Government Business a Bright Spot for Eutelsat

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PARIS — Satellite fleet operator Eutelsat on Nov. 4 said its division selling satellite capacity to government customers — mainly the U.S. government — in the Middle East and North Africa increased revenue by nearly 26 percent in the three months ending Sept. 30 and was the star performer in an otherwise lackluster quarter.

Paris-based Eutelsat’s Multiusage business, which is mainly civil-government and military business that has grown enormously in the past decade with the U.S. military presence in Iraq and Afghanistan, increased to 36.2 million euros ($49 million) during the quarter.

Among the major commercial fleet operators, Eutelsat has been perhaps the biggest benefactor of the military activity in the Middle East and surrounding regions because of the orbital slots at which it has satellites.

Eutelsat’s overall revenue for the three months ending Sept. 30 rose 3.4 percent, to 295.4 million euros, and was held back by a lack of Ku-band satellite capacity. Eutelsat Chief Executive Michel de Rosen, in a Nov. 4 statement, said the company is nonetheless maintaining its forecast of an average 7 percent annual revenue growth between 2011 and 2014.

EBITDA, or earnings before interest, taxes, depreciation and amortization, will remain above 77 percent of revenue for the period, de Rosen said. Eutelsat reiterated its forecast that for its current fiscal year, which ends June 30, it will report revenue of more than 1.24 billion euros.

Two satellites recently launched for Eutelsat — the Atlantic Bird 7, to operate at 7 degrees west longitude, and the W3C satellite, to be stationed at 16 degrees east — are healthy but were not launched soon enough to contribute to the quarterly revenue picture.

Atlantic Bird 7 entered service Oct. 23, and W3C is scheduled to begin commercial operations Nov. 9.

Eutelsat has five additional satellites being readied for launch by mid-2014 and is counting on this new capacity to spur revenue growth in the coming months and years.

Eutelsat’s core business of selling satellite bandwidth for commercial video applications, which accounts for more than two-thirds of the company’s revenue, grew by just 1.4 percent in the three months ending Sept. 30 compared with the same period a year ago, to 198.2 million euros.

In its Nov. 4 statement, Eutelsat said the sluggish growth rate is due to a lack of in-orbit capacity. This is due in part to a quicker-than-expected takeup of existing bandwidth in the past two years, resulting in higher satellite fill rates and little unoccupied space.

It is also partly due to the loss, just after launch, of the W3B satellite in October 2010 following a catastrophic leak in its propellant tank. Eutelsat was forced to retain other satellites at the 16 degrees east orbital position instead of freeing them to expand the company’s in-orbit capacity.