Eutelsat Faces Revenue Decline Amid Weak Video Sales in Q1

French satellite operator Eutelsat reported disappointing first quarter revenues on September 30, 2023, as a downturn in its video business offset robust demand for government services. The company generated €283 million (approximately $330 million) in revenue, a decline of 1.2 percent year-on-year on a comparable basis, falling short of analyst expectations of €295 million.

The video segment, which supplies satellite broadcasting services to over a billion viewers worldwide and constitutes nearly half of Eutelsat’s total revenue, experienced a significant revenue drop of 10.5 percent year-on-year. This decline is attributed to a long-term decrease in the video market and the adverse effects of sanctions placed on Russian channels. Eutelsat estimates that these sanctions will have a financial impact of around €16 million this year.

Government Services Show Strong Growth

Despite the challenges in its video business, Eutelsat’s government services sector emerged as the fastest-growing segment during the quarter. Revenues from this area soared by 18.5 percent compared to the previous year, reaching €52.4 million. This growth aligns with the company’s expectations and reflects increasing demand from European governments seeking reliable satellite communication services.

Eutelsat operates a constellation of over 600 Low Earth Orbit (LEO) satellites, providing broadband internet through its London-based subsidiary OneWeb. This network positions Eutelsat as a primary competitor to Elon Musk’s Starlink, particularly as European nations look for domestic alternatives to satellite services. Despite this promising segment, Eutelsat continues to navigate sluggish sales growth, primarily due to its declining legacy video operations.

Looking ahead, Eutelsat has reaffirmed its financial targets for the year and the long term. The company remains committed to adapting its services in response to shifting market demands while facing the ongoing challenges posed by its traditional video business.