[Satellite News 05-19-09] Eutelsat Communications saw a seven percent increase in revenues, at 700 million euros ($944.93 million), for the nine-month fiscal period ending in March.
    Despite Eutelsat reporting revenue increases in both data and value added services and multi-usage services, the main source of revenue for Eutelsat continues to be video applications, with just under 75 percent of its revenues derived from these services. With the recent launch of its Tooway consumer Internet access service in the U.K., it is hoping to diversify its sources of income.
    Jean-François Fremaux, director or multimedia products at Eutelsat, told Satellite News that he believes there is a strong opportunity for this type of product in the U.K. “We are launching the product country by country. We have initiated service roll out in western Europe, Switzerland, Italy, France, Spain, Germany, Czech Republic, Ireland and now the U.K,” said Fremaux. “The U.K. has wide coverage of DSL service, but it still has important pockets of the country unserved by terrestrial coverage, including 14 percent of homes unserved in the densely populated South East. There are a number of initiatives in different regions of the U.K. trying to get technology to provide Internet services to end users, wherever they are. This shows that there is a real opportunity for this product in the U.K. today,” he said.
    However, the satellite broadband market is seeing more competition than ever with competitors like Avanti Communications and SES Astra, through its Astra2Connect service, also aggressively targeting these markets. Fremaux said that Eutelsat’s approach separates the company from its competion. “Eutelsat has taken an approach based on dedicated Ka-band satellite capacity and ViaSat‘s technology platform which is already widely deployed in the consumer market in North America,” said Fremaux. “We are operating in a competitive environment and believe that our asset is investment in a good satellite product and on-ground infrastructure together with strong support teams in Paris and at the Skylogic teleport in Turin where the service is managed. By using standard Ku-band satellite capacity for a mass-market broadband product operators will ultimately hit a road block in terms of growth and satisfying evolving high bitrate applications.”
    In terms of perspective, Fremaux compares the U.K. marker to Spain’s market, where large parts of the population are not covered even by the major telecoms. He believes that demand, coupled with low costs of providing satellite broadband now make it an attractive option for people where there are precious few terrestrial alternatives. “We have positioned Tooway at a price, which is close to the price of DSL. For the consumer, the price for Customer Premise Equipment (CPE) has significantly dropped over recent years and of course as a fully bidirectional service there is no need for terrestrial infrastructure, specifically a telephone line. We are also finding solutions where a region can subsidize parts of the costs of the CPE. There is a way to provide a solution, which will reduce costs and make satellite compare favorably to terrestrial,” said Fremaux.
    Even before the launch of the company’s dedicated Ka-band satellite, Ka-Sat, Eutelsat is preparing for a mass market deployment of Tooway, according to Fremaux. “Our objective is to make our product known to customers in the market, to build partnerships with significant telcos and ISPs in the U.K. and elsewhere in Europe and to ensure that we are offering a quality product that satisfies consumer expectations, even with the capacity we are using on our current satellites. The idea is to use the time before Ka-Sat to ramp up the service so that we are absolutely ready for mass-market deployment in 2010 when the new satellite is launched,” he said.
    The company’s results and future-oriented business model are generating positive reviews from analysts. Eric Beaudet, a satellite equity analyst at Natixis Securities gave a positive assessment of the operator’s recent results in a research note, stating that the company’s figures underline the strong demand for satellite capacities and reflects the boost of of both HDTV and channel offerings in emerging market zones throughout eastern Europe, Africa and the Middle East.
    “With seven new satellites due for launch out to end-2010, Eutelsat is in an ideal position to exploit this growth,” said Beaudet. “Indeed, the group is planning to expand its capacity in orbit by over 32 percent while developing new orbital locations (9 degrees East, 36 degrees East). However, these bright prospects have already been factored into consensus estimates, which are for 2008/09 sales of 920 million euros ($1.24 billion), where Eutelsat is targeting over 900 million euros ($1.21 billion), and an EBITDA margin of 79 percent vs. over 78 percent targeted,” he said.