Eutelsat Communications

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

Good evening, welcome, and thank you for joining us today for UTELSAT 3rd Quarter 25-26 Revenue Presentation. I'm Sébastien Rouge, Chief Financial Officer, and here with me, Joanna Darlington, Head of Investor Relations, and Hugo in her team. Let's start with the highlights of the past quarter. Third quarter operating verticals revenue of $283.7 million, up 0.9% year-on-year, in line with our expectations. Connectivity saw further double-digit growth of 15%, driven by LEO-enabled solutions, up 65% year-on-year. During the quarter, we successfully completed the closing of a 1.5 billion senior note offering that was the final milestone in the group's comprehensive 5 billion equity and debt refinancing strategy. And finally, based on the performance of the first nine months, we confirm our objectives of the full year. If we turn now to the Q3 performance. As a reminder, all comments are on a like-for-like basis, which means at current scope and currency. Total revenues for the third quarter stood at 293 million euros, up 3.1% on a like-for-like basis. They reflected a 20 million negative currency effect and a 10 million positive swing in other revenue, mainly driven by the recognition of Iris Square and related to Eutelsat's involvement as consortium system development prime. Revenues of the four operating verticals were up 0.9% on a like-for-like basis. Let's now have a look at the segmental reporting. Video, representing 45% of revenue, stood at 128 million euros, a decline of 13.3%. Fixed connectivity revenues, representing 21% of the group total, rose 10.6% to 60 million euros. Government services, 18% of our revenue, stood at 50 million euros, a rise of 11.8%. And finally, mobile connectivity, representing 60% of our group total, stood at 45 million, representing an increase of 27%. Let's start with the details of video. As said above, third-quarter video revenues amounted to 128 million euros, down 13.3% year-on-year. This reflects the impact of sanctions on Russian channels imposed at the beginning of the year, and from March 26 onwards, the termination of capacity contracts at the Express 81 and 82 satellites. On a quarter-on-quarter basis, revenues were down 3.6%, reflecting notably the above-mentioned termination of 81 and 82 contracts. Since February 26, UTELSAT has renewed multiple capacity agreements, notably with USAT at the 7-8 West Video neighborhood to support development of broadcast markets in MENA. in Mexico with Cadena 3, part of Grupo Imagen, and with PCTV, a leader in continued distribution of video services, using our UTELSAT 117 West-A satellite. Elsewhere, UTELSAT ints a new partnership with Coop Cable, for direct-to-home and connectivity offerings across the Caribbean, leveraging our UTELSAT-65 WestA satellite. Let's now take a closer look at connectivity, which accounts for 55% of our sales, well over half of our operating verticals revenues. Total connectivity revenue for the third quarter stood at 155.7 million, up 15.3% year-on-year. Once again, they were driven by the strong LEO growth, up 65%. If we look now at each vertical in more detail, Third-quarter fixed connectivity revenues stood at 60.3 million, up 10.6% year-on-year. They reflected the continued momentum of geo-enabled connectivity solutions, partially offset by more challenging conditions for geo-enabled services. Quarter-on-quarter revenues were down 12.9%. This was due to the one-off positive impact that we shared in Q2, coming from the upfront recognition of revenue relating to a capacity contract. On the commercial front, Utelsat signed a multi-year agreement with MTM Côte d'Ivoire to deliver satellite connectivity services using Utelsat Connect's high-throughput capacity. Third-quarter government services revenues stood at 50.4 million, up 11.8% year-on-year. They reflected continued growth in LEO-enabled solutions, notably through services delivered in Ukraine, alongside rising demand from non-U.S. governments. Quarter on quarter, revenues were up 10%, notably due to the acceleration of LEO activities. In the fourth quarter, UTELSAT expects to recognize revenue from the Nexus Framework Agreement with the French Ministry of Defense. As previously communicated, revenues will ramp over the 10-year duration of this agreement. Third quarter, mobile connectivity revenues stood at 45 million, up 27% year-on-year, reflecting the ongoing growth in the aerial segments across both GEO and LEO solutions. Quarter on quarter, revenues were up 8.3%. In aeromobility, a significant new connectivity agreement Powered in part through our LEO network was announced for Japan Airlines with more than 40 wide-body aircraft set to be equipped with a next generation of in-flight connectivity solutions. It adds to the significant numbers of aircraft already equipped and in the pipeline. Elsewhere, UTELSAT entered a multi-year partnership with Singapore-based CanMarine to deliver maritime connection LEO services. Furthermore, UTELSAT and its long-standing partner India's Stations.com, a leader in maritime connectivity, signed an expanded multi-year, multi-million-dollar agreement to scale the deployment of LEO connectivity services across its global maritime fleet. Finally, UTELSAT continued to expand its portfolio of user terminals for real applications, with partners including Kymeta and Hughes Network Systems, developing and testing dedicated rail-certified hardware optimized for the OneWeb-LEO network. If we look at the backlog, it stood at 3.4 billion at the end of March 26, stable as compared to end of December 25. The natural erosion of the backlog was completely offset by the renewal of Polsat video contracts and growth in the LEO backlog. It was equivalent to 2.8 times our fiscal year 25 revenues, with connectivity representing 58% of this backlog. Let's now turn to the outlook. On the back of the performance of the first nine months, well in line with what we thought, we confirm our objective for the full year 2025-2026. Revenue of the four operating verticals in line with the level of last year. Leo revenues to grow by 50% year-on-year. Adjusted EBITDA margin slightly below the level of the one of fiscal year 2024-2025. Also, we expect gross capital capex capital expenditure to be around 900 million. Following the successful completion of the capital increase in December 25, net debt to EBITDA is estimated at circa 2.7 times by year end. Our longer-term objectives in terms of revenue and EBITDA margin are also confirmed. I thank you very much for your attention, and we are now ready to take some questions.

Ladies and gentlemen, if you wish to ask a question, please dial pound key 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial hashtag 6 on your telephone keypad. The next question comes from Roshan Ranjit from Deutsche Bank. Please go ahead.