Eutelsat Expects $22M Loss in FY 2019-20 Due to COVID-19 

Eutelsat headquarters in Paris, France. Photo: Eutelsat

Eutelsat estimates a $21.8 million risk to its Fiscal Year (FY) 2019-20 revenues due to the COVID-19 crisis. The company said in a Thursday announcement updating its financial objectives in regards to the pandemic, that the impact is “limited” because of the satellite industry’s resilience due to long-term contracts. Its broadcast business represents 60% of revenues. 

Eutelsat expects revenues from its five operating verticals in FY 2019-20 to be roughly $1.37 billion, compared to its previous estimate between $1.39 billion and $1.44 billion. 

Particularly, the company expects its Mobility, Professional Video, and its Fixed Broadband verticals to feel the effects of the pandemic. The Occasional Use segment of Professional Video is impacted by the postponement or cancellation of sports and other events; Mobile Connectivity is impacted by the decline of airline and maritime traffic; and Fixed Broadband is experiencing a slowdown in gross adds in a context of more challenging customer gathering.

In addition, the company said the launch of its QUANTUM satellite and the deployment of ground gateways supporting KONNECT will likely be delayed because of the pandemic’s effects on other parts of the supply chain like satellite manufacturers and launchers. Because of this, the revenue ramp-up of these two expansion satellites will be pushed out, which will affect Eutelsat’s expectations for FY 2020-21.

QUANTUM’s launch has been planned for the third quarter of calendar 2020. Eutelsat has said the satellite will be the first Geostationary Orbit (GEO) telecommunications satellite to be fully reconfigurable in orbit in order to adjust to business requirements. 

KONNECT, which will serve Europe and Africa, was launched by Arianespace in January. The satellite is currently in orbit raising. 

CEO Rodolphe Belmer said the company is suspending its 2022 Discretionary Free cash flow objective, and is also recommending a 30% cut to this years’ dividend. The company is also continuing its cost-savings plan called LEAP 2, which aims to generate about $22 million – $27 million in annual savings by FY 2021-22. 

“Our combination of resilient heritage activities complemented by connectivity-related growth opportunities, together with our well embedded strategy of strict financial discipline, aimed at preserving a solid liquidity position and strong cash generation capacity, mean we are well placed to withstand the challenges of the current environment and to revert to our regular dividend policy as soon as circumstances permit,” Belmer said. 

In terms of the pandemic’s effect on the company’s business continuity, Eutelsat said employees are working remotely, and it has a continuity plan for key workers in mission-critical posts, that will enable its teleports and control centers to operate nominally.