Satellite operator Eutelsat OneWeb opened its second-quarter and first half earnings call by talking about its revenues of 572 million euros ($616.2 million), which returned it to topline growth.
“The LEO activities of OneWeb are progressing well, with 100% of the constellation in place and a secured and growing backlog,” Eva Berneke, chief executive of Eutelsat Communications, said during the call.
She added that the company “anticipates an acceleration in revenues in the coming months as the constellation achieves full global operational coverage of the ground network.”
WHY IT MATTERS: Eutelsat OneWeb is a case study for satellite mergers, attaching the geostationary operator with the low Earth orbit (LEO) constellation that predates Starlink. The success of the merged company, which was completed Sept. 28, presents a formidable challenge to the LEO connectivity predominance that Starlink hopes to establish.
BY THE NUMBERS: Q2 results included revenues of $321.8 million, up 3.7% quarter over quarter.
Results for the six months ending December 2023 included:
- $616.2 million in vertical revenues;
- Adjusted EBITDA of $393.86 million;
- Operating income of negative $144.79 million due to the merger;
- Net debt of $4.45 million; and
- A backlog of $4.2 billion.
In January, OneWeb reported that the rollout of its ground network was on track to reach a 90% completion rate in Q2 2024, not meeting its near-term expectations and leading to an adjustment of its financial objectives.
“Delays in the availability of the ground network have impacted revenues, with a mix more oriented towards the sale of user terminals affecting margins, leading us to adjust our expectations for 2023-24,” Berneke said.
NOTEWORTHY: Video accounted for 58% of Eutelsat OneWeb’s revenues across H1, which were down 8% to $356.5 million. This reflects the impact of an early non-renewal of a capacity contract with Digiturk from mid-November 2022 in addition to lower revenues in Europe related to volume reduction with certain sellers and sanctions against Russian and Iranian channels, Eutelsat said.
MARKET REACTION: Eutelsat Oneweb shares initially jumped from $3.97 at market close on Feb. 15 to a high of $4.06 today. At market close, the shares were trading at $3.97.
FUTURE LOOK: Operating costs were $56.27 million higher than the last fiscal year reflecting consolidation efforts with OneWeb alongside investments in future technologies.
Eutelsat is progressing well on the design of the next generation of the OneWeb constellation, based on a stepwise increase in capacity and functionality with a progressive extension which also fully utilizes the current in-orbit assets, Beneke said, which would result in a reduction in expected capital expenditure for the period 2025-30.
BOTTOM LINE: Eutelsat OneWeb appears to be navigating a challenging high-cost period of its history in a competitive environment of economic shocks, but signs suggest the company’s integration efforts will translate to smoother sailing ahead.
“The progress of the integration enables us to confirm the synergies expected from the operation. In particular, cost [and capex] synergies are fully on track, and we have scope to exceed our original plan,” Berneke said.
Editor’s note: All amounts have been converted to U.S. dollars.
