Eutelsat Communications SA · EURONEXT:ETL
Eutelsat Communications SA — Debt Investor Presentation (October 2020)
39 slides from Eutelsat Communications SA's debt investor presentation, October 2020
Slide 1: Credit Investor Update
CREDIT INVESTOR UPDATE October 2020
Slide 2: Disclaimer
DISCLAIMER NOTE: UNLESS OTHERWISE STATED, FINANCIAL DATA IN THIS PRESENTATION REFERS TO EUTELSAT COMMUNICATIONS S.A. This presentation has been prepared by Eutelsat Communications solely for informational purposes. This presentation does not constitute or form part of and should not be construed as,
Slide 3: Agenda
AGENDA 1. Eutelsat in a snapshot 2. Strategy and Outlook 3. ETL Communications FY 20 performance 4. Conclusion 5. Appendix 3
Slide 4: Organisation chart
Organisation chart • Simplified organisational chart Eutelsat S.A. Bond Issuer 3.6% 96.4% Eutelsat Communications S.A External (listed company) shareholders • No guarantee on financial indebtedeness 4
Slide 5: Eutelsat in a snapshot
EUTELSAT IN A SNAPSHOT KEY DATA REVENUE BREAKDOWN BY APPLICATION • FY 20 revenues of €1.28bn Western Europe BY GEOGRAPHY 9% 7% Central Europe • Fleet of 39 satellites1; global coverage 26% MENA 10% RCA • Operating >1,370 transponders SSA 10% 9% Americas • Broadcasting ~6,800 channels 7% APAC 22% Una
Slide 6: Highly experienced management team
Highly experienced management team ► CEO of Eutelsat Communications since March 2016, implemented new strategic plan ► 20-year experience in the Video industry Rodolphe Belmer ► Former CEO of Canal+ Group, led the Group’s diversification into FTA CEO ► Board member of Netflix ► HEC graduate ► Joined
Slide 7: Eutelsat's global network
EUTELSAT’S GLOBAL NETWORK As of 30 September 2020 • 7
Slide 8: Business characteristics
BUSINESS CHARACTERISTICS •High barriers to entry Finite resource of orbital positions and frequencies, heavily regulated at international level with key commercial orbital positions have already been developed High upfront CAPEX before operations High technology and technical expertise through
Slide 9: Relative resilience to Covid-19
RELATIVE RESILIENCE TO COVID-19 Activity characterized by long-term contracts, a substantial backlog and the criticality of our capacity for customers Resilience of core broadcast (>60% of revenues) Professional Video, in particular Occasional Use (c.1%) impacted by cancellation of sport events Mobi
Slide 10: Robustness of core broadcast
ROBUSTNESS OF CORE BROADCAST CHANNEL KPIs LEADING TO UNDERLYING STABILITY GROWTH IN MBPS OF CORE BROADCAST CONSUMPTION EVOLUTION OF CORE BROADCAST REVENUES 6,548 + 4% 6,788 197 197 198 197 196 195 197 197 193 192 196 194 CHANNEL COUNT June 2017 ex. 25B June 2020 1,679 1,097 +53% HD PENETRATION 17% 2
Slide 11: Satellite continuing to gain share in our footprint
SATELLITE CONTINUING TO GAIN SHARE IN OUR FOOTPRINT Expansion of satellite households in most regions Region Satellite 2015-2019 Satellite Satellite HH (m) CAGR penetration Rank WEU 47m -1.5% 27% #2 CEU1 40m +0.1% 31% #1 MENA 58m +2.4% 66% #1 AFRICA 24m +11.8% 29% #1 EUTELSAT FOOTPRINT 169m +1.7% 36
Slide 12: Sky Italia: strategic renewal at Hotbird
SKY ITALIA: STRATEGIC RENEWAL AT HOTBIRD THE ANCHOR KEY TERMS KEY MESSAGE CUSTOMER AT HOTBIRD Share of total Group Revenues Multi-year agreement Unmatched coverage of Hotbird 6% Massive secured backlog of Long term effectiveness of c.€450m satellite for linear distribution in Future extension opti
Slide 13: Sound financial structure
SOUND FINANCIAL STRUCTURE ONGOING DEBT OPTIMISATION NET DEBT (€bn) AND NET DEBT/EBITDA EVOLUTION Net Debt/EBITDA ratio of 3.05x • 4.0 vs 3.44 as of 30 June 2016 3.6 3.2 3.1 Net Debt of €2,999m • 3.0 vs €4,007m as of 30 June 2016 Average cost of debt after hedging of 2.4% • Average weighted matur
Slide 14: Bond & bank debt maturity schedule
BOND & BANK DEBT MATURITY SCHEDULE Lines of credit of Eutelsat S.A Term loan / undrawn line of credits of Eutelsat Communications Outstanding Bonds Note: Maturities are provided on a calendar year 1 Bond and Bank debt maturity schedule as of 30 June 2020, excluding ECA loans and lease debt. The €300
Slide 15: Commitment to IG credit ratings for Eutelsat S.A
COMMITMENT TO IG CREDIT RATINGS FOR EUTELSAT S.A S&P FITCH Current ratings Current ratings Eutelsat SA: BBB/Stable4 Eutelsat SA: BBB-/Stable1 Eutelsat Communications: BBB/Stable5 Eutelsat Communications: BB+/Stable2 Confirmed on 15 September 2020 Confirmed on 15 April 2020 «Early remedial ac
Slide 16: Agenda
AGENDA 1. Eutelsat in a snapshot 2. Strategy and Outlook 3. ETL Communications FY 20 performance 4. Conclusion 5. Appendix 16
Slide 17: Reminder: our strategic roadmap
REMINDER: OUR STRATEGIC ROADMAP STEP 1 STEP 2: RETURN TO GROWTH GROW TOPLINE MAXIMIZE EXTRACT VALUE CAPTURE FREE CASH-FLOW FROM THE CORE THE CONNECTIVITY GENERATION VIDEO BUSINESS OPPORTUNITY 17
Slide 18: DFCF/revenue ratio doubled in five years
DFCF/ REVENUE RATIO DOUBLED IN FIVE YEARS Reported DFCF / revenue 16% 28% 29% 31% 37% ratio 1,529 1,478 1,408 1,321 1,278 415 474 408 408 247 FY 2015-16 FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20 Adjusted DFCF growth1 +65% +12% +10% +6% Total revenues Reported Discretionary Free Cash Flow 18 • Data
Slide 19: Preparing for return to growth in fixed broadband
PREPARING FOR RETURN TO GROWTH IN FIXED BROADBAND Progress in Europe and Africa Jan 20 March 20 June 20 July 20 Fall ‘20 to early ‘21 Launch of MoU with Agreement with BBB Gradual entry EUTELSAT Schoolap in Orange for acquisition1 into service of KONNECT DRC entire French adding retail KONNECT capac
Slide 20: FY 2020-21: revenue trends by application
FY 2020-21: REVENUE TRENDS BY APPLICATION Continued dynamism in SSA BROADCAST Limited available capacity in other geographies Forthnet specific renegotiation in Greece Continued double-digit price decline in Fixed Data DATA & PROFESSIONAL Improving volume trends in Fixed Data VIDEO Gradual recovery
Slide 21: Financial outlook
FINANCIAL OUTLOOK OPERATING VERTICALS ► Between €1,180m and €1220m REVENUES1 in FY 2020-21 ► Not exceeding average of CASH CAPEX €400m2 per year for the period July 2020 to June 2022 ADJUSTED ► Between €420m and €450m DISCRETIONARY FREE CASH FLOW3 in FY 2021-22 ► Maintain investment grade rating LEV
Slide 22: Targeted growth capacity to progressively support topline
TARGETED GROWTH CAPACITY TO PROGRESSIVELY SUPPORT TOPLINE Incremental capacity Key markets CY 2020 CY 2021 CY 2022 CY 2023 Jan. Video 19 Ku Sub-Saharan EUTELSAT 7C Africa Jan. Fall 20 to early 21 65 Ka spotbeams Broadband KONNECT 75 Gbps Europe/Africa Q4 End-Q1 EUTELSAT 8 “QUANTUM” Government QUANTU
Slide 23: Agenda
AGENDA 1. Eutelsat in a snapshot 2. Strategy and Outlook 3. ETL Communications FY 20 performance 4. Conclusion 5. Appendix 23
Slide 24: Key figures
KEY FIGURES Y-o-y change Reported As per financial objectives definition OPERATING VERTICALS €1,276m at reported €/$ rate REVENUES -2.8% -3.9%1 €1,261m at 1.14 €/$ rate EBITDA MARGIN 76.8% reported -1.3 pts 76.9% at constant currency CASH CAPEX €222m -31.5% DISCRETIONARY €474m reported +16.3% +5.7%2
Slide 25: FY 2019-20 revenues by application
FY 2019-20 REVENUES BY APPLICATION REVENUE REVENUES LIKE-FOR-LIKE2 CONTRIBUTION1 (€m) CHANGE BROADCAST 61% 785 -1.2% DATA & 14% PROFESSIONAL 175 -14.1% VIDEO GOVERNMENT 13% SERVICES 161 -3.3% FIXED BROADBAND 6% 77 -5.6% MOBILE CONNECTIVITY 6% 79 -5.1% TOTAL OPERATING VERTICALS 1,276 -3.9% OTHER REVE
Slide 26: Discretionary free cash flow
DISCRETIONARY FREE CASH FLOW In €m 483 8 FX, Hedging & one-offs related to LEAP 2 and to (222) HQ move 779 (83) 1 (1) 474 Net Cash Flow from Cash Capex (1) Interest and Other fees paid Discretionary Free Cash Flow operations net of interests received Change as per financial objectives +26 Reported c
Slide 27: Agenda
AGENDA 1. Eutelsat in a snapshot 2. Strategy and Outlook 3. ETL Communications FY 20 performance 4. Conclusion 5. Appendix 27
Slide 28: Investment case in a nutshell
INVESTMENT CASE IN A NUTSHELL Strong market position: among top 3 in the sector with high barriers to entry and a backlog representing > 3 years of revenues High profitability, strong cash generation and upcoming C- Band proceeds Sound financial structure with a leverage under control, a commitment
Slide 29: Indicative terms & conditions
INDICATIVE TERMS & CONDITIONS ISSUER EUTELSAT SA ISSUER RATING AND EXPECTED ISSUE RATING BBB- stable / BBB stable (S&P / Fitch) STATUS (NOTES) Senior, unsecured notes, RegS, Bearer CURRENCY, SIZE EUR, 500M (expected) EXPECTED TENOR 8 years COUPON Fixed, Annual SPECIFIED DENOMINATION €100,000 + €100,
Slide 30: Agenda
AGENDA 1. Eutelsat in a snapshot 2. Strategy and Outlook 3. ETL Communications FY 20 performance 4. Conclusion 5. Appendix 30
Slide 31: Eutelsat S.A financials
EUTELSAT S.A FINANCIALS Extracts from the consolidated income FY FY statement in €m1 CHANGE 2018-19 2019-20 Revenues 1,324 1,281 -3% Operating costs -90 -89 -1% SG&A -195 -203 4% Depreciation and amortisation -474 -486 3% Other operating income and expenses 13 37 181% Operating Income 578 539 -7% Ne
Slide 32: Eutelsat S.A financials
EUTELSAT S.A FINANCIALS Extracts from the consolidated Balance sheet in 30 JUNE 2019 30 JUNE 2020 CHANGE €m Total of non-current assets 5,290 5,221 (69) Total current assets 1,891 1,296 (595) Total assets 7,181 6,517 (664) Total shareholders' equity 2,181 1,930 (251) Total non-current liabilities 3,
Slide 33: Eutelsat S.A financials
EUTELSAT S.A FINANCIALS Extracts from the consolidated cash flow FY FY statemetn in €m1 CHANGE 2018-19 2019-20 Net cash flows from operating activities 855 782 (73) Net cash flows used in investing activities (143) (80) +64 Net cash flows used in financing activities 35 (1,329) (1,364) Increase (dec
Slide 34: Eutelsat's SA financial structure
EUTELSAT’S SA FINANCIAL STRUCTURE ONGOING DEBT OPTIMISATION NET DEBT AS PER COVENANT DEFINITION (€M) Average cost of debt after hedging of 2.73 % • 2,474 Average weighted maturity of 3.7 years • Strong liquidity • Cash and undrawn credit lines of > €1bn 2,403 Investment grade ratings confirmed pos
Slide 35: Further decrease in net debt of Eutelsat Communications
FURTHER DECREASE IN NET DEBT OF EUTELSAT COMMUNICATIONS In €m -€73m +46 +39 (20) +20 (474) +316 3,073 2,999 Net Debt as Reported Dividend Equity Share Pre-Hedge Other Net Debt as* of 30/06/19 DFCF investments buyback settlement of 30/06/20 35 Data for Eutelsat Communications as of 30 June 2020 •
Slide 36: Future launches
FUTURE LAUNCHES KONNECT EUTELSAT EUTELSAT EUTELSAT 10B NAME VHTS HOTBIRD 13F HOTBIRD 13G Orbital 48°East TBD 13° East 13° East 10° East Position Launch date1 Q4 2020 H2 2021 H2 2021 H2 2021 2022 Manufacturer Launcher TBD TBD TBD TBD Coverage Flexible Europe Europe Europe EMEA, Atlantic & Indian Ocea
Slide 37: C-Band
C-BAND In its order on the C-band, voted on February 28, the FCC confirmed its plan to clear the frequency band 3.7-4.0 GHz in CONUS and • make it available for flexible use, including 5G, via a public auction. The schedule for clearing the 300 MHz of C-band satellite spectrum will be concluded by D
Slide 38: ESG strategy
ESG STRATEGY • Given the nature of its activities, the Group has a limited impact on greenhouse gases emissions CSR strategy seeks to focus on those areas where it can maximise its impact without neglecting • other aspects • Four major areas of focus are identified Engaging in efforts to bridge th
Slide 39: Speaker IR contacts
Sandrine Téran SPEAKER Chief Financial Officer Joanna DARLINGTON T: +33 1 53 98 31 07 E: [email protected] IR CONTACTS Cédric PUGNI T: +33 1 53 98 31 54 E: [email protected] 39
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