Eutelsat said that revenue growth in the third quarter was below expectations, reflecting a worse than expected environment in several emerging markets.
The operator said that conditions in particular Latin America were affected, where much of the opeator’s new capacity is targeted, and the spread of tough competitive conditions in data services to all markets.
As a result, Eutelsat expects revenues 2015-16 to be broadly flat, downgrading its forecast from the bottom-end of the 2-3% range previously. These headwinds will continue to impact Full Year 2016-17 revenues. In consequence, revenues are now expected in the region of -3% to -1% (versus the previous +4-6% range).
Eutelsat said it is adapting to slowing industry-wide momentum, undertaking a wide-ranging review of its organisation and priorities with an emphasis on cash-flow generation and margin support. A detailed update will be provided in July.
“Our business is strong and highly resilient. We are adjusting our strategy in the face of slowing industry-wide growth and we are committed to maximizing cash and protecting our profitability during this cycle,” said Rodolphe Belmer, CEO.
“Our industry continues to offer long-term growth levers and we are confident we can position ourselves to capture these opportunities and generate value for our stakeholders.”
Total revenues for the third Qqarter ending March 31, 2016 stood at €383.0 million, up 1.1% at constant currency and by 4.2% in actual terms, the appreciation of the dollar relative to the euro adding some three points to top-line growth.
Third quarter revenues for Video Applications amounted to €239.1 million, up 4.9% at constant currency. This rise mainly reflected the entry into service of Eutelsat 8 West B in October 2015 and Eutelsat 36C mid-February 2016, as well as higher revenues at Fransat on the back of the transition to HD in France, which is now nearing completion. These elements more than offset lower revenues at the Hot Bird position following the non-renewal of several contracts with service providers in recent months, as well as a decline in revenues from Professional Video.
At March 31, 2016, the total number of channels broadcast by Eutelsat satellites stood at 6,156, up 7.1% year-on-year. HD penetration continued to rise, representing 13.1% of channels compared to 11.7% a year earlier, or 807 channels, up from 672 a year earlier.
