Eutelsat Discloses Initial Tooway Results But is Mum on Forecast

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PARIS — Satellite fleet operator Eutelsat on July 30 said its Tooway consumer broadband service, which has been in commercial operations for about 14 months, had 52,450 subscribers and generated revenue of 49.9 million euros ($62.4 million) for the year ending June 30.

Paris-based Eutelsat, whose fiscal year ends June 30, until now has declined to disclose the status of Tooway, which is enabled by the all-Ka-band Ka-Sat satellite in geostationary orbit.

In a statement accompanying its financial results, Eutelsat said Tooway subscriber growth began to accelerate in recent months.

Eutelsat had promised investors that Ka-Sat, which cost about 300 million euros including launch and insurance, would generate 100 million euros in incremental revenue starting in its third year of service.

The company did not reiterate that forecast or provide a new one in its financial results, which were published after the NYSE Euronext stock market closed July 30.

Eutelsat said the growth in professional value-added services on Ka-Sat has been “slower than anticipated. The group is implementing measures to strengthen its commercial organization around Ka-Sat services, including refining products and distribution channel management.”

Eutelsat recently increased the speed of Tooway services available to subscribers as part of an effort to stimulate subscriber growth. Eutelsat has said Ka-Sat/Tooway would be profitable with 700,000 subscribers but can accommodate up to 1 million.

The 70-gigabits-per-second Ka-Sat is Europe’s first high-throughput Ka-band satellite. Eutelsat is trying to replicate the success in satellite broadband that Hughes/EchoStar and ViaSat Inc. have seen in the United States with their respective HughesNet and Exede services, which together have around 900,000 subscribers.

ViaSat and Hughes have recently launched their own high-throughput satellites. Eutelsat’s main European competitor, SES of Luxembourg, has refrained from making a similar investment, saying consumer satellite broadband in Europe shows no sign of being a long-term success story.

Eutelsat spooked investors three months ago when it declined to discuss Ka-Sat/Tooway performance and also said growth in the company’s Multi-Usage business, which has surged in recent years with contracts from the U.S. Defense Department for capacity over the Middle East and Central Asia, would be slowing.

For the 12 months ending June 30, the Multi-Usage business generated 146.5 million euros in revenue, up 16.7 percent over the same period a year ago. Eutelsat said it booked fewer contracts than expected during a scheduled renewal period in February and March, presaging a slowdown, in part because Eutelsat lacked sufficient capacity in the places desired by the U.S. government.

The company has said that situation will change with the scheduled launches of the Eutelsat 21B and Eutelsat 70B satellites.

Eutelsat, which is the world’s third-biggest commercial satellite fleet operator when measured by revenue, reported a 4.6 percent increase in overall revenue, to 1.22 billion euros, for the 12 months ending June 30.

EBITDA, or earnings before interest, taxes, depreciation and amortization, was 78.3 percent of revenue.

Eutelsat said its revenue growth for the next three years would average between 5 percent and 6 percent per year, with EBITDA holding at around 77 percent of revenue each year.

The company’s core video distribution business grew by 5.8 percent in the year, The number of TV channels carried on Eutelsat’s fleet continued to increase, totaling 4,261 as of June 30, up 10 percent from a year ago. Of these, 346 channels were in high-definition (HD) format. HD programming now accounts for 8.1 percent of Eutelsat’s broadcasts, compared to 5.7 percent a year ago.

 

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