Teleport facility
Eutelsat's Paris-Rambouillet teleport facility in France. Credit: Eutelsat/Adrien Daste 2018

TAMPA, Fla. — European satellite giants SES and Eutelsat see improving trajectories in their broadcast businesses, although the wider picture remains mixed as the pandemic hangs over financials. 

Despite connectivity becoming an increasingly important part of their growth stories amid a general decline in the satellite TV market, video continues to pull in the majority of their revenues.

Luxembourg-based SES reported 526 million euros ($623 million) in revenues for its video business in the six months to June 30, around 60% of total sales.

That is a 3.9% decline compared with the first half of 2020 when adjusted for foreign exchange rate changes.

However, the 559 million euros that SES recorded for the first half of 2020 was an 8% decline compared with the same period in 2019.

“The lasting value of our Video business is reflected in the improved trajectory, the important long-term renewals at our core neighbourhoods, increased penetration of HD TV channels, and new paying subscribers for HD+ in Germany,” SES CEO Steve Collar said Aug. 4 in its financial results for the first half of 2021.

SES said growth in Germany and internationally partially offset lower broadcast sales in mature markets.

It is also seeing a recovery in revenues from sports and events, which suffered last year amid cancellations and delays caused by COVID-19.

Collar added that SES is expanding its German HD+ service to mobile devices and non-satellite, internet-connected homes in the second half of this year.

SES recorded 875 million euros in total revenues for the first half of 2021, down 3.3% compared with the same period last year at constant currency. It said the decline is 2.5% when excluding “periodic” revenue that does not exist this year. 

Adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization, fell 2.5% to 544 million euros.

Collar said its networks business “continues to perform well notwithstanding the COVID-impacted environment,” pointing in particular to an 11.3% year-on-year increase in government sales.

SES is due to commercially launch its upgraded O3b mPOWER constellation next year, significantly increasing the broadband speeds it can provide from medium Earth orbit.

“[W]e have secured over $300 million in backlog from major cruise brands which underscores the compelling combination of high throughput and high flexibility of the constellation,” Collar added.

SES’ video business generated 263 million euros in revenues in the second quarter of 2021, which is flat compared with the previous quarter but down 3.2% year-on-year. 

Eutelsat tells a similar story

Broadcast represents 62% of revenues at France-based Eutelsat, which recently reported financials for its fiscal year to June 30.

Eutelsat recorded 180 million euros in broadcast revenues for its fiscal fourth-quarter. That is broadly stable compared with its previous quarter when excluding Fransat, its free-to-air television platform, but down 6.6% year-on-year.

Despite this, the operator said the recent renewal of a contract with Italy’s Sky Italia, its largest broadcast customer, highlights the long-term resilience of Europe’s pay-TV market. 

It also pointed to an incremental satellite capacity deal with South African broadcaster Multichoice, which it said shows the African market’s potential.

“Conversely, the tough covid-related economic environment led to a lower than usual level of new business throughout the year, particularly in Europe,” Eutelsat stated July 30 in the announcement of its financial results.

“Nevertheless, there have been some signs of normalization recently, for example with a contract secured with a major global broadcaster for content distribution on EUTELSAT 9B.”

Eutelsat posted 1.23 billion euros in total revenues for the 12 months to June 30, down 2.9% year-on-year on a like-for-like basis when adjusted for currency and other changes. EBITDA fell 6.4% to 922 million euros.

In April, the French operator struck a deal to buy a quarter of OneWeb, the U.K.-based low Earth orbit broadband venture, to give its connectivity business an extra growth engine. 

Fixed broadband was Eutelsat’s only vertical to post an increase in revenues for the 12 months to June 30, up 7.1% to 80.2 million euros compared with the year before on a like-for-like basis.

Although Eutelsat expects the direction of broadcast revenues for the coming 12 months will be broadly similar to the year it just reported, amid lingering pandemic effects, it said the trend will improve after that.

Overall, it expects its 2021-22 fiscal year will be its last to report a decline in total organic revenues, with growth returning in the 2022-23 fiscal year onward.

Eutelsat and SES are also in line for sizable payments from the Federal Communications Commission, if they can meet accelerated deadlines for clearing C-band in the U.S. for terrestrial 5G.

Eutelsat said it is eligible for $507 million in accelerated relocation payments.

SES holds more C-band in the U.S. and is currently due to get around $4 billion if it meets all its deadlines. The operator is embroiled in legal action against satellite operator and C-band holder Intelsat for a larger share of the proceeds, following a disagreement about how to divide them.

Jason Rainbow writes about satellite telecom, space finance and commercial markets for SpaceNews. He has spent more than a decade covering the global space industry as a business journalist. Previously, he was Group Editor-in-Chief for Finance Information...