +33 6 74 52 15 31 E: jdarlington@eutelsat.com Hugo Laurens-Berge Investor Relations Officer T: +33 6 70 80 95 58 E: hlaurensberge@eutelsat.com Christine Lopez IR Coordinator T: +33 1 53 98 47 02 E: clopez@eutelsat.c

  54. Slide 54: 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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