Analysts Heap Praise On Eutelsat As Broadcast Revenues Hold Up


By Stuart Thomson

Amid problems elsewhere in the satellite sector, analysts have given a strong vote of confidence in satellite operator Eutelsat after it posted solid fiscal Q3 results that showed modest quarter-to-quarter growth in the challenged broadcast segment and a stable year-on-year performance in broadcast.

Analysts at Berenberg said that “Eutelsat’s Q3 revenue release once again highlighted to us that the company’s cash flows are far more resilient than its valuation would suggest”, pointing to the stability of its broadcast business not only in the quarter but over the last few years “in contrast to peers”.

In the view of the analysts, Eutelsat’s strength in broadcast compared with Intelsat and SES is its “different geographic exposure”, with emerging markets accounting for 50 per cent  of revenues and little exposure to the cord-cutting US.

According to Berenberg, Eutelsat also benefits from the fact that most of its business in video is generated by the relatively resilient DTH segment.

Analysts at Jefferies had earlier also given a vote of confidence, pointing to its outperformance in broadcast – “that rarest of sightings” in the quarter to March. Jefferies qualified Eutelsat’s numbers as “a rare convergence of word and deed” with an evidence-based assessment of risks associated with the coronavirus pandemic.

Both Berenberg and Jefferies pointed to the importance of the company’s current negotiations for a renewal of its contract with Sky Italia, with Jefferies praising CEO Rodolphe Belmer’s limited confirmation that negotiations had started and “hat company guidance is based on prudent assumptions as to the likely outcome”.

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