Eutelsat Communications SA · EURONEXT:ETL
Eutelsat Communications SA — Debt Investor Presentation (February 2019)
42 slides from Eutelsat Communications SA's debt investor presentation, February 2019
Slide 1: Credit Investor Update
CREDIT INVESTOR UPDATE February 2019
Slide 2: Disclaimer
Disclaimer NOTE: UNLESS OTHERWISE STATED, FINANCIAL DATA IN THIS PRESENTATION REFERS TO EUTELSAT COMMUNICATIONS S.A. This presentation does not constitute or form part of and should not be construed as any offer for sale of or solicitation of any offer to buy any securities of Eutelsat Communication
Slide 3: Agenda
Agenda 1 Eutelsat in a snapshot 2 Strategy and Outlook 3 H1 FY 2018-19 performance 4 Conclusion 5 Appendix 3
Slide 4: Organisation chart
Organisation chart ► Simplified organisational chart Eutelsat Communications S.A 96.4% Eutelsat S.A. External Issuer shareholders 3.6% ► No guarantee on financial indebtedeness 4
Slide 5: Eutelsat in a snapshot
Eutelsat in a snapshot KEY DATA REVENUE BREAKDOWN BY APPLICATION By geography ► Revenues of €1.41bn 5% Western Europe 6% Central Europe 11% 30% MENA ► Fleet of 37 satellites; global RCA coverage 10% SSA Americas 6% 8% APAC ► Operating >1,400 transponders 24% Unallocated and others By application ► B
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 Michel A
Slide 7: Eutelsat's global network
iy?) EUTELSAT 113 WEST A EUTELSAT 115 WEST B EUTELSAT 117 WEST A EUTELSAT 117 WEST 8 e i o e800 @ e EUTELSAT 139 WEST A THE EUTELSAT FLEET | @ January 2019 | © eutelsat HOTBIRO 138, 130, 13E ALYAH2* EUTELSAT7 WESTA EUTELSAT 218 EUTELSAT 480 EUTELSATSWESTB EUTELSAT 100 EUTELSAT S3A* EUTELSAT/ 12 WEST
Slide 8: Sound financial structure
Sound financial structure ONGOING DEBT OPTIMISATION NET DEBT TO EBITDA RATIO ► Net Debt/EBITDA ratio reduced to 3.1x • Versus 3.4x at 30 June 2016 • December is usually the peak in the 3.4x annual net Debt given dividend timing 3.2x 3.0x 3.1x ► Pre-hedge of 2020 bond swap component for €500m ► Stron
Slide 9: Bond and bank debt maturity schedule
Bond and bank debt maturity schedule Pre-hedge: €500m at c. 1.12% ex. spread €930m €800m €200m €500m €450m2 (1) €300m 2.625% €600m 2.0% 1.125% 3.125% 2020 2021 2022 2023 2025 Undrawn lines of credit Outstanding Bonds (Eutelsat S.A) Term loan / undrawn line of credits of Eutelsat Communications Note:
Slide 10: Commitment to Investment Grade Credit Ratings for Eutelsat S.A
Commitment to Investment Grade Credit Ratings for Eutelsat S.A MOODY’S S&P FITCH RATINGS ► Current ratings ► Current ratings: ► Current ratings • Eutelsat SA1: Baa3 • Eutelsat SA: BBB- • Eutelsat SA: /stable /Stable3 BBB/Stable5 • Eutelsat • Eutelsat • Eutelsat Communications2: Communications: Commu
Slide 11: Video KPIs: resilience in Europe, growth globally
Video KPIs: resilience in Europe, growth globally SATELLITE GAINING SHARE GROWING CHANNEL LINE-UP INCREASING HD PENETRATION GLOBALLY Satellite TV channels (units) HD channels (units) Satellite Subs (millions) 21 463 216 5 077 194 17 023 86 87 2 020 1 989 6 152 6 346 965 2013 2018 2013 2018 2013 2018
Slide 12: Agenda
Agenda 1 Eutelsat in a snapshot 2 Strategy and Outlook 3 H1 2018-19 performance 4 Conclusion 5 Appendix 12
Slide 13: Reminder: Our strategic roadmap
Reminder: Our strategic roadmap Step 1 Step 2: return to growth GROW TOPLINE MAXIMIZE EXTRACT VALUE CAPTURE THE FREE CASH-FLOW FROM THE CORE CONNECTIVITY GENERATION VIDEO BUSINESS OPPORTUNITY 13
Slide 14: Significant progress on all components of cash generation since FY 16
Significant progress on all components of cash generation since FY 16 Item Achievement Status Guidance reduced from Cash Capex Delivered €500m to €400m LEAP program generating Opex Secured €30m external cost-savings €50m savings through Cash interest Secured bond refinancing Asset >€600m asset sold
Slide 15: Build on our core Video business; capture longer term potential in Connectivity
Build on our core Video business; capture longer term potential in Connectivity to accelerate growth MEDIUM TERM LONG TERM FIXED MOBILE VIDEO BROADBAND CONNECTIVITY Extracting value from the Prepare From niche core business for scalability to mass market ► Growth potential of Video ► Optimize existi
Slide 16: Financial outlook for Eutelsat Communications
Financial outlook for Eutelsat Communications OPERATING VERTICALS REVENUES ► Broadly stable in FY 2018-191 (At constant currency, perimeter and ► Return to slight growth from FY 2019-20 accounting standards) EBITDA MARGIN ► Above 78% from FY 2018-19 (At constant currency) Taking into account impact
Slide 17: Agenda
Agenda 1 Eutelsat in a snapshot 2 Strategy and Outlook 3 H1 2018-19 performance 4 Conclusion 5 Appendix 17
Slide 18: Key financial data
Key financial data First Half Underlying REVENUES 2018-191 performance Operating Verticals €660m -2.4%2 Revenues EBITDA margin At constant currency 79.0% -0.4 pts Cash Capex (€130)m (€77)m Discretionary Free Cash-Flow €235m -30% At constant currency & perimeter Net Debt / EBITDA 3.1 -0.2x (vs. Dec.
Slide 19: H1 2018-19 revenues
H1 2018-19 revenues H1 19 Y-O-Y REVENUE BRIDGE (€M) ► Total revenues of €658m, down 4.4% ► Negative net perimeter impact • Consolidation of Noorsat -2.4% 3 • Deconsolidation of Eutelsat 25B (3) (15) (16) ► Positive currency effect • €/$ rate of 1.16 vs 1.17 last year ► Negative swing of -€15m in 688
Slide 20: H1 2018-19 revenues by application
H1 2018-19 revenues by application REVENUE REVENUES LIKE-FOR-LIKE2 CONTRIBUTION1 (€m) CHANGE CORE BUSINESSES Video 66% 432 -2.0% Government 12% 10% 82 +1.7% Services Fixed Data 10% 66 -11.9% CONNECTIVITY Fixed 6% 40 -5.8% Broadband Mobile 6% 40 +6.7% Connectivity Total Operating Verticals 660 -2.4%
Slide 21: Video
Video 66% REVENUES (€M) ► Revenues of €432m, down 2.0% like-for-like1 ► Core broadcast excluding FRANSAT broadly stable ► High-single digit decline in 437 432 Professional Video ► Channel count up 3.8% yoy Q2 219 Q2 215 • 7,067 channels at end December 2018 • HD up from 18.7% to 21.2% ► H1 commercia
Slide 22: Government Services
Government Services 12% REVENUES (€M) ► Revenues of €82m, up 1.7% like-for- 80 82 like1 ► Incremental business at 174°East Q2 39 Q2 39 ► Impact of low outcome of USG Fall 2018 renewals • Non-renewal of a single sizeable contract with a specific service Q1 41 Q1 42 provider • Not reflective of underl
Slide 23: Fixed Data
Fixed Data 10% REVENUES (€M) ► Revenues of €66m, down 11.9% like-for-like1 73 ► Continuing to reflect: 66 • Highly competitive environment • Ongoing price pressure Q2 36 Q2 33 ► Latin America the main contributor to revenue decline ► Framework agreement with Orange Q1 37 Q1 33 • Multi-transponder re
Slide 24: Fixed Broadband
Fixed Broadband 6% REVENUES (€M) ► Revenues of €40m, down 5.8% like-for-like1 ► Contract expiry for a spotbeam on ETL 3B 43 • Re-contracted to Taqnia in Mobile 40 Connectivity • c.-2 points of impact Q2 21 Q2 20 ► Lower revenues for European Broadband • Scarcity of available capacity in certain West
Slide 25: Mobile Connectivity
Mobile Connectivity 6% REVENUES (€M) ► Revenues of €40m, up 6.7% like-for-like1 reflecting: • New contract with Taqnia at 3°East and 70°East 40 37 • Carry-over effect of entry into service of EUTELSAT 172B Q2 19 • Ongoing ramp up of capacity contracts on Q2 19 KA-SAT ► New multi-transponder contract
Slide 26: Agenda
Agenda 1 Eutelsat in a snapshot 2 Strategy and Outlook 3 FY 2017-18 performance 4 Conclusion 5 Appendix 26
Slide 27: Investment case
Investment case ► Strong market position: among top 3 in the sector with high barriers to entry ► Backlog representing >3 years of revenues ► High profitability and strong cash generation • EBITDA margin objective >78% • Discretionnary-Free-Cash-Flow of €415m, mid-single digit growth CAGR objective
Slide 28: Agenda
Agenda 1 Eutelsat in a snapshot 2 Strategy and Outlook 3 H1 2018-19 performance 4 Conclusion 5 Appendix 28
Slide 29: Video drivers: Channel growth and image quality
Video drivers: Channel growth and image quality CHANNEL GROWTH INCREASED IMAGE QUALITY TV Channels in EMEA and LATAM HD penetration rate by major region ~23,000 49% CAGR: +1.1% ETL footprint 22% Russia and 38% Central Asia 12% 2027 2017 SSA 23% ~20,900 5% MENA 48% 22% LATAM 58% 28% Central 55% Europ
Slide 30: Video drivers: Capacity requirements versus compression technology
Video drivers: Capacity requirements versus compression technology EVOLUTION OF IMAGE QUALITY NUMBER OF CHANNELS PER (NUMBER OF CHANNELS) 36 MHZ TRANSPONDER 25 000 20 000 Format Modulation MPEG-2 MPEG-4 HEVC 15 000 DVB-S ~12 - - SD 10 000 DVB-S2 - ~26 - DVB-S - - - 5 000 HD DVB-S2 - ~9 ~15 0 UHD DVB
Slide 31: Video: Satellite resilience in Eutelsat main European markets
Video: Satellite resilience in Eutelsat main European markets1 MILLION TV HOMES BY DISTRIBUTION MODE IN IP GAINING SHARE VS. TERRESTRIAL, NOT SATELLITE WESTERN EUROPE 73 73 74 ► Slight increase in total number of TV homes 74 million 26 26 25 ► Satellite reception broadly stable at 7 5 6 c.25 million
Slide 32: Video: Satellite gaining market share worldwide
Video: Satellite gaining market share worldwide MILLION TV HOMES BY DISTRIBUTION MODE - GLOBAL 1,624 1,720 ► Total number of TV homes to 1,604 increase by 95 million to 1.7 bn by 475 2022 411 426 171 195 247 ► Satellite reception to grow by 50 million homes to 475 million by 2022 566 555 560 ► Satel
Slide 33: Backlog and Fill Rate
Backlog and Fill Rate BACKLOG (€BN) OPERATIONAL AND UTILIZED TRANSPONDERS 1416 1427 1419 949 971 970 4.7 4.6 4.6 % 85% 83% 77% Video 31 Dec. 2017 30 June 2018 31 Dec. 2018 Fill 67.0% 68.1% 68.3% 31 Dec. 2017 30 June 2018 31 Dec. 2018 rate Operational transponders Utilized transponders ► 3.3 years of
Slide 34: Video KPIs
Video KPIs 6,929 +4% 7,067 (105) 6,824 Progressing channel count June 2018 25B June 2018 ex. 25B Dec. 2018 1,455 (80) 1,375 1,500 +9% Sustained HD ramp-up Penetration 21% 20.1% 21.2% June 2018 25B June 2018 ex. 25B Dec. 2018 4,674 (85) 4,589 +6% 4,858 MPEG-4 more advanced than HD Penetration 67% 67%
Slide 35: Focus on HOTBIRD KPIs
Focus on HOTBIRD KPIs CHANNEL COUNT HD PENETRATION MPEG 4 RAMP UP 346 +7% 584 304 +14% 548 1 002 -24 978 Penetration 30% 35% Penetration 55% 60% Dec. 2017 Dec. 2018 Dec. 2017 Dec. 2018 Dec. 2017 Dec. 2018 ► Lower channel count ► Sustained HD ramp-up, ► MPEG-4 considerably reflects anticipated end ou
Slide 36: Satellite programme capex profile
Satellite programme capex profile BREAKDOWN OF TYPICAL TIMING OF CAPEX CAPEX PAYMENTS 30% 30% 40% YEAR 1 YEAR 2 YEAR 3 Others ► Capex generally split equally over three Insurance years prior to launch Launcher Satellite ► Insurance paid in year three 36
Slide 37: Future launches
Future launches EUTELSAT EUTELSAT KONNECT EUTELSAT EUTELSAT Name 7C 5 WEST B KONNECT VHTS HOTBIRD HOTBIRD 13F 13G Orbital 7° East 5° West TBD TBD TBD 13° East 13° East Position Launch date1 Q2 2019 Q2 2019 H2 2019 H2 2019 2021 2021 2021 Manufacturer Launcher TBD TBD TBD MENA Europe Flexible SSA Euro
Slide 38: Profitability
Profitability EBITDA (€M) ► EBITDA margin of 79.0% at constant currency vs. 79.4% in H1 2017-18 546 518 • Lower ‘Other Revenues’ • Roll-out costs of Konnect Africa • Disposal of ETL 25B Margin at • Consolidation of Noorsat constant 79.4% 79.0%1 currency 77.4 77.4 77.5 ► LEAP cost saving plan in line
Slide 39: Discretionary Free Cash-Flow reflecting Capex phasing
Discretionary Free Cash-Flow reflecting Capex phasing In €m 235 10 FX & perimeter impact 379 1 (130) (24) (1) 225 (1) Net cash Flow from Cash Capex Interest and Other Discretionary Free operations fees paid net of Cash-flow interests received Change at constant (22) (77) (3) (102) FX & perimeter Rep
Slide 40: Eutelsat SA main P&L items
Eutelsat SA main P&L items As of 31 December (Audited) (in € millions) 2017 2018 Change REVENUES 689 659 -4% Operating costs (46) (43) -7% Selling, general and administrative expenses (94) (95) +1% Depreciation and amortisation (232) (235) +1% Other operating income and expenses (10) 46 n/a OPERATIN
Slide 41: Eutelsat SA main Balance sheet items
Eutelsat SA main Balance sheet items As of (in € millions) (Audited) 30 June 2018 31 Dec. 2018 Change Total of non-current assets 5,513 5,349 (164) Total current assets 1,102 1,906 +805 Total assets 6,615 7,255 +641 Total shareholders' equity 2,141 2,002 (139) Total non-current liabilities 3,182 4,0
Slide 42: Speaker and IR Contacts
Speaker and IR Contacts Sandrine TÉRAN Joanna DARLINGTON, Chief Financial Officer Financial Communications Director and Chief Transformation Officer T: +33 1 53 98 31 07 E: [email protected] Cédric PUGNI Alexandre ENJALBERT Head of Investor Relations Investor Relations T: +33 1 53 98 31 54 T:
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