Eutelsat Communications

Welcome to the UTLSAT first quarter 2025-2026 revenues presentation. For the first part of the conference, the participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key 5 on their telephone keypad. Now, I will hand the conference over to the speaker, Christophe Cadrelier, Chief Financial Officer. Please go ahead.

Hello, everyone. Welcome and thank you for joining us today for USTEP's first quarter 25-26 revenues presentation. I'm Christophe Cordier, CFO, and I'm joined today by Joanna Darlington, Head of Communication and Investor Relations. Let's start with the highlights of the past quarter. Leo revenues continued their robust growth rate up 70%. Overall, first quarter revenues were in line with expectations, enabling us to confirm all our full-year 25-26 financial objectives, as well as our longer-term targets. And finally, at the end of September, UTELSAT, on the 30th exactly, UTELSAT held an ordinary and extraordinary general meeting where all resolutions related to the contemplated capital increases were approved. Let's now turn to the Q1 performance. First, as a reminder, All commentary is on a like-for-like basis, that is to say at constant currency and parameter. Total revenues for the first quarter stood at 293 million euros, virtually stable at minus 0.3% on a like-for-like basis. They reflected a €10 million negative currency effect and a €7 million positive swing in other revenues, mainly from hedging, as well as revenue recognition from Iris Square related to UTADSAT's involvement as consortium system development prime. Revenues of the four operating verticals were down 1.2% on a like-for-like basis. Let's have a look at the segmental reporting. Video representing 47% of revenues stood at 133.6 million euros, a decline of 10.5%. Fixed connectivity revenues representing 22% of the group total rose 16% to 62.3 million euros. Government services 19% of revenues stood at 52 million euros, a rise of 18.5%. And finally, mobile connectivity revenues, representing 12% of the group total, stood at 34.7 million euros, a decline of 12%. I will come back to this. Let's now start with a video. As said above, Q1 video revenues amounted to €134 million, down 10.5% year-on-year. They reflect the ongoing mid- to high-single-digit secular market decline, but also the negative effect of the latest sanctions imposed on Russian channels. As a reminder, this started in July 2025, with an impact of around €16 million expected for the full year 2025-2026. On a quarter-on-quarter basis, revenues were down by 8.3%, more in line with the underlying market trend. On the commercial front, UTELSAT renewed contracts, notably with key regional player BHS Telecommunications, confirming the 7-8 degree west video neighborhood as the leading satellite position in the MENA region. Let's now have a closer look to connectivity. Total connectivity accounts for 53% of total sales and well over half of the operating vertical's revenues. First quarter revenues stood at 149 million euros up 8.6%. As stated above, this growth was primarily driven by LEO revenues up 71% to 54 million euros and representing over one third of the connectivity top line. The LEO trend fully offsets the geo-connectivity decline of 10% to 95 million euros. quarter-on-quarter revenues were down by 13.2%. This sequential decline was mainly the reflection of an exceptionally high level of LEO terminal sales in Q4-24-25 across all three verticals, but predominantly government services and mobility. As a result, LEO revenues in the first quarter were down 20%, reflecting this impact as well as the non-recurrence of catch-up revenues recorded in Q4-25. Let's look at each vertical in more detail now. Q1 fixed connectivity revenues stood at 62 million euros, up 15.9% year-on-year, reflecting continuing growth in LEO services. revenues were impacted by the cessation of revenue recognition from TIM on Connect VHTS since January 2025 with an annualized impact of around 12 million euros. As a reminder, this impact will wash through as of Q3 2025-2026. On a quarter-on-quarter basis, revenues were down by 6%. This reflected, in particular, more challenging conditions for geo-enabled solutions. On the commercial front, UTELSAT signed a strategic partnership with Twisas for LEO connectivity in Greenland, as well as an agreement with NELCO, part of the TATA group, to deliver LEO connectivity across India. Moving to government services, revenues stood at 52 million euros, up 18.5% year-on-year. This rise reflected the growing demand on LEO-enabled connectivity solutions for governmental applications, notably with services delivered in Ukraine. On a quarter-on-quarter basis, revenues were down 17%, reflecting mainly the above-mentioned terminal impact. Mobile connectivity revenues stood at 35 million euros, down 12.1% year-on-year. They mainly reflected lower geo revenues, as well as the non-recurrence of a one-off contract in aviation for about 3 million euros in Q1 2425. On a quarter-on-quarter basis, revenues were down by 19%, reflecting a one-off revenue catch-up in Q4 2025 and a slowdown in GEO in addition to the above-mentioned terminal impact. Moving to backlog, it stood at 3.5 billion euros at the end of September 2025, stable versus end of June 2025. It was equivalent to 2.8 times fiscal year 24-25 revenues with connectivity now representing 58% of the total. Let's now turn to the outlook. The first quarter performance was in line with our expectations with a further sharp rise of LEO revenues of setting the decline in GEO. which embarked the impact of further Russian sanctions in video from July 1st. As a result, we confirm our fiscal year 25-26 financial objectives with revenues of the four operating verticals in line with the level of fiscal year 24-25, LEO revenues to grow by 50% year-on-year, an adjusted EBITDA margin slightly below the level of fiscal year 2024-2025. Gross capex expenditure is expected in a range of 1 to 1.1 billion euros. Following the contemplated capital increases announced in June 2025 and due to be completed by the end of calendar year 2025, Net debt on adjusted EBITDA ratio is estimated at around 2.5 times by year-end 2025-2026. Our longer-term objectives are also confirmed. Revenues of the four operating verticals between 1.5 to 1.7 billion euros by the end of fiscal year 2028-2029, with LEO revenues significantly outperforming the market. Operating leverage, driving a mid to high single digit percentage point improvement in the EBITDA margin, resulting in a margin of at least 60% by fiscal year 28-29. With that, I thank you very much for your attention. And together with Joanna, we are now ready to take your questions.

Ladies and gentlemen, if you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Roshan Ranjit from Deutsche Bank. Please go ahead.