Eutelsat sees OneWeb merger boost annual sales to $2 billion by 2027

  • Q1 sales down 4.5% like-for-like
  • Sees tie-up with OneWeb increasing annual sales and profits
  • Extends the no-dividend policy to three years
  • Stocks fall

PARIS, Oct 12 (Reuters) – Eutelsat Communications (ETL.PA), the world’s third-largest satellite operator by revenue, said on Wednesday it expected its planned merger with Britain’s OneWeb to boost its annual sales at 2 billion euros ($1.95 billion). ) by 2027.

The merger, announced in July and closely watched by the French and UK governments, aims to combine Eutelsat’s fleet of geostationary satellites with OneWeb’s low-Earth-orbit constellation to deliver fast internet services via satellite. Read more

The main companies currently battling for a share of the satellite internet market are SpaceX’s Starlink, owned by Elon Musk, and’s Project Kuiper (AMZN.O).

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The French group expects the combined entity’s annual sales to reach around 1.2 billion euros in 2023, after the transaction is finalized. He said he expected core operating profit to grow at an even faster rate than revenue.

The new company’s earnings before interest, taxes, depreciation and amortization (EBITDA) are expected to grow by more than 10% each year to around 1.4 billion euros in 2027, compared to 700 million euros in 2023, a- he specified.

Eutelsat also extended its non-dividend policy from one year to three years to channel cash flow into investments. The shares had fallen more than 2% in early trading.

“Overall, we continue to struggle with the concept of using ‘cheap’ Eutelsat equity to fund a high-risk acquisition like OneWeb,” JPMorgan said in a note.

Eutelsat – which would own 100% of OneWeb following the deal, which values ​​its UK counterpart at around $3.4 billion – aims to capitalize on the growth of real-time video games and growing demand for connections fast Internet businesses, which increasingly rely on cloud computing services for their day-to-day operations.

Eutelsat, whose stock market value has fallen by nearly two-thirds in five years, also plans to offset the gradual decline of its worldwide TV channel distribution business with the new revenue stream.

The group’s turnover in the first quarter fell by 4.5% on a like-for-like basis to 287 million euros, he announced on Wednesday.

He said the decline in sales was in line with his own targets and he confirmed his full-year targets, including an annual adjusted discretionary free cash flow of 420 million euros.

($1 = 1.0283 euros)

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Reporting by Mathieu Rosemain; Additional reporting by Elena Vardon; Edited by Benoit Van Overstraeten, Andrew Heavens and Louise Heavens

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