EUTELSAT COMMUNICATIONS Investor Presentation January 2017

Transcription

1 EUTELSAT COMMUNICATIONS Investor Presentation January 2017

2 Agenda 1 FSS Industry 2 3 Eutelsat in a snapshot FY Outlook 5 Appendix 2

3 The satellite value chain Satellite manufacturers Satellite launchers Satellite operators TV broadcasters, Telecoms, Governments Consumers and businesses 3

4 A robust business model with high barriers to entry Robust business model Significant backlog with long term contracts generating revenue visibility Economies of scale High operating margins Predictable operating cash flow 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 & technical expertise through satellite lifecycle 4

5 Changing dynamics in our core businesses VIDEO: MODEST DEMAND GROWTH DATA SERVICES: STRUCTURALLY CHALLENGED GOVERNMENT SERVICES: POCKETS OF OPPORTUNITY Sustained growth in emerging markets Robust channel growth Increasing HD penetration MENA and SSA leading growth Prices well-oriented Broad stability in Europe Broadly stable channel count HD and UHD ramp-up Improving encoding and compression Low single digit growth Global demand driven by increasing connectivity needs Large HTS systems adding to existing overcapacity Ongoing severe pricing pressure More stickiness in certain segments Low single digit decline US DoD demand stabilizing, albeit at lower prices Slower migration to HTS than Data Services Opportunities in Europe, Asia and MENA and in non-military Broad stability 5

6 Longer-term potential in Video and Connectivity VIDEO FIXED AND MOBILE CONNECTIVITY Satellite and IPTV set to dominate global video distribution in the longer term Opportunity to enhance satellite value proposition by offering IP-like viewer experience Outsourcing of services by broadcasters will create additional sources of demand Nascent markets with huge potential Massive growth in bandwidth usage per consumer Medium-term potential in Aero Long-term potential in land mobility VHTS and VVHTS satellites are pre-requisites in terms of volume and pricing for mass-market adoption 6

7 Video drivers: Channel growth and image quality CHANNEL GROWTH INCREASED IMAGE QUALITY TV Channels in EMEA and LATAM HD penetration rate by major region CAGR: +2.2% ~24,400 Russia and Central Asia 9% 32% SSA 4% 19% MENA 14% 35% ~19,600 LATAM 21% 46% Central Europe 16% 52% Western Europe 24% 78% North America 38% 81% Predominantly driven by emerging Video markets Everywhere, including mature Video markets Source: Euroconsult

8 Video drivers: Capacity requirements versus compression technology EVOLUTION OF IMAGE QUALITY (NUMBER OF CHANNELS) NUMBER OF CHANNELS PER 36 MHZ TRANSPONDER Rampup Format Modulation MPEG-2 MPEG-4 HEVC s- 2000s SD DVB-S DVB-S s- 2010s HD DVB-S 2 to DVB-S2 3 to 4 6 to 8 12 to s UHD DVB-S2 1 to 2 3 to 4 Standard Definition High Definition Ultra High Definition and 3D Source: Euroconsult 2016, EMEA and LATAM 8

9 Agenda 1 FSS Industry 2 3 Eutelsat in a snapshot FY Outlook 5 Appendix 9

10 Eutelsat in a snapshot KEY DATA REVENUE BREAKDOWN BY APPLICATION By geography Revenues of 1.53bn Fleet of 38 satellites; global coverage Operating >1,320 transponders 8% 10% 9% 5% 5% Western Europe Central Europe 34% MENA RCA SSA Americas 8% APAC 21% Unallocated and others Broadcasting >6,300 channels By application 13% Backlog of 5.4bn, representing 3.6 years of revenues 7% 16% 64% Video Data services Value-Added Services Government Services Data as of 30 Sept except for revenues which are as of 30 June

11 Breakdown of revenues by Application Video: 64% Video 64% Direct-to-Home (DTH) Cable headends Professional Video Data: 36% Data Services 16% Value-Added Services: 7% Government Services: 13% Mobile backhaul Corporate networks Broadband Internet Mobility (aircraft, ships) Government and administration Departments of Defense As of 30 June % of revenues excluding Other revenues and Non-recurring revenues 11

12 Eutelsat s global network 1212

13 Sound financial structure NET DEBT / EBITDA RATIO 1 Successful 500m bond issue in June to refinance March 2017 bond Swap-lock in anticipation of the January 2019 bond maturity Average cost of debt after hedging reduced to 3.5% Average weighted maturity extended to 3.4 years Strong liquidity Cash of 304m on top of the 850m to redeem March 2017 Bond at maturity 650m revolving lines of credit available 30 June Dec June Based on net debt at the end of the period and last twelve months EBTIDA 13

14 Summarized outlook Stabilization of revenues in FY , with return to growth in FY EBITDA margin maintained above 75% Steadily growing cash flow thanks to Capex reduction, Opex containment and balance sheet optimization to fund ongoing deleveraging in line with commitment to Investment Grade rating and targeted investments in future growth and deliver stable to progressing dividend 14

15 Shareholder structure EUTELSAT SHAREHOLDING STRUCTURE AS OF 30 JUNE 2016 Bpifrance 26.4% Free float and others 59.4% CIC 1 6.7% FSP 2 7.5% 1 China Investment Corporation 2 Fonds Stratégique de Participations 15

16 Agenda 1 FSS Industry 2 3 Eutelsat in a snapshot FY Outlook 5 Appendix 16

17 Key data REVENUES Revenues of 1,529m, up 3.6% + 0.2% at constant currency EBITDA EBITDA of 1,165m EBITDA margin of 76.2% NET INCOME Group share of net income at 348m Net margin of 23% FINANCIAL POSITION DIVIDEND Discretionary Free-cash-flow 1 : 247m Net Debt / EBITDA ratio of 3.4x Proposed dividend of 1.10; cash-only Payout Ratio of 73% 1 Net cash-flow from operating activities less Cash Capex less Interest and Other fees paid net of interest received. 17

18 FY 16 Revenues: 1,529m, +3.6% reported, +0.2% like-for-like 1 REVENUE CONTRIBUTION 2 REVENUES 3 ( m) LIKE-FOR-LIKE CHANGE (%) REPORTED Video 64% % +3.4% Data Services 16% % +1.5% Value-Added Services 7% % +5.2% Government Services 13% % +1.7% 1 At constant currency and perimeter and excluding non-recurring revenues. 2 The share of each application as a percentage of total revenues is calculated excluding Other revenues and Non-recurring revenues. 3 Total revenues of 1,529m also include Other revenues of 48m. 18

19 Video REVENUES ( M) FY 16 Revenues of 944m, up 2.3% like-for-like 1 Sustained growth in MENA and SSA Entry into service of EUTELSAT 8 West B in October and EUTELSAT 36C mid-february Growth at 7 East (Middle East and Africa) and 16 East (SSA and Central Europe) Higher revenues at Fransat Lower revenues at HOTBIRD and for Professional Video 6,342 channels at end-june % y-o-y Increased HD penetration at 13.6% Q4 Q3 Q2 Q Q Q Q Q1 229 FY FY % reported 19

20 Data Services REVENUES ( M) FY 16 Revenues of 230m, down 6.1% y- o-y at like-for-like 1 Broadly stable revenues excluding End of contract for Ka-band on EUTELSAT 3B in December Reclassification of revenues to Government Services Higher volumes in the Americas Ramp-up of EUTELSAT 115 West B Entry into service of the fully sold Ka-band payload on EUTELSAT 65 West A in May Highly competitive environment in all geographies Q4 Q3 Q2 Q Q Q Q Q1 59 FY FY % reported 20

21 Value-Added Services REVENUES ( M) FY 16 Revenues of 108m, up 4.8% y-o-y like-for-like 1 181,000 terminals activated on KA-SAT at 30 June 2016 Continued high loading of some beams in France and the UK Q Q Rationalization of customer base by certain distributors Q3 23 Q3 25 ARPU and revenue trends on KA-SAT remain well oriented Proactive yield management Solid performance of B2B Positive seasonal effect of the maritime activity in Q4 Q2 Q1 25 Q Q1 30 FY FY % reported 21

22 Government Services REVENUES ( M) FY 16 Revenues of 200m, down 7.5% y-o-y like-for-like 1 Down c. 12% excluding impact of reclassifications from Data Services Early termination of a contract with a distributor in Q1 Impact of lower renewals with US DoD Renewal rate of around 65%, for February-March 2016 round Significant downward pricing reset Re-compete of task orders placed five years ago now mostly completed Q4 Q3 Q2 Q Q Q Q Q1 53 FY FY % reported 22

23 Backlog Backlog of 5.6bn, down 9.5% y-o-y 3.7 years of revenues BACKLOG ( BN) Main contracts signed this year Multi-year renewal of capacity at 36 East with Russian customers New contracts including notably EAS fleet and 7/8 West position EBU contract at several orbital positions were offset by backlog consumption Video % 83% 85% and two early terminations in H1 30 June March June 2016 Video accounting for 85% The backlog represents future revenues from capacity lease agreements (including contracts for satellites not yet delivered). These capacity lease agreements can be for the entire operational life of the satellites. 23

24 Fill rate OPERATIONAL AND LEASED TRANSPONDERS Operational transponders up by 43 Q-o-Q Entry into service of EUTELSAT 65 West A in May 1,168 1,285 1,328 Leased transponders up by 13 Q-o-Q Expansion of capacity contracted by EBU for Professional Video Ramp-up of capacity on EUTELSAT 8WB Ramp-up of EAS fleet Fill rate of 70.9% reflecting new capacity Fill rate June March June % 72.3% 70.9% Operational transponders leased transponders Based on 36 MHz-equivalent transponders (TPE), excluding HTS capacity (KA-SAT 82 spot-beams, EUTELSAT 3B s 5 Ka-band spot beams and EUTELSAT 65 West A 24 spotbeams) 24

25 Agenda 1 FSS Industry 2 3 Eutelsat in a snapshot FY Outlook 4 5 Appendix 25

26 Adapting strategy to new market conditions STEP 1 STEP 2 GROW CASH-FLOW GROW TOPLINE Maximize free-cash-flow generation of existing businesses Financial and operational measures Optimizing revenues in the core businesses Build on our core video business to accelerate growth Capture longer term potential in Connectivity 26

27 Maximize free-cash-flow : Financial and operational measures CAPEX REDUCTION OPTIMIZATION OF COST OF DEBT OTHER MEASURES Implement design to cost approach Ground capex under strict control Capture hosted payload and condosats opportunities Capitalize on industrywide efficiency improvements Average annual cash Capex reduced by 80m 500m bond issue at 1.125% coupon Refinancing of 850m March 2017 Bond (4.125% coupon) Swap-lock ahead of m bond (5.0% coupon) Locked at c. 145 bps, (-90 bps) Annual savings of c. 30m from 2017, c. 50m from 2019 OPEX under review to protect EBITDA Streamlining the organization Optimizing the asset portfolio Entry of Inframed into African Broadband project Disposal of Alterna TV Disposal of Wins /DHI Initiation of disposal of Hispasat stake 27

28 Maximize free-cash-flow: Optimizing revenues in each core business Core businesses Video Data Services Government Services Enhancing hotspot value generation Targeting growth in emerging markets Developing satellite value proposition versus IPTV Mounting competitive pressure in coming years Managing the impact of lower pricing on revenues No further investment in regular data capacity Stabilizing DoD Opportunities in other geographies and non-military Leverage EUTELSAT QUANTUM Connectivity Broadband Mobility Ramp-up of Broadband projects in Africa and Russia Options to further develop in Europe Leverage existing assets to prepare for scalability From niche to potential mass-market in the next decade Market foothold with existing assets in Aero Preparing the ground for Big Mobility verticals 28

29 Build on our core Video business to accelerate growth; capture longer term potential in Connectivity MEDIUM TERM (FROM FY 2019) LONG TERM (FROM FY 2021) VIDEO Build on our core business to accelerate growth FIXED BROADBAND Prepare for scalability MOBILE CONNECTIVITY From niche to mass market Growth potential of Video Opportunity for further value creation Harnessing technology Optimize existing assets within a limited current addressable market Progress on prerequisites for scalability Decide on scale and location of investments from Use existing assets to anchor foothold in the market Selectively invest in capacity to improve coverage Pave the way for Mass market 29

30 Video: Build on our core business to accelerate growth GROWTH POTENTIAL OF VIDEO OPPORTUNITY FOR FURTHER VALUE CREATION HARNESSING EXISTING TECHNOLOGY Video via satellite will continue to grow Distribution will be split between satellite and IPTV longer term Outsourcing of services by broadcasters will create additional sources of demand Greater integration within the IP ecosystem Enhance viewer experience Add new services for broadcasters, advertisers and consumers Develop connected terminals Improve efficiency Compression Encription Security Increase revenue Metadata management Targeted advertising Payment Enhance loyalty Multiscreen Smart EPG TV everywhere Enhance end-viewer experience to reinforce customer loyalty and generate additional revenue opportunities 30

31 Fixed Broadband: Preparing for mass market adoption BRIDGE DIGITAL DIVIDE IN-MARKET PROPOSITION INDUSTRIAL TRANSLATION TIMING Deliver fiber-like capacity (30 Mbps) Reach fiber-like pricing ( 40 / month) Lower barrers to adoption Assess adressable market Develop appropriate distribution VHTS satellites 1m / Gbps Terminals < $200 Refine assessment of fiber deployment Test and validate business models C onwards Use the time to VHTS to prepare for mass market: optimize existing or committed assets (KA-SAT, Russian and African Broaband) and validate go-to-market models 31

32 Mobile Connectivity: Market foothold with existing assets BRING FIBER-LIKE CONNECTIVITY IN MOBILITY IN-MARKET PROPOSITION INDUSTRIAL TRANSLATION TIMING Deliver streaming-like experience for IFEC 1 Mbps / passenger for 50% of passengers VHTS satellites 1 Terabyte satellite Deliver on-the-move fiber-like Connectivity for ground transportation VVHTS Flat terminals Pave the way by leveraging our existing assets in Aero (172 East, 10 East, 117 East, KA-SAT), selectively invest to improve coverage, and seek partnership deals with stakeholders for each vertical 32

33 Financial outlook REVENUES (At constant currency, and perimeter excl. non recurring revenues) FY : Between -3% and -1% FY : Broadly stable FY : Slight growth EBITDA MARGIN FY to FY : above 75% CAPEX FY to FY : Average of 420m 1 per year FREE CASH FLOW FY to FY : Discretionary free cash flow 2 CAGR >10% LEVERAGE Investment grade rating Target net debt / EBITDA: below 3.3x DISTRIBUTION Stable to progressing dividend 1 Inc. cash outflows related to ECA loan repayments and capital lease payments 2 Net cash-flow from operating activities less Cash Capex less Interest and Other fees paid net of interest received. Three year CAGR calculated on the period FY to FY

34 Fleet plan Name EUTELSAT 117 WB EUTELSAT 172 B EUTELSAT 7C EUTELSAT 5 WEST B AFRICAN BBAND. SATELLITE Position West 172 East 7 East 5 West TBD TBD Launch Launched 15 June 2016 H H Manufacturer Launcher TBD TBD TBD Coverage LATAM Asia-Pacific MENA SSA Europe MENA Flexible SSA Applications Video Data GS Data GS Mobility Video Video Data GS Mobility Broadband Total Capacity (TPE/Spotbeams) 48 Ku 42 Ku 24 C 11 Ku / 1.8 Gbps 49 Ku 35 Ku N/A 65 Ka / 75 Gbps Expansion Capacity 1 48 Ku 19 Ku 11 Ku / 1.8 Gbps 19 Ku - N/A 65 Ka / 75 Gbps Electrical propulsion HTS Payload 1 Excludes unannounced redeployments 34

35 Agenda 1 FSS Industry 2 3 Eutelsat in a snapshot FY Outlook 5 Appendix 35

36 Appendix 5.1 FY financials 5.2 Q Video 5.4 Miscellaneous 36

37 Profitability EBITDA ( M) EBITDA up 2.9% EBITDA margin of 76.2% Versus 76.7% last year Higher level of bad debt Termination of contract for Ka-band payload of EUTELSAT 3B in December 2015 Margin (%) 1,132 1, FY FY

38 Net income of 348m, net margin of 23% Extracts from the consolidated income statement in m 1 FY FY Var. Revenues 1,476 1, % Positive currency impact of 3.5 points EBITDA 2 Operating income Financial result 1,132 1, % % (116) (123) +6.1% Higher expenses related to the kick-off of African Broadband project Increase in D&A following OSD of ETL 8WB, ETL 115WB, ETL 36C, ETL 9B and ETL 65WA Positive impact of term loan refinancing Unfavourable variation in Forex impact Income tax (194) (200) +2.9% Tax rate of 37.1% Lower tax loss carry-forwards than last year Income from associates Group share of net income % % Higher contribution of Hispasat Net margin of 22.8% 1 Rounded to closest million 2 EBITDA defined as operating income before depreciation, amortisation, impairments and other operating income/(expenses) 38

39 Discretionary Free-Cash Flow In m 1 (514) (1) 896 (134) 247 Net cash Flow from operations Cash Capex (1) Interest and Other fees paid net of interests received Discretionary Free Cash-flow (1) Cash Capex includes capital expenditures and payments under existing export credit facilities and under long-term lease agreements on third party capacity. Cash Capex for FY includes the value of the payment owed in FY to RSCC in respect of lease of EUTELSAT 36C ( 95.2 million) which remains blocked due to the ongoing Yukos legal proceeding. 39

40 Net debt In m (247) Discretionary Free Cash Flow 110 Dividend Payment 9 Others 294 Change in financial leases 1 3,841 3,713 4,007 Net Debt at June 30, 2015 Net Debt at June 30, 2016 Before change in financial leases Net Debt at June 30, 2016 as reported (1) Excluding amount due to RSCC ( 95 million)

41 Debt maturity schedule Will be used together with cash in Balance sheet to refinance 850m 800m 930m 450m 500m 39m 200m % 5.0% 2.625% 1.125% 300m 600m % 3.125% 190m Undrawn lines of credit (Eutelsat S.A) Bonds Others Term loan / undrawn line of credits of Eutelsat Communications Note: Maturities are provided on a calendar year basis figures based on accounts as of 30 June With a possible extension facility of one year subject to lenders agreement 4164

42 Appendix 5.1 FY financials 5.2 Q Video 5.4 Miscellaneous 42

43 Recent Highlights Procurement of EUTELSAT 5 West B satellite with significant capex savings in the context of a design-to cost approach Solid renewals with USG confirming a stabilisation of trends in Government Services New contracts signed for airline mobility demonstrating strong positioning of KA-SAT Launch of Russian broadband project and Ka capacity secured for African Broadband to replace AMOS-6 Portfolio optimisation: sale of the 70% stake in Wins /DHI and initiation of the process of divesting the 34% stake in Hispasat Q1 revenues in line with expectations; all financial targets confirmed 43

44 Q1 Revenues: 385m, +0.7% like-for-like 1 REVENUE CONTRIBUTION 2 REVENUES ( m) LIKE-FOR-LIKE CHANGE (%) REPORTED Video 63% % -2.2% Data Services 16% % -3.3% Value-Added Services 8% % -1.0% Government Services 13% % -11.2% Other revenues % +61,8% Total revenues % -0.7% 1 At constant currency and perimeter and excluding non-recurring revenues. 2 The share of each application as a percentage of total revenues is calculated excluding Other revenues and Non-recurring revenues. 44

45 Video REVENUES ( M) Revenues of 224m, down 1.3% y-o-y like-for-like 1 Positive impact of incremental capacity launched last year EUTELSAT 8 West B in MENA EUTELSAT 36C in SSA Lower revenues at HOTBIRD following rationalisation of distribution Lower revenues for Professional Video Q4 Q3 Q ,336 channels at end-june % y-o-y Total HD penetration from 12.3% to 14.8% HOTBIRD HD penetration from 19% to 22% Q1 229 Q1 224 FY FY % reported 45

46 Data Services REVENUES ( M) Revenues of 57m, down 2.8% y-o-y like-for-like 1 Full-quarter contribution of the Kaband payload on EUTELSAT 65 West A HTS Payload fully sold since entry into service in May 2016 End of contract for Ka-band on EUTELSAT 3B in December 2015 Ongoing tough environment in all geographies Q4 Q3 Q2 Q Q1 57 FY FY % reported 46

47 Value-Added Services Revenues of 29m, up 8.3% y-o-y likefor-like 1 Sale of Wins/DHI. Impact of c. 2.5m REVENUES ( M) KA-SAT: 179,000 terminals activated at 30 Sept ARPU and revenue trends well oriented Russian broadband service launched on EUTELSAT 36C Distribution agreement with Tricolor TV African Broadband back on track Alternative Ka capacity deal with Yahsat Enabling launch of African Broadband initiative in first four Revert to initial business plan in FY 18 Q4 Q3 Q2 Q Q1 29 FY FY % reported 47

48 Government Services REVENUES ( M) Revenues of 47m, down 10.7% y-o-y like-for-like 1 Revenue trend reflecting mainly the effect of lower renewals of last fiscal year Renewal rate above 90% in Fall round Considerable improvement vs. Spring round (65%) Broadly stable volume Modest price softening New contracts representing four 36- MHz equivalent transponders Confirming prospects of a stabilisation in this vertical. Q4 Q3 Q2 Q Q1 47 FY FY % reported 48

49 Backlog and Fill Rate BACKLOG ( BN) OPERATIONAL AND LEASED TRANSPONDERS 1,175 1,328 1, Video 83% 85% 85% 30 September June September 2016 Fill rate 30 Sept June Sept % 70.9% 71.5% Operational transponders leased transponders Backlog of 5.4bn 3.6 years of revenues Video accounting for 85% Operational txp unchanged Q-o-Q Leased txp up by 6 units Q-o-Q Fill rate of 71.5% Based on 36 MHz-equivalent transponders (TPE), excluding HTS capacity 49

50 Strategic roadmap: Main achievements in Q1 STEP 1 Maximise free-cash-flow generation Financial and operational measures Optimizing revenues in the core businesses Capex optimisation: EUTELSAT 5 WB procured with significant savings Asset disposals: Wins /DHI, Hispasat put option exercised Video: HOTBIRD rationalisation completed Government: improving USG trends Build on core video business Tricolor TV rolling out Smartbeam Multiscreen delivery Video service STEP 2 Grow topline Capture longer term potential in Connectivity Broadband: launch of Russian broadband service and agreement with Tricolor TV; capacity secured to launch African broadband Mobile Connectivity: several contract wins in Aero mobility: SAS, Finnair 50

51 Appendix 5.1 FY financials 5.2 Q Video 5.4 Miscellaneous 51

52 Sound fundamentals at HOTBIRD LIMITED DECLINE IN CHANNEL COUNT HD PENETRATION: 22% Less than half in simulcast Channel count HD channels Sept Sept Sept Sept Sept Sept MPEG4 PENETRATION: 48% STABLE PRICING MPEG 4 channels N/A Average price per TPE 1 ( m / year) Sept Sept Sept FY FY FY per 36 Mhz equivalent transponder 52

53 HOTBIRD Action Plan Enhance distribution model Extend control over network by taking back empty capacity from distributors Increase share of direct sales, especially to Free-to-Air channels Develop segmented pricing strategy Improve value proposition Stimulate transition to HD and ultra-hd: o o Objective of circa 50% HD penetration in 5 years > 20 UHD channels expected in 5 years Attract premium channels in different language pools Develop services (Smart LNB, IP Multiscreen) Address new geographies FY 2019 Stable revenues at HOTBIRD 53

54 Enhancing hotspot value generation: Update on HOTBIRD action plan Measure: Extend control over network by taking back empty capacity from distributors GROW CASH-FLOW Renegotiation of re-take of empty HOTBIRD capacity from distributors fully completed at July 1st Equivalent to 5 transponders Enabling as of beginning FY 2017 to: Enhance the premium value of the HB hotspot Stimulate HD and UHD take-up Begin to streamline distribution by using fewer and more specialized distributors 54

55 Satellite gaining market share worldwide VIDEO MILLION TV HOMES BY DISTRIBUTION MODE - GLOBAL 1800 Total number of TV homes to increase by 140 million to 1.7 bn by 2020 Satellite reception to grow by 80 million homes to 440 million by Satellite market share to rise from 23% to 26% Growth of satellite in fastgrowing markets, resilience in mature markets Terrestrial Cable IP Satellite Source: Euroconsult, Digital TV Research 55 55

56 Satellite s competitive advantage over OTT / IP VIDEO COST-EFFICIENCY UNIVERSAL REACH SERVICE QUALITY BROADBAND COVERAGE (>30Mbps) BANDWIDTH REQUIREMENT (Mbps) Cost OTT 1 UHD channel in HEVC 20 86% 1 HD channel in MPEG 4 8 Satellite 40% 27% 1 SD channel in MPEG 2 4 # viewers UK France Italy CDN costs rise in line with audience growth Satellite more cost efficient above 50k viewers in Western Europe Satellite a fraction of TV platforms operating costs High cost of fibre roll-out Terrestrial networks cannot reach entire population Lower image quality Or even no service Satellite providing full coverage of a market Higher quality of image leading to increased bandwidth usage Congestion of terrestrial networks Video will represent ~80% of consumer internet traffic by 2019 Satellite and hybrid solutions allowing unimpaired viewing experience Source: Eutelsat analysis, European Commission - Broadband Coverage in Europe 2014, CISCO VNI

57 Appendix 5.1 FY financials 5.2 Q Video 5.4 Miscellaneous 57

58 Data Services: significant pressure on pricing BREAKDOWN OF EUTELSAT FIXED DATA REVENUES 1 Historic price pressure due to overcapacity in certain geographies BY VERTICAL 64% 36% Backhaul, Trunking Compounded by arrival of significant additional capacity in the form of HTS systems Corporate netwoks All Data Applications potentially affected Corporate Networks more sticky than point-to-point BY GEOGRAPHY 7% 1% 20% Europe MENA Prices expected to decline by up to 50% in 5 years 36% 17% SSA Americas APAC Other 19% 1 Based on Fixed Data estimated revenues for FY 16, representing c.85% of total Data Services revenues 58

59 Impact of lower pricing mitigated by higher volumes and resistance measures EVOLUTION OF EUTELSAT DATA* REVENUES AS % OF TOTAL REVENUES -15% Resist: High share of revenues already in the Backlog >60% of FY 17 revs and >40% of FY 18 Focus on less price-sensitive customers, untapped verticals and differentiated offer Compensate with higher volume: Favouring fill rate over price Significant available capacity Decline in Data revenues contained to c. 3% cagr in 5 years (15-20% decline) Today Price impact Volume and yield impact Medium term Offset by growing revenues in other applications Data to shrink to 10% of total revenues medium-term No further investments in regular data capacity 59

60 KA-SAT ramping-up on aero Mobility Two new contracts signed using capacity on KA-SAT Finnair to connect entire Airbus A320 series short-haul fleet ~40 aircrafts SAS to connect its short and medium-haul fleet ~80 aircrafts Eutelsat provides satellite capacity, ViaSat is the prime contractor EL AL expected to enter full retail service before the end of

61 Satellite programme capex profile BREAKDOWN OF CAPEX TYPICAL TIMING OF CAPEX PAYMENTS 30% 30% 40% YEAR 1 YEAR 2 YEAR 3 Others Insurance Launcher Satellite Capex generally split equally over three years prior to launch Insurance paid in year three 61 61

62 Design-to-cost benefits: EUTELSAT 5 West B case study DESIGN-TO-COST Improved match of coverage with customer requirements Lower cost of payload Smaller platform LAUNCH Shared launch in a stacked configuration on a Proton rocket Lower launch cost Lower insurance cost >30% 1 in capex savings Improved IRR Enhanced performance (1) relative to the theoretical cost of replicating EUTELSAT 5 West A s Ku band mission 62

63 Satellite economic model 1 : Regular capacity 1 For a greenfield satellite, using chemical propulsion 63

64 Typical ramp-up profile for a regular capacity satellite Pure replacement Pure expansion Mix of expansion and replacement 90% 90% 90% 60% 60% 60% 30% 30% 30% 0% Y1 Y2 Y3 Y4 Y5 0% Y1 Y2 Y3 Y4 Y5 0% Y1 Y2 Y3 Y4 Y5 Assumption: 50% pure replacement, 50% pure expansion Ramp-up dependent on: mix of replacement vs. expansion region and application Pre-sales not the norm, but occur in fast-growing markets, more common in Video 64

65 Case study: Ramp-up of 7/8 West orbital position, creating leading Video hotspot in MENA 65

66 Industry average revenue per transponder AVERAGE REVENUE PER TRANSPONDER (m$) North America LATAM Western Europe Central Europe CIS & Central Asia MENA SSA Southern Asia North East Asia China area South-East Asia Oceania Source: Euroconsult Average Revenue per 36-Mhz Transponder for regular capacity only 66

67 Eutelsat Quantum: Cutting-edge technology Software-defined class of satellites First satellite to be launched in 2019 Manufactured by Airbus Defence and Space Incomparable flexibility in terms of: Coverage Bandwidth Power and frequency configurability Premium capacity through footprint shaping and steering, power and frequency band pairing that customers will be able to actively define Targeting for users operating in Government, Mobility and Data markets Example of a coverage hopping between 2 markets Most of the capacity is devoted to Cairo, during day-time in Africa Most of the capacity is devoted to NYC, during day-time in Americas 67