EuroBusinessMedia (EBM): Eutelsat, Europe’s largest satellite operator, reports first half results for 2010/2011. Michel de Rosen, welcome. You are the CEO of Eutelsat, what are the highlights and key takeaways from your first half results?
Michel de Rosen (MR): Well, we are very happy with the results we are presenting today. We are delivering growth of revenues of more than 13% to €576 million. Our EBITDA has grown by a similar amount. We have an EBITDA margin of 80.4% which is the highest of the largest FSS satellite operators. And our net income is growing by 25%. So all that is, frankly, pretty good and we are very proud. What is very important for our future is that our backlog is growing by 16.7% to €4.9 billion. This means we have a backlog of 4.7 years of revenues. So this is of course great for the visibility of our business – visibility for our investors. Finally, we are happy to also report that our balance sheet has never been more healthy. We have a ratio of debt to EBITDA which is now down to 2.75. So, all the indicators are green or sometimes bright green!
EBM: Apparently, the unavailability of the W3B satellite has no impact on your future growth prospects. How were you able to overcome this adverse event?
MR: Well, this is an adverse event for sure. But we overcame it in different ways. First of all, we were fully insured. And by the way, we have been fully paid by the insurers. That is already behind us. But second and the most important aspect of your question, I believe, is how much does this impact our growth prospects? And the answer is that there is no negative impact on our growth prospects. We have confirmed our guidance for the coming three years. We still believe that we will be able to grow by more than 7% a year for our revenues and we are also confirming our guidance for EBITDA. How is that? Mainly for two reasons. One is that in the way we manage our orbital positions and our fleet of satellites, we are able, when an event happens, to redeploy satellites so as to be able to overcome this kind of situation. Number two, we have a new satellite which is under construction, called W3C, which we plan to launch later this year. This satellite will go where W3B was supposed to go. It will serve those customers. So we are fine, this event is already behind us.
EBM: You launched your new-generation KA-SAT in the first half. When is it coming into operation and how important is it for future growth?
MR: KA-SAT is more than a satellite; it’s a smart satellite, it’s a super satellite. It’s in fact the most powerful satellite in the world today. We launched the most powerful satellite there is. Let me tell you a bit more about it and why we are so excited about this satellite. We did launch it on December 26 and in fact, since February 17, it is now at 9° East. We have done the in-orbit tests and they are all successful. In the coming months, we still need to do more work; this satellite is, in fact, a whole system. There’s the satellite and there are eight so-called “terrestrial gateways” all over Europe. Together they will deliver the services to our customers. Why is this satellite so interesting? Not only because it is powerful, but also because the way it has been built will allow us to provide services at a cost that is far better than the cost of pre-existing satellites. Because of that, it will open the broadband market to hundreds of thousands of households in Europe and North Africa, who today do not have access to broadband. So it’s a fantastic weapon to fight the digital divide. There is already an equivalent satellite – this belongs to the family of high throughput satellites – an equivalent satellite in North America. It is smaller than KA-SAT, but it is operational. So we know that this works, there is no big risk, big uncertainty. Our task now is “execute”. Prepare the services which will be operational by mid 2011. And then in 2011, 2012, 2013, 2014, expect a regular ramp-up, and it will become a significant contribution to Eutelsat’s growth by delivering great services to many households in Europe.
EMB: What is your outlook for the second half of the year?
MR: Well, it’s simple. We are going to continue to grow and continue to deliver. We have many things to do in the technical arena and in the commercial arena. An important task for us is to prepare the KA-SAT for it to be able to deliver the services for all the people and corporations waiting for it. Another task is to finish the manufacturing of two new satellites, W3C and AB7, which we plan to launch in the second half of 2011 calendar year. And then, of course, there is the day-to-day life, where we operate our satellites and we work with our customers. All of that allows us – will allow us – to continue to grow and we clearly expect to deliver – or over-deliver – on the goals we have for the year, which is for revenues to be above €1.12 billion and for EBITDA to be above €875 million.
EBM: And finally, what do you see as the key long-term opportunities for Eutelsat?
MR: We are privileged to be at the centre of the so-called numerical revolution. In fact, this revolution is the combination of two major trends. One is that people want more and more pictures, more and more TV channels. They want more and more choice. And this is true in Europe, it’s true in all the continents across the world, especially in the emerging markets where Eutelsat is very well positioned: Eastern Europe, Middle East and Africa. The second major trend that is part of this numerical revolution is that people want more connections. They want to be connected. They want to receive data. They want to be able to send data. This creates a huge growth of demand for the coming, we believe, 10 to 20 years, and who knows after that. Our satellites are at the centre of that revolution. We deliver services to TV companies, we now have close to 3,800 TV channels on our satellites. And we expect that the number of TV channels in the world will continue to grow and that our satellites will continue to grow. We also deliver services to corporations or to households in the broadband arena. So, we see a growing demand and we see it grow for many years, and we are also then adjusting to this growing demand by growing our own capacity. In the coming two and a half years, we plan to launch six new satellites and to grow our capacity by 25%. So more demand, more capacity. Because of that, we’re going to continue to grow on the financial arena. What does this mean? It means that we can, today, confirm our financial guidance for the coming three years where we plan that our revenues will grow by more than 7% per year, our EBITDA will be above 77% and, of course, we plan to treat our shareholders well by continuing to have a pay-out ratio between 50% and 75%. So, Eutelsat has delivered always since it became public. We plan to continue to deliver: deliver growth, deliver profitability and deliver reliability.
EBM: Michel de Rosen, CEO of Eutelsat, thank you.
MR: Thank you very much.
