Starlink rival Eutelsat beats estimates on Ukraine boost, government demand

By Gianluca Lo Nostro

 

(Reuters) -French satellite operator Eutelsat reported better-than-expected annual earnings on Tuesday, driven by growing interest in its satellite internet services from government and corporate customers.

 

Eutelsat gained the spotlight this year as European governments sought home-grown solutions for satellite services, aiming to reduce their reliance on U.S. providers, such as Elon Musk’s Starlink.

 

Revenues from video, connectivity and government services reached 1.23 billion euros ($1.43 billion) in the year ended June 30, up 0.8% from a year earlier.

 

Financial analysts had expected those revenues to total 1.21 billion euros, according to a consensus poll provided by Eutelsat.

 

The Paris-based group hopes to offset declining income from its video business by gaining a foothold in the satellite internet market, where Elon Musk’s Starlink dominates. 

 

However, CEO Jean-François Fallacher told reporters the company "won’t compete head-to-head with Starlink or Amazon’s Kuiper in consumer markets," focusing instead on segments that make it competitive.

 

Besides government services, these areas include in-flight connectivity and maritime services, Fallacher said.

 

Eutelsat said revenues from its low Earth orbit (LEO) satellites rose 84.1% yearly to 187 million euros.

 

Higher revenues for government services reflected services delivered in Ukraine and increased demand from other non-U.S. governments, particulary Taiwan, Fallacher said.

 

The German government has been paying for Ukraine’s access to Eutelsat’s network for about a year.

 

Eutelsat expects LEO revenues to grow by 50% next year, saying it will compensate, but not yet outweigh the decline in its legacy business, which are impacted by additional Russian sanctions.

 

However, the operator said it took a 1.1 billion euro loss through the year, partly due to impairments from its geostationary (GEO) assets.

 

In addition to its 34 GEO satellites - mostly used for broadcasting and fixed satellite internet - Eutelsat owns a constellation of over 600 in low Earth orbit, managed by its London-based subsidiary OneWeb, which was acquired in 2023.

 

The company is undergoing a radical shake-up following the appointment of a new CEO and a chairman as well as new injections of capital led by the French state alongside Britain and other anchor shareholders for 1.5 billion euros.

 

Eutelsat’s shares were up 1.2% at 0747 GMT. The stock had climbed 30% this year as of Tuesday’s closing price.

 

($1 = 0.8643 euros)

 

 (Reporting by Gianluca Lo Nostro; Editing by Matt Scuffham)