By Gianluca Lo Nostro and Alban Kacher
(Reuters) -French satellite operator Eutelsat reported worse-than-expected first-quarter revenue on Tuesday as a decline in video sales offset strong demand for government services, notably in Ukraine.
Revenue from video, connectivity and government services fell 1.2% year-on-year on a comparable basis to 283 million euros ($330 million) in the quarter to end Sept. That was below the average 295 million euros forecast by analysts, according to data from the company.
The video business, which provides satellite broadcasting services to over a billion viewers globally and accounts for 47% of Eutelsat’s total revenue, recorded a 10.5% fall in revenue from a year ago.
That reflected both a long-term decline in the video market and a negative impact from sanctions imposed on Russian channels, the group said in a statement.
French regulators recently ordered Eutelsat to stop broadcasting two Russian channels after finding links to a sanctioned entity.
Sanctions are expected to have an impact of around 16 million euros this year, the company said.
Eutelsat owns more than 600 Low Earth Orbit satellites via its OneWeb subsidiary providing broadband internet, the only other LEO constellation available besides Elon Musk’s Starlink. These satellites have gained traction as Europe seeks home-grown alternatives for satellite services.
But the firm still faces sluggish growth, hurt by its declining video business.
“We still see a strong progress of Starlink on the broadband and B2C (business-to-consumer) segments,” finance chief Christophe Caudrelier said in a call with analysts. “Clearly, the demand for connectivity by satellite is growing fast.”
A 1.5-billion-euro capital injection led by France and Britain to strengthen the satellite operator is expected to be completed by the end of 2025. Eutelsat hopes other countries will invest too.
Government services were the fastest-growing segment again this quarter, with revenues rising 18.5% from a year ago to 52.4 million euros.
Eutelsat confirmed its annual and long-term financial targets.
($1 = 0.8575 euros)
(Reporting by Gianluca Lo Nostro and Alban Kacher; Editing by Matt Scuffham)
