[Satellite News 02-23-10] Investment bank analysts hailed the recent performances of both Eutelsat and SES at the half-year mark of 2010, following the release of their latest financial results.
    Eric Beaudet, a satellite equity analyst at Natixis Securities said SES’ performance “underlines the strong demand for satellite capacity,” and that Eutelsat, “with three new satellites entering service over the past year and a growth of total commercial transponder of over 20 percent, is particularly well placed to benefit from this good demand as it has now showed us over the past few publications.”
    Edward Hill-Wood, a satellite equity analyst at Morgan Stanley was equally effusive about the prospects for the FSS industry. “(The) FSS industry is highly attractive, with long term contracts creating highly visible cash flows. (There is) currently strong industry demand due to introduction of HDTV globally, and launch of new television platforms and channels. Eutelsat has the highest margins in the FSS industry globally.”
    Eutelsat saw net profits and overall revenues increase in the last six months of 2009 compared to 2008. Revenue growth was particularly impressive showing an almost ten percent increase compared to 2008. The operator generated revenues of 508 million euros ($695.68 million) in the six months to the end of December. This compares to 463.5 million euros ($637.74 million) in the same period in 2008. Eutelsat’s overall net profits for the six-month period stood at 139.5 million euros ($191.04 million), a 3.5 percent increase compared to the same stage in 2008.
    Both Hill-Wood and Beaudet said these set of results were “strong’ in their respective research reports. “Sales come out slightly above expectations at 508 million euros (vs 505 million euros), +9.6 percent year-on-year, thanks to strong demand on all segments (video, data and multi-usage). Margins are particularly good. EBITDA comes out at 81 percent (vs 80.4 percent estimate), way above the group’s 78 percent FY target. We just have to note that it was, once again, helped by seasonality and the reimbursement of 3.2 million euros ($4.35 million) of mandatory taxes,” said Beaudet.
    Hill-Wood was equally positive but also highlighted three potential risks which could impact Eutelsat’s performance over the course of the year. He said, “(Firstly), satellite failure at either the launch or in orbit phase. This can cause disruption to services, additional capital expenditure and in some cases revenue loss. For the more risky launch phase, insurance cover provides financial security. It has detailed back-up plans to avoid customer disruption should a satellite fail in orbit, including maintaining pare capacity and ground spares. (Secondly), should customers face financial pressure, merge or shift business to competitors both companies could see a reduction in utilization rates. This is more important given Eutelsat is planning to significantly increase available capacity through scheduled new launches. (Finally), Eutelsat has supplemented core provision of satellite capacity with more discretionary services. These services have less visible revenue characteristics and could be more impacted by economic conditions.”
    SES increased net profits for 2009 by over 20 percent compared to 2008. The operator had net profits in 2009 of 476.5 million euros ($654.25 million). In 2008, the figure had been 387.5 million euros ($532.05 million). The operator has revenues for the year of 1.7 billion euros ($2.33 billion), an increase of 4.4 percent compared to the same stage last year.
    Hill-Wood said in a report issued after SES’s results that they provided “additional encouragement” for investors.  “Management provided more comfort that our forecast of five percent underlying revenue growth in 2010 was more than achievable, aided by strong expected demand for the recently launched NSS-12 and soon to be launched Astra 3B. Pricing trends remain firm and demand solid for HDTV (+20 channels forecast in Europe in 2010), pay-TV, broadband and government services.”
    Beaudet said SES had bounced back from a disappointing set of third quarter results and that he expects to see the operator’s revenue performance to improve as a slew of new satellite launch. “With the launch of three new satellites planned for the first half 2010 adding 76 new transponders, we are therefore confident SES will see its growth accelerate from now on and reach it five percent target for the year.”