EuroBusinessMedia (EBM): Eutelsat Communications, one of the world’s largest satellite operators, reports results for the first half of its fiscal 2012/2013. Michel de Rosen, welcome.
Michel de Rosen: It’s a pleasure to be with you today.
EBM: You are the CEO of Eutelsat Communications, what are the highlights of your first half results?
Michel de Rosen: It’s a solid first half. Good results, in line with our targets. Let me share a few figures with you. Our revenues are up by more than 5%. Our EBITDA margin is more than 79%, which is the top in the industry leaders. Our net result - our bottom line - is up by 14%. Our backlog is up to a record level of €5.4bn, giving us excellent visibility for the mid-term and also during this period we launched two new satellites, Eutelsat 21B and Eutelsat 70B, both focused on emerging markets and we also acquired and integrated smoothly Eutelsat 172A, which is a satellite we acquired from General Electric, which helps us increase our presence in the Asia-Pacific region. So overall, it has been a good first half and we are today confirming our goals for the year and for the three years 2012 - 2015. Let me add a comment on what is our most important business, the Video business. Video represents 70% of our revenues, so it’s clearly the lion’s share. Well, that business grew around 7% in the first half and this growth doesn’t come just like that. It is based on two important trends. One trend is that the number of television channels continues to grow, especially in emerging markets. And the other trend is the expansion of High-definition. High-definition for us is very good, because when a channel moves from Standard Definition to High-definition it increases, all other things being equal, the need for satellite capacity by a factor of 2.5, so High-definition is for us very good. So, a good half year for Eutelsat and a very good half year for our number one business, Video.
EBM: And what about the other parts of your business, Data and Value-added services and Multi-Usage?
Michel de Rosen: Data and Value-added services represent 20% of the revenues of the company. Value-added services had a very strong first half of 2012/2013, based on two engines. One engine is our KA-SAT business, which has grown both in the B2B2C segment, two-way, for individual people, but also in the B2B arena. Just one figure; we had at the end of December 2012, 72,000 activated terminals for people and this figure will continue to grow. The second engine for this part of the company is mobility, especially mobility in the maritime field, for cruise ships and this activity has also grown nicely and has added to the growth of the company. We also have Data; our Data business declined by 1.5% during this first half, but during the period, at the end of this period, we added new capacity which will be an important foundation for future growth of this Data business. Thirdly: Multi-Usage. Multi-Usage represents approximately 10% of our revenues. We had flagged the fact that our February/March campaign of 2012, a year ago, had not been very good and therefore that we should expect, for a few quarters, a limited decline. The campaign of last September was good and we have added recently some new capacity. Therefore, we can expect growth to come back.
EBM: You have now smoothly integrated 172A, a satellite recently acquired from General Electric, what is your update?
Michel de Rosen: We are very pleased with this acquisition. This proves to be a very good move. First of all, the satellite works well, so operationally it works fine. Secondly, it also works very well commercially. Clients are using it and they enjoy it. Thirdly, financially it’s also good. We got it at a good price and it is accretive already in Year 1. At least as important is the quality of the people that have come with that satellite. Came with the satellite two teams. One team based in Washington and one team based in Singapore. So the Washington team is now merging into our already present Washington team. And the team in Singapore is now the foundation for the newly created Eutelsat Asia, which is a first for Eutelsat. Before we had a limited presence in China. Now we have a real team in Singapore, and which I’m convinced will be a solid foundation for future growth, both organic and potentially, one day, again inorganically. Finally, I think the success of this acquisition, of this integration is a good step, a good way for Eutelsat to start building a track record for future inorganic initiatives that we may want to take in the coming years.
EBM: In addition to the integration of 172A, you have also launched two satellites in the first half. What can you tell us about these satellites?
Michel de Rosen: Our technical teams did a tremendous job launching two new satellites in two months, one in November, one in December. Eutelsat 21B was launched and has been operational now since December of 2012. It provides services in the Data segment and in the Multi-Usage Government segment. It provides services in Central Asia, in Europe, in North Africa and in Sahel, so mid Africa. It will be a good foundation for future growth for the company. The other satellite is Eutelsat 70B. This one is operational since January. It also provides services in Data and Government Services, but also in Professional Video. And this one has four beams, one in Africa, one in Europe, one in Asia and one in Australia. This one will also be a precious foundation for future growth.
EBM: You also did some commercial development recently. What can you tell us about it?
Michel de Rosen: In our business, of course it is important to have the right satellites at the right place. It is important to have the right expertise, it is important to innovate, but it is also absolutely vital to serve our customers and to be close to our customers. And therefore we have decided to expand the reach of our commercial presence, to be closer geographically to our customers. Specifically we recently took four initiatives. One is to open an office in Johannesburg, to serve many of our African customers. Another office we are opening in Dubai to serve customers in the Middle East and North Africa. Thirdly, we have also opened an office in Tampa, to serve government customers based in Florida. And finally, we opened the Eutelsat Asia office in Singapore. Overall, besides the headquarters where we are meeting today here in Paris and our teleports, we now have 14 decentralised commercial locations, all across the globe. I’m convinced that these will help us serve our customers better and nourish the growth of the company.
EBM: And finally, what is your outlook for the rest of the year?
Michel de Rosen: Well, if I may, before I say a few words about the outlook for the rest of the year, I’d like to make the following more mid/long-term focus comment. I’m convinced that we are - our company, our industry - in the middle of a very dynamic revolution: the digital revolution. On one hand, people want more and more pictures, more and more television channels, more and more quality pictures, with larger screens. More and more of that means more and more satellite capacity. And on the other hand, people want to be connected, all the time, everywhere. They want to be able to send not just a letter, they want to be able to send a book, to send some music, to send a video or whatever. This means need for broadband capacity; this means need for more satellite capacity. So we are on that wave and, of course, that is fantastic. You asked me about our perspective for the rest of the year. In fact, as you know, we are one of few companies who provide guidance targets for not only one year but also for three years. We are confirming today our targets, the targets that we provided a few months ago. For revenues, we said that our target is to grow revenues this year – 2012/2013 – by 5 to 6%. We said that for the three year period, 2012 to June 2015, we want the average growth rate to be 6 to 7%. We are confirming that. We also said that we want during this year and the two following years, our EBITDA margin to be around 77%. We are confirming that. We also said that we want our Capex, our investments, our organic investments to be around €500 million a year, we are confirming that. We also say that we want our pay-out - the dividends we pay to our shareholders - to be between 65% and 75% of our group net profit. We are confirming that. Finally, in terms of guidance, we also say that we want our leverage, our net debt on EBIDTA, to remain below 3.3%. We are confirming that. Overall, today we are confirming our targets for the year, for three years, and we are - I am - optimistic about Eutelsat and our ability to deliver growth and profitability for our shareholders.
EBM: Michel de Rosen, CEO of Eutelsat Communications, thank you very much.
Michel de Rosen: Thank you.
