Eutelsat Communications

Welcome to the utilsat full year 2025-2026 results presentation. 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, Jean-François Fallacher, Chief Executive Officer, and Sébastien Rouge, Chief Financial Officer. Please go ahead.

Hello, welcome and thank you for joining us today in the middle of the summer for Utelsat's full year 25-26 results presentation. I am Jean-François Fallacher, the CEO of Utelsat and I am joined today by Sébastien Rouge, our Chief Financial Officer and Joanna Darlington, Head of Investors Relations. So let's go directly to the meat of this meeting and the highlights of our year. So I want to stress that our LIO revenues were ahead of expectations, up nearly 70% year-on-year to almost 300 million euros. And our LIO revenues are now representing 25% of group total revenues. Overall, our full year 25-26 results are in line with objectives. CAPEX are at just under 600 million euros, below the 900 million euro expectations, and Sébastien will come back to that. In March this year, we've added the final touch to our successful 5 billion euros. complete refinancing package with a 1.5 billion bond offering securing our mid-term capex needs and we also secure the major 350 million call of contract under nexus framework agreement with the french procurement arm of the french mod We also welcomed two weeks ago the US FCC C-BAN clearing order which is expected to deliver 504 million dollars in incentives payment in 2031. And finally, the imminent outcome of the IREA Square first rendezvous is expected to confirm Utelsat leadership on the LEO segment. Let's now turn to the financial highlights. Total revenues for full year 25-26 stood as you can read there at 1,235,000,000 down 0,6% on a reported basis and up 3% like for like. Revenues for four operating verticals stood at 1,197,000,000 up by 1.8% on a like-for-like basis. LEO revenues amounted to 297 million euros, up to almost 70%. and now accounting, as I was saying, for a quarter of our revenues. And this is up again by 70% versus last year. Adjusted EBITDA stood at 632 million on 30 of June, down 3.1 points Like for like, adjusted EBITDA margin stood at 51.2, 3.2 points like for like. As mentioned, these results were in line with our expectations. CapEx is at just under €600 million, below the €900 million expectation. This is leaving us with a net debt to EBITDA ratio of 2.32%. Let's go now to our operational performance. I will comment our revenues by vertical. Video, as you can see now, is representing 43% of our total revenues at 519 million euros. This is actually a decline in these legacy revenues by 13.1%. Then if we go to our fixed connectivity revenues, they are now representing 23% of the total group revenues and they rose by 15.6% to 270 million euros. Government services which are now representing 20% of our revenues at 235.5 million euros rose by 17.7% and our mobile connectivity which are representing 14% of the group total revenues with 172 million euros increased by 16%. If we now look at the next page, our total revenues stood at 1 billion 226 revenues. Again, on a like-for-like basis, it is an increase of plus 3%. and they reflected a 51 million negative currency effect and 21 million positive swing in other revenues mainly from revenue recognition from ARRI Square linked to the hotelsat involvement as a consortium system development prime and as well as some edging revenues. And revenues of our four operating verticals were up 1.8% on a like for like basis. Let's now zoom on our video business. As I was saying, video revenues were down by 13.1% this year. This is with no surprise reflecting the underlying market trend compounded as well by sanctions on our Russian channels that were imposed at the beginning of the year and by the termination of capacity contracts on two Russian satellites called X-81 and X-82. So fourth quarter revenues on the video side stood at 124.7 million, down by 14.4% on year-by-year basis, and 2.7% quarter-on-quarter, reflecting actually the first full quarter effects of these contract terminations. I was talking about the 81 and 82 contract terminations. Let's now turn more in detail into our connectivity business. Our total connectivity revenues stood at 677.9 million euros, up by 9.7% on a reported basis and 16.4% like for like. This is clearly thanks to the robust performance of Lio across all three verticals. As I was saying, Leo Growth exceeded expectations, up by almost 70% to 297 million euro revenues. And now, Leo is representing more than 40% of our connectivity business revenues and a quarter of the Group's total top line. The fourth quarter revenues stood at 214.9 million euros, up 24.7 like for like, and 30% quarter on quarter, again powered by the sustained growth in our LEO business. And in particular, they reflected the catch-up revenue recognition with respect to our Nexus framework contract with the French MoD. Now, if we zoom in each verticals on fixed connectivity, I am page 10 on the presentation. Fixed connectivity revenues stood at 270 million by 15.6%. Again here, thanks to the growth of LEO enabled solution and that was partially offset by more challenging conditions for geo-enabled solutions. The fourth quarter revenue of this specific segment were at 77.7 million, up 17% year-on-year, and 27.8% quarter-on-quarter, reflecting again our EU performance as well as catch-up revenue in the fourth quarter. Key wins in this fourth quarter included a new partner agreement with Voimatel, and the delivery of Leo Connectivity Services in Finland, supporting critical network infrastructure, resilient communication for enterprise and public sector customers, and connectivity in high northern latitudes, including Arctic regions, where our constellation is particularly strong. Let's go now to the government services segment where revenues stood up at 17.7%. This is strong growth and this is reflecting the revenue recognition related to the Centaur call of contract, part of again the nexus and the French MoD, as well as increased demand from other non-US governments and services that we are delivering in Ukraine on the LEO constellation. And fourth quarter of this segment was up by 36.9% year-on-year and by 70% quarter-on-quarter. This was linked to the above-mentioned contract with the French procurement arm of the French MoD. On mobile now connectivity. Revenues up 16% year-on-year, precisely 15.9%. This reflected the ongoing strong performance of the aero segment, both on LEO and GEO solutions. This is really a segment where we are benefiting from our multi-orbit capabilities at UTSAT, as well as more limited contribution from maritime, where LEO growth was unfortunately partially offset by softer trends in the GEO services for maritime. Fourth quarter revenues stood at 50 million euros, up 18.6% year-on-year and 11.8% quarter-on-quarter. Let me comment a few commercial successes. In Q4, where we signed a multi-year, multi-million dollar agreement with AST Network to expand the use of Utelsat OneWeb Lio services as part of hybrid connectivity solutions for maritime customers worldwide. Utelsat also signed a new partner agreement with Greece, Tototeo, to deliver the Lio connectivity services to customers across the global maritime sector. and this is clearly strengthening our company's distribution network in this strategic market which is maritime for us. And in aviation, Etelsat signed a multi-year agreement with ANVU for capacity on Etelsat 10B to enhance high-speed in-flight connectivity services, underscoring the role of the geo-capacity within your TELSAT multi-orbit strategy. And elsewhere, we are happy that our distribution partner, SS Intelsat, entered major in-flight connectivity agreements with Japan Airlines and LATAM Airlines that will use our LEO constellation for in-flight connectivity. Our backlog now stood at 3.4 billion on June 30th versus 3.5 billion a year earlier. This is the equivalent of 2.7 times our 25-26 revenues and connectivity represented 61% of the total backlog versus 57% a year ago. As a reminder, the evolution of this backlog is reflecting the increasing weight of Leo business in the mix. And as a reminder, contracts in the Leo business tend to be shorter than the contracts we used to have in the legacy geo application. This explains this slight decrease of the backlog. Moreover, only the secured element or take-or-pays Leo contracts are recognized, while what we call PSGO Leo contracts are not reflected in this backlog. Let's now turn to our financial performance, and I will pass the floor to our CFO, Sébastien Rouge.

Thank you, Jean-François. You covered revenues in detail, so let's now jump straight to profitability. Adjusted EBITDA stood at 632 million for the year ended at the end of June compared to 666 million a year earlier. It's down 6.5%. It was down 3.1% on a like-for-like basis. Operating expenses stood at 604 million. It's up 36 million. They mainly reflected an increase in cost of goods sold for our Leo business, partially offset by the revaluation of share-based compensation schemes that we booked in H1. In terms of margin, adjusted EBITDA margin stood at 51.2% versus 54.4%, down 3.2%. points on both reported and like-for-like basis. If we look at the rest of the PNL, group share of the net result was a loss of 457 million versus a loss of 1.1 billion a year earlier. This improvement reflected lower other operating expenses of 153 million as compared to 777 million last year. As a reminder, fiscal year 25-26 included goodwill and satellite impairments totaling 720 million. We have lower DNA of 699 million versus 808 a year earlier, reflecting the positive effect from the securing of operational continuity of the LEO constellation following the procurement of additional 340 satellites. as well as the end of amortization of certain intangible assets as well as lower on-ground depreciation. We have a net financial result of minus 232 million versus minus 201 a year earlier, mainly reflecting higher interest costs, partially offset by the favorable evolution of foreign exchange gains and losses. Finally, we have a very small corporate tax charge of 1.6 million versus a small gain of 6.7 a year earlier. If we look at our capital expenditure, CAPEX amounted to 594 million as compared to 450 million a year earlier. This increase reflects the progress in the execution of LEO investment programs primarily focused on the Gen1 follow-up activities. It was below the 900 million that we originally anticipated through our first half result communication, mainly due to changes in milestone phasings and good control over geo and ground capexes. It should not be extrapolated for the future years, notably 26-27, where CAPEX is expected to be the region of 1.2 billion. In this context, the group confirms its medium-term plan, covering investments of approximately 4 billion over the period fiscal year 26 to fiscal year 29, funded by its recently completed 5 billion refinancing round. If we look now at our financing structure, at the 30th of June 26, the net debt stood at 1.46 billion, down by 1.2 billion versus the end of last year, mainly reflecting the net proceeds from the capital increase of 1.5 billion. It was partially offset by interest out and costs associated with the execution of our refinancing plan. As a result, the net debt to EBITDA ratio stood at 2.32 times compared to 3.9 times at the end of June 25. The average cost of debt after hedging stood at 4.37%, Along to an ample renewal of our financing capability, the Group was able to take advantage of the 1.5 billion capital increase which has improved its rating and credit appraisal by lenders. The Group has extended the average maturity of its debt now at 4.2 years as compared to 2.5 years at the end of 2025. We enjoy a great level of liquidity with under-owned credit lines and cash in hand at 2.3 billion, complemented by around 690 million of under-owned ECA facilities dedicated to future CapExes. Now I hand back to Jean-François for the outlook and the next steps.

Thank you very much Sébastien. Let's now turn to the outlook where I want to start by commenting on the commercial momentum we've built over the past year. It clearly demonstrates that our strategy is translating into tangible customer wins across all our core markets. In fixed connectivity, as you can see there, we continue to strengthen our presence. with both existing and actually new partners. You can see a list here of our distribution partners and basically customers. Ertel, Orange, Paratus, Intersat are actually reflecting the continued demand for high quality connectivity solutions and the value of our multi-orbit offering. On governmental services, this has been a year where this segment has been a major growth driver with secure landmark agreements, most notably with the French Defence Procurement Agency, DGA, under the Nexus Frame contract and alongside contracts with other institutional customers and partners. These successes are really reinforcing our position as a trusted partner for sovereign and defence communication In an area where the demand really continues to accelerate and on the right side of the chart you can see there that the momentum in mobile connectivity has also been strong because maritime and aviation and the list of partners we are having reselling for her are including here Viasat, Marlin, Panasonic Aviation, Tototeo, AST Network, Stations.com and of course SCS Intelsat. Taken together, I mean, these commercial successes last year are really illustrating the breadth of our customer base, the growing recognition of our capacity and our ability to win a business across a number of verticals. They are providing us with increasing visibility on the revenue growth as our LEO business continues to scale and to increase, of course, that while leveraging the strength of our multi-orbit established GEO franchise. One word about one of the most significant commercial achievements of last year. This is the award of the first call-off contract under the French Ministry of Armed Forces Nexus Framework Agreement. The name of this contract is SANTOR. It has a total value of €350 million over eight years. And it's obviously a major milestone for hotelsat. It's validating our strategic role. and the role that the One Web Constellation can play in supporting as a dual player in supporting sovereign defense communications. This contract is actually composed of a firm commitment of 138 million over the first four years and is enabling immediate deployment of a secure, resilient, Leo connectivity capabilities for the French Armed Forces. Importantly, it is bridging the gap ahead of the deployment of ARRI Square by providing, as we speak, immediately, and we started actually already last year to provide a number of services, this is clearly a solution that is laying the foundation for Europe's future sovereign connectivity infrastructure. Beyond its financial contribution, this contract is strategically important. It is demonstrating the confidence that one of Europe's leading defence organisations is placing in our technology and operational capability. And this is only the beginning. The Framework Agreement Nexus has a 10-year duration, creating a significant pipeline of future opportunities, as additional call-off contracts are going to be awarded to support evolving operational requirements of the French Arm. We believe this contract is positioning Etelsat at the forefront of Europe's sovereign communication ecosystem and is providing an important catalyst for continued expansion of our government services business across other geographies in Europe and outside Europe. A word now on FCC upper seabed transition in the United States. The recent FCC order has been establishing the regulatory framework for the reallocation of 160 MHz upper seabed spectrum in the United States. Under this order, Etelsat is expecting to receive an incentive payment of 504 million dollars pre-tax upon the completion of the transition which is 443 million euro pre-tax upon completion of the transition. These funds will be expected during 2031 and separately the costs that will be associated with this transition are eligible for reimbursement by the FTT and this is coming on top of the 504 million dollar incentives to be received when freeing up this spectrum. Our preliminary transition plan is now under review and will be presented to the FCC in November and the proceeds from this incentive payments in 2031 will contribute to funding our CAPEX requirements beyond 2030-3031. Now, let me say a word on this very important project, which is IRI Square. And I have fresh news, a scoop, as I'm just learning at the moment now I'm speaking that we have finalized and the EC has just been communicating that we have successfully passed a very important milestone for this IRI Square project, which is the so-called Rendez-vous 1 closure, what does it mean? It means that the project that was so far in a phase of design, of preparation, is going into a different operational phase where first of all the Space Rise Consortium is now committed to to build this project and contracts are going to be passed to major prime key subcontractors to build this constellation for Europe's future. This is ARRI Square, the largest public-private partnership ever undertaken in the European space sector. It will provide Europe with a sovereign, secure, resilient multi-orbit connectivity infrastructure. The first rendezvous negotiations are clearly now finalized. We will move now to the next step of this project. This is confirming that Tutelsat has a leading role in this project as a LEO lead within the program. This is clearly reflecting the unique expertise we are bringing to this project, Harry Square, as the only European player with an operational constellation as we speak. And I have to underline that beyond the strategic recognition, IRIS Square will provide access to enhanced network capacity and next generation technological capabilities. So this is really the next generation and the generation two of our constellation that will strengthen our competitive position for the years to come and secure our future until 2040. Ultimately the program again firmly establishes the TELSAT I believe as the heart of Europe's sovereign connectivity ambition and is reinforcing our role as a key strategic infrastructure provider and supporting future growth opportunity for us across not only government but also commercial market, B2B and really underpins now our long-term roadmap. Let's now Turn to our financial outlook. For the financial year ending in June 27, that has just started, our new revenues are set to drive again further strong growth. We are anticipating a rise of over 30%. And as in the previous year, Leo growth will offset the decline in geo-revenues, notably video. In consequence, we expect to deliver slight growth in our total revenues of our four operating verticals, with an EBITDA margin broadly at the same level as last year. This year, gross capital expenditure is expected to amount to 1.2 billion euros. This is clearly reflecting a milestone shift from the previous years, as well as ramp-up of capex associated with the renewal of our current generation of one-web constellation. Elsewhere, we are confirming our revenue expectation in a range of between 1.5 and 1.7 billion for the year ending June 29. that will be again supported by the very strong momentum of Leo Renews. Our operating leverage is set to drive an improvement in operating EBITDA margin which is expecting at this horizon of year ending June 29 above 60%. To conclude, now to sum up, it's been a year of solid execution against our strategic priorities. First, our transformation gains momentum. Low orbit revenues grew by 70% last year. They are now accounting for a quarter of our group revenues. This is really demonstrating the increasing commercial traction of OneWeb. This growth is progressively offsetting the decline and the expected decline of our legacy job business. which nonetheless continues to generate strong, resilient cash flows that are supporting Group's investment strategy. Second, we have fundamentally strengthened our financial position. During last year, we successfully completed a comprehensive 5 billion euro refinancing package, securing funding for our Constellation renewal and other capital expenditure requirements throughout full year 28-29. while we have significantly improved the resilience and flexibility of our balance sheet. Third, we achieved an important milestone with the first major call of contract under the French MoD framework agreement that is representing more than 350 million euros and further on is demonstrating the growing strategic demand for sovereign EU connectivity. and our role as a dual supplier in the MODs segment. Fourth, looking ahead, the FCC's decision on the Upper Seabed Transition in the US will provide $504 million in incentive payments expected in 2031, which will contribute to our long-term financing needs. And finally, The breaking news, the outcome of RIA Square's first rendezvous, which has now been signed this morning, that is obviously a very key and important milestone for Eutelsat and also for Europe, and it is confirming Eutelsat's central role in Europe's sovereign connectivity ambitions, reinforcing our leadership in new services and further strengthening our long-term strategic roadmap. So overall, I believe we live the year as a stronger company, commercially, financially, strategically, with now a clear path to long-term sustainable growth. Thank you very much for your attention and now we will take your questions.

The next question comes from Alexander Peterek from Bernstein. Please go ahead.

Good morning and thank you for taking my question. I just have three, please, if I may. So the first one is on your guidance for the current year fiscal 27. I'm just wondering, are you being very, very cautious was explaining yet another year of flat revenue and how should we think about your mid-term guidance that does model at some point a more meaningful top-line recovery. So when will we finally get this LEO traction that translates into overall group revenue starting to track towards your mid-term guidance levels? Secondly, on the government and defense pipeline, I'm wondering whether you know to what extent the central program helped fourth quarter government revenues was this a one-off particularly strong quarter or should we expect similar streams going forward I just want to know how the phasing of this program works and then thirdly on EBITDA margins that came in a little bit below expectations again we're going to get flat margins for the current year. Is this a function of mix that is detrimental with video declining and that obviously creates high margins or is there anything else at play there? Thank you very much.

Thank you for your questions. I will start to take the second question. On the accounting of our contract with the French MoD, that was an exceptional quarter in the sense that we have recognized revenues because the constellation was used during the year and we signed this contract in June so don't derive that the June revenues are going to flow that way each quarter in 2026-2027 so clearly that was the catch-up in Q4 of some usage that the French MoD did of this constellation in the year that passed. On your first question, first of all, we maintain our expectations in terms of revenues for full year 29 to get between 1.5 and 1.7 billion in full year 29. Leo revenues are expected to continue to accelerate. I mean, again, we have a number of Installation that are growing really in the right way. We are ramping up also the backlog. Consumption is going the right direction. And basically, full year 27, actually, slight growth is explained by actually 27 video revenues, which are expected to face another tough year. and as you remember we had channel losses in Q4 26. We had this 81-82 satellites which we actually abandoned and from 27 sorry from full year 28 we expect the video decline to Abate to more average market trends and therefore growth will come next year. What you see is indeed the video is expected to have tough times again in 27.

The video geo-business.

And your third question was about the EBITDA margin mix. Maybe I will pass the floor to Sébastien.

Yes, I think you have well the answer into your question. We are still in a stage where the LEO business is actually not as profitable as the established GEO one with acquisition costs and the equipments that dilute that. It will normalize throughout the year, but as we said, I think we have in this transition some pressure coming from this mix that remains.

Thank you very much. Thank you.

The next question comes from Utsav Sinha from Alpha Value. Please go ahead.

Hi, good morning. Thank you for taking my question. I just had the question about your capex investment going from now onwards so initially it was planned for the replenishment of generation one satellite so 2 billion but now you're projecting it to be around 4 billion for your mid-term capex investment so I just wanted to understand what would be your like stable level capex ratio based on sales because this 4 billion use looks like quite heavy at the start and also I would like to understand the revenue you expect from the ID Square program. I understand on a technical basis that Utilsat is the leader there, but I would just also like to understand what is the return that you are getting on this kind of capex investments. Thank you so much.

So what we clearly stated last year and at the beginning of the year was that we have a 4 billion cumulative capex between fiscal year 26 and fiscal year 29, which includes in real terms the replenishment of the of the OneWeb constellation, which was indeed highlighted at around 2 billion, and includes as well the early contribution of the Iris Square CAPEX. and that it's important that obviously there will be some shift in phasing but this overall envelope accumulated over four years is confirmed with you have seen lower spending last year and spending that will ramp up a little this year and the next two years will be important CAPEX as well. But we are really maintaining this 4 billion cumulative over four years, which is very well in line with the refinancing package that we have, so that we are sure that we have the necessary fund to engage this CAPEX.

Yeah, thank you so much. But still, I would say like 1 billion, Every year, like for four years, $4 billion. So $1 billion and your revenue is at around $1.2 billion now. So the percentage of sales is quite high. So when do you think it will stabilize?

Yes, we are well aware that it's important. We are well aware that we are in a very specific period in the life of Utelsat where we have to make sure that the current constellation is up and running and that we transition to the next generation of constellations. So that's really the reason why we have put in place this financing package including the large capital increase so that we have the means to, I would say, in a condensed timing, ensure quality of service for our customers that are more important every day and every month after the other. And at the same time, prepare the future, the next generation in the European frame. So it's, we agree, a very intensive timing, but we've been prepared for that.

Okay, thank you so much. That's cool.

The next question comes from Stéphane Béagin from Otto BHF. Please go ahead.

Good morning, thank you. Yes, I'm just wondering to follow up on Iris Square if there is any significant deviation or change to the initial calculation that you provided. especially in terms of the future revenue stream. I guess the CapEx investment is something that we have but probably we have a little more uncertainty perhaps on the revenue stream. So I was just wondering in all the discussion if you've been able to get more commitment, more let's say conviction on the future revenue stream. Second question, I was just wondering whether you can provide us a little more technical features on the new OneWeb and IRIS Square satellites. I'm thinking of speed, possible download speed and capacity from those constellations. And finally, I was just wondering whether you have some takeaways from the Starlink IPO. There's been the disclosure of A lot of things, you know, there are financial numbers, there are strategy, you know, market reaction. I was just wondering whether there are any surprise or any takeaway that can be interesting to you, Tessa. Thank you.

Okay, thanks, Stefan. It's Jo here. So Jean-François said the IRIS announcement is obviously breaking news. We will be releasing our own press release with DITA. I mean, they've obviously, they have announced the global Constellation, we will be communicating like we did last time with details which are more specific to ourselves. So I think what I would ask everybody to do is to wait for that communication and then we'll be able to come back to you at a later stage and answer questions on IRIS squared. So no further communication on IRIS in this call, please. Let's focus on the results. I'll let Jean-François comment on your Starlink question.

Yes, I mean thanks Stefan for the question on Starlink IPO. This was of course interesting because this is the first time they had to publish a prospectus and as you know two days ago they published their first quarterly results. So this is of course interesting because it's a way to get more information about SpaceX, Starlink. So first thing we've derived is and that was a surprise I mean in the prospectus we've seen that the client A so-called client A which is representing almost 25% of their revenues is obviously the federal state the US federal state so we've been I mean it's clear the level of support SpaceX and Starlink are getting from the US government so this is the first thing that struck us I think the second thing that struck us is when we look at their valuation, we see that Eutelsat is extremely undervalued because we are, as I repeat, the second operational low orbit constellation existing today in the world. And you see with the results we are just publishing the growth that we are having. and basically the strategy that the board of Utelsat took a few years ago and the previous management was the right one because this 70% growth year on year on our Leo constellation is actually as we see Compensating actually the decline in legacy geo business so again I mean learning when we look at the valuation of Starlink is that we believe we are undervalued as a company looking at the asset we are currently running and operating.

Thank you and sorry just the other question on you know any technical features you will share with us on the one web replacement and iris square.

I guess the bottom line of my question is... Joanna was saying we will communicate later today on this, but I can already say that this is going to be really a next generation and a cutting-edge technological constellation. which will have obviously, if I'm quoting just a few features, interlink satellites. It will be a multiple layer constellation, which will be the first one of this kind. So it will be a Leo-Mio constellation. And Mio will be also serving besides the ground station in the Earth as a backbone of the constellation. so very advanced constellation it will provide us much more actually capacity than we have today on one web and also I think a feature I want to state because if it's important it will use 5G and TN technology so for IELTS Square we want also to normalize the technology we want to use this is also a way to fight against the American giants because today each of the technology used by ourselves on one web by actually Amazon or by Starlink are full proprietary technologies going to normalize technologies such as 5G and TN which will also help Bringing the cost down, having, let's say, antennas which will be actually cheaper and of a smaller size. So just to give you in a nutshell a few hints of what Irisquare will be looking like. And now we are really, since the announcement of just this morning, entering in the new phase. It's a major milestone for the project. It's a new phase. It's an operational phase where we will invest, the European Commission will massively invest alongside ourselves in order to start contracting with the prime subcontractors, which are going to be... Airbus, Thales Alenia Space, OHP and Aerospace Lab. So the contracts will start in the coming days to really start building this constellation. We compare that to a race. I think the starter has just begun this morning and we are starting to run now full speed to reach this operational constellation as soon as we will be able to have it.

Great, thank you.

The next question comes from Ben Rickett from New Street Research. Please go ahead.

Hi there, thank you. I have two questions, please. The first question just coming back to the 2029 guidance. So your NEO revenue is obviously very strong this year, but you are guiding for that to decelerate to 30% growth next year. And I think that we probably need to re-accelerate to get to the 2029 guidance. So can you talk a bit about What gives you confidence that NEO revenue growth could accelerate in that way? And then I had a second question. There's been some talk about the potential for cooperation between the smaller NEO constellations. So this is something that Telefat has spoken about, and I think it was also the NATO alliance. to facilitate some interoperability between the constellations. So I'd just be interested in your thoughts, whether that is technically possible or whether that would be sort of desirable, that sort of cooperation. Thank you.

Thanks, Ben. I'll take the first question and then pass the second to Jean-François. So I think, I mean, you know, we don't see our Leo growth decelerating. I mean, you know, obviously when you've grown by, You know, by 80% and then 70% in the past two years, it's, you know, I mean, it's not exponential, because obviously you're growing, but off an increasingly higher base. I think the other thing is we do try to give ourselves a bit of headroom. If you remember, we were guiding to 50% LEO growth this year. It turned out to be more like 70%. So we've reiterated our 20, 28, 29 guidance. And that means that we're comfortable with it and that we do expect the LEO to grow sufficiently to offset the decline in the geo verticals.

Yes, on your question about interoperability, I mean, I was saying, I mean, on IRI Square, we are going to go for 5G NTN. I mean, this is a normalized technology. I mean, for that reason, I mean, this is opening potentially some possibilities for interoperability based on the UT technology used. I mean, nonetheless, this is still to be worked out and still to be proven. So I have read, like you, the declarations of Telesat. So we will need to materialize that in the future. At this stage, none of the constellations which are existing are interoperable, unfortunately. Or fortunately, I don't know, but this is the case today.

That's great. Thank you.

As a reminder, if you wish to ask a question, please dial pound key 5 on your telephone keypad. The next question comes from Roshan Ranjit from Deutsche Bank. Please go ahead.

Great. Morning, everyone. I've got three questions as well, please. Jean-François, you've illustrated the kind of government opportunity, and we've seen quite a lot of news flow over recent weeks, particularly the Poland MOU. How should we think about further contracts similar to the Nexus framework tied in with, I guess, Iris Squared? Should we think about future government contracts being on Iris Squared or could we see something similar to Nexus on the existing Utilsat network? And just tied to that, How should we think about the timing of the upside to the Nexus framework? Because as you said, there's up to 350 million. I mean, is that something which we could hear in the next 12 months? Or we think maybe a bit longer? Secondly, strong performance in fixed and mobile connectivity, and that's supported the 70% Leo growth. Is it possible to get a sense of the service versus terminal mix in there? because again I guess that will support the future growth profile in terms of the service revenue ramping up and lastly just on the midterm guidance now we've talked about the revenue angle I've noticed that the margin guidance was turned down a bit what is the reason behind that is that the kind of geo weakness or is that again the equipment versus service mix thank you

Thank you very much. On the service slash terminal revenues, Leo, we are not communicating that, so I will not comment further. On your point that it's been slightly turned down for the EBITDA in 29, it's true, and this is actually linked to mostly GEO, which which as we just said for full year 27 is going to unfortunately continue on a declining trend which will be similar to the one we have seen this year. We have had as you know some further Russian sanctions which are also pushing down the geo video revenues and you have seen as well in the in the communication we are giving if you make the calculation yourself that we have actually declined also in the geo connectivity business which is a bit stronger than what we expected so this is explaining actually this 60% guidance on EBITDA in 2028-29. Now, on your question on, let's say, contracts like Nasus and how they will develop, I mean, now, obviously, that Harry Square is entering in an operational phase, I mean, we see clearer. So, in terms of... expectations is that we are expecting actually our current constellation OneWeb to be operational until 2034 so they will be able obviously this constellation will be able to continue carrying services until 2034 and starting mid-2032 we will start to migrate customers to iris square commercial commercial capacity because as you understood well iris square will be both i would say hardgov military constellation and a commercial constellation so that's the timeline so and and we will and sorry iris square commercial services is clearly the gen 2 of one web so we are going to migrate all our customer base and this is going to be a Over with the current Gen 1 R1 web end of 2034, we are going to migrate all our customers, commercial customers, to actually the IRI Square constellation, commercial payload. And what we believe clearly is that despite the fact that IRI Square will be clearly providing hard gov, hardened military services, there will still be space for, I would say, commercial services because Why we have signed this contract with the French MoD and actually why we see actually a quite strong usage of our services in Ukraine is that basically the conflict in Ukraine has been showing that commercial services are actually working extremely well and are much less expensive than military and ARGOV communication services. If I may say so, the doctrine has changed and MODs in the world are now open to buy dual services, so services that were not originally thought of for military usage but that can be of I would say that can be pertinent. This is what you see in the drone segment, for instance, and of course also the commercial communication segment. So we believe that those two will still coexist in the long term. and therefore we are very confident that our revenues even in the government segment and in the military in the dual let's say in our dual business are going to continue beyond actually 2030 and beyond the arrival of the military hardgov services that will be provided by Airisquare.

That's great. Thank you very much.

The next question comes from Stéphane Bayagin from Otto BHF. Please go ahead.

Yes, thank you. I think last quarter or two quarters ago, we discussed about some business opportunities that you were looking at, such as selling some payload capacity or selling some ground infrastructure capacity. We also discussed the highway industry. I was just wondering whether you can debate us whether you have identified possible future new revenue streams. Thank you.

So the answer is yes. actually we have signed a first contract but this one is confidential so we cannot communicate it but we have signed the first contract for hosted payload and we have a very nourished sales pipe on hosting payloads We see a lot of appetite in a number of geographies not only in Europe but across the world for actually this service. I remind that this is a service we are offering on the 340 satellites tranche, the second tranche that we have ordered in Jan last year to Airbus. And I confirm that the pipe is extremely nourished and we hope to be able to make announcements in the coming months is around this and the second let's say side business which also where we see sorry also a lot of appetite is around our ground because as you know we have a number of teleports we have more than 40 142 operational ground stations for OneWeb across the entire planet. These are quite wide areas, a few hectares of fields with 8 to 12 antennas, which are obviously key to have our OneWeb constellation operational all across the planet. and we see a lot of appetite to host additional antennas or let's say to sweat these assets and we are we have been structuring ourselves in order to derive as much as possible additional revenues from this asset of ours which as you remember last year we were about to solve but which has been actually stopped by the lack of authorization from the French Gov. But I think it has waken us up in terms of the capacity to derive revenues from this asset and we have structured ourselves internally to boost this additional business.

Thank you. And what about the railway industry? Is there some potential in the aviation industry?

Thanks. Yes, on the rail, yes, we see potential. More for the French around this call, we are engaged for now a good year with SNCF how they will actually equip potentially the fast trains in France and we've been trying to understand their needs more precisely to be ready at the moment they will launch an RFP and that I understand should come pretty soon so we will be ready I'm very happy to report that actually we did we are going also to answer an RFP for Renfe which is the Spanish trains and we have conducted actually two weeks ago a very successful test with PKP which is the Polish railways on a fast train going from Warsaw to Kraków that train we have equipped in one of our rail antennas we have made progress because we have certified an antenna for the rail actually to be precise two months ago so it's pretty fresh We just tested it two weeks ago very successfully in one of the wagons of this train which is also paving the way for PKP in Poland to start a tender and to choose actually to complement I would say the classical mobile connectivity on rail by satellite connectivity and we obviously will be present of course there will be competition to be clear but we will fight and we will do our utmost to convince these rail entities that the one web solution in the one web utilities solution is the right one Paul.

Thank you and if I sorry about that just can just follow up a little bit on that just to understand the size of the market or the size of these contracts for now those companies are looking to put connectivity In just a couple of major trend lines, or we are talking about 20%, 40% of their trends. I'm just trying to understand what we're talking about.

Just to be clear I mean this is a sizeable market because what we understand in this company are really looking for equipping a vast majority of their trains whether those are fast trains or whether those are more let's say regional classical trains so clearly you know the feedback we are getting from the rail is that as in aviation i mean the customer experience and the customer satisfaction on the specific item which is onboard connectivity is a black spot i would say that's what they are saying also this is a this is really a topic that they will wish to to solve I mean for those of you which are taking the train between Paris and London and you are probably experiencing once you cross the channel really awful connectivity so we have ourselves this experience so clearly I mean the expectations of these Rail companies are actually to equip a vast majority of their trains. I mean, I'm talking for those who are discussing SNCF, Renfe, PKP in Poland. I mean, but as you know, I mean, each country has its own company. We are also in discussions with British Rail and each country has its own company. So the market, the overall market is vast. And once more, I mean, the one way Constellation is flying all across the planet. So I didn't want to tell you guys, but we have already equipped trains in Kazakhstan and we have trains which are equipped in the Democratic Republic of Congo, for instance. Well, I'm not sure these are very valid reference for speed trains, but nonetheless, there are going to be opportunities in the rail all across the planet in many different geographies. So we see that as alongside maritime and alongside aero, we see that as a potential very interesting segment and this is a very sizable one.

That's very clear, thank you for that.

Ladies and gentlemen, thank you for your participation. This concludes our conference. You may now disconnect. We wish you a pleasant day.