Etalon Group H2 2026 Earnings Report

Etalon Group EPS Results

• Actual EPS: -GBX 52.40
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Etalon Group Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Etalon Group Announcement Details

• Quarter: H2 2026
• Date: 8/7/2026
• Time: Before Market Opens
• Conference Call Date: Friday, August 7, 2026
• Conference Call Time: 3:00AM ET

Etalon Group (LON:ETL) is a Russia-based real estate development and construction company that primarily focuses on residential property markets in major Russian cities. The company’s core activities encompass the planning, design, and delivery of multi-family residential complexes, townhouses, and essential infrastructure aimed at creating liveable urban environments. Leveraging an integrated model, Etalon Group oversees all stages of a project, from land acquisition through construction to sales and after-sales services.

The group’s operations are heavily concentrated in the Saint Petersburg and Moscow regions, where it serves a mix of affordable and mid-market housing segments. In addition to constructing residential buildings, Etalon Group incorporates commercial amenities such as retail outlets, green spaces, and social infrastructure to enhance community appeal. By combining in-house engineering and project management expertise with selective partnerships for specialized trades, the company strives to maintain cost efficiency and quality control across its portfolio.

Etalon Group’s shares are listed on the London Stock Exchange, providing international investors access to Russia’s large-scale housing market. The company’s governance framework is led by a professional management team responsible for strategy, risk management, and corporate governance functions. Through its public listing, Etalon Group aims to uphold transparency and financial discipline while pursuing sustainable growth in its core markets.

Etalon Group H2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: LEO revenue growth exceeded expectations, rising nearly 70% year over year to €297 million and reaching 25% of group revenue. Growth across fixed, government, and mobile connectivity is increasingly offsetting declines in legacy GEO video.
• Positive Sentiment: Eutelsat secured a €350 million, eight-year CENTAURE contract under France’s NEXUS defense framework, including a €138 million firm commitment for the first four years. Management said the agreement strengthens its position in sovereign and dual-use defense communications and creates a pipeline for additional awards.
• Positive Sentiment: The company completed a €5 billion refinancing, reduced net debt to €1.46 billion, and lowered net debt to adjusted EBITDA to 2.32x from 3.9x. Liquidity stood at €2.3 billion, supplemented by approximately €690 million of undrawn ECA financing capacity.
• Negative Sentiment: Legacy video revenue fell 13.1%, pressured by structural market declines, sanctions on Russian channels, and terminated capacity contracts. Management expects another difficult year for GEO video in fiscal 2027, while adjusted EBITDA margin declined to 51.2% and is expected to remain broadly flat next year.
• Neutral Sentiment: IRIS² reached a key European Commission milestone and is moving from design into execution, with Eutelsat confirmed as the LEO lead in the SpaceRISE consortium. However, the company plans to raise gross CapEx to about €1.2 billion in fiscal 2027 and invest approximately €4 billion through fiscal 2029, creating substantial near-term funding demands despite projected revenue of €1.5–€1.7 billion in fiscal 2029.

Presentation

[Operator]

Welcome to the Eutelsat full year 2025/2026 results presentation. For the first part of the conference, the participants will be in listen-only mode. During the questions and answers session, participants will be able to ask questions by dialing pound key five on their telephone keypad. I will hand the conference over to the speaker, Jean-François Fallacher, Chief Executive Officer, and Sébastien Rouge, Chief Financial Officer. Please go ahead.

[Jean-François Fallacher, CEO at Eutelsat]

Hello. Welcome, thank you for joining us today in the middle of the summer for Eutelsat's full year 2025/2026 results presentation. I am Jean-François Fallacher, the CEO of Eutelsat, and I am joined today by Sébastien Rouge, our Chief Financial Officer, and Joanna Darlington, Head of Investors Relations. Let's go directly to the meat of this meeting and the highlights of our year. I want to stress that our LEO revenues were ahead of expectations, up nearly 70% year-on-year to almost EUR 300 million. Our LEO revenues are now representing 25% of group total revenues. Overall, our full year 2025/2026 results are in line with objectives. CapEx are at just under EUR 600 million, below the EUR 900 million expectations. Sébastien will come back to that.

[Jean-François Fallacher, CEO at Eutelsat]

In March this year, we've added the final touch to our successful EUR 5 billion complete refinancing package with a EUR 1.5 billion bond offering securing our midterm CapEx needs. We also secured a major EUR 350 million call-off contract under NEXUS framework agreement with the French procurement arm of the French MOD. We also welcomed, two weeks ago, the FCC, the U.S. FCC C-band clearing order, which is expected to deliver $504 million in incentives payment in 2031. Finally, the imminent outcome of the IRIS² first Rendez-vous 1 is expected to confirm Eutelsat leadership on the LEO segment. Let's now turn to the financial highlights. Total revenues for full year 2025/2026 stood, as you can read there, at EUR 1,235.9 million, down 0.6% on a reported basis and up 3% like-for-like.

[Jean-François Fallacher, CEO at Eutelsat]

Revenues for our four operating verticals stood at EUR 1,197 million, up by 1.8% on a like-for-like basis. LEO revenues amounted to EUR 297 million, up to almost 70%. Now accounting, as I was saying, for a quarter of our revenues, this is up again by 70% versus last year. Adjusted EBITDA stood at EUR 632 million on June 30, down 3%, 3.1 points like-for-like. Adjusted EBITDA margin stood at 51.2%, 3.2 points like-for-like. As mentioned, these results were in line with our expectations. CapEx is at just under EUR 600 million, below the EUR 900 million expectation. This is leaving us with a net debt to EBITDA ratio of 2.32. Let's go now to our operational performance. I will comment our revenues by vertical. Video, as you can see now, is representing 43% of our total revenues at EUR 519 million.

[Jean-François Fallacher, CEO at Eutelsat]

This is actually a decline in these legacy revenues by 13.1%. If we go to our fixed connectivity revenues, they are now representing 23% of the total group revenues, and they rose by 15.6% to EUR 270 million. Government services, which are now representing 20% of our revenues at EUR 235.5 million, rose by 17.7%. Our mobile connectivity, which are representing 14% of the group total revenues with EUR 172 million, increased by 16%. If we now look at the next page, our total revenues stood at EUR 1.236 billion. Again, on a like-for-like basis, it is an increase of +3%, and they reflected a EUR 51 million negative currency effect and EUR 21 million positive swing in other revenues, mainly from revenue recognition from IRIS² linked to the Eutelsat involvement as a consortium system development prime and as well as some hedging revenues.

[Jean-François Fallacher, CEO at Eutelsat]

Revenues of our four operating verticals were up 1.8% on a like-for-like basis. Let's now zoom on our video business. As I was saying, video revenues were down by 13.1% this year. This is with no surprise reflecting the underlying market trend, compounded as well by sanctions on our Russian channels that were imposed at the beginning of the year and by the termination of capacity contracts on two Russian satellites called Ekspress-81 and Ekspress-82. Fourth quarter revenues on the video side stood at EUR 124.7 million, down by 14.4% on a year-over-year basis and 2.7% quarter-on-quarter, reflecting actually the first full quarter effects of these contract terminations. I was talking about the Ekspress-81 and Ekspress-82 contract termination. Let's now turn more in detail into our connectivity business.

[Jean-François Fallacher, CEO at Eutelsat]

Our total connectivity revenues stood at EUR 677.9 million, up by 9.7% on a reported basis and 16.4% like-for-like. This is clearly thanks to the robust performance of LEO across all three verticals. As I was saying, LEO growth exceeded expectations, up by almost 70% to EUR 297 million. Now LEO is representing more than 40% of our connectivity business revenues and a quarter of the group total top line. The fourth quarter revenues stood at EUR 214.9 million, up 24.7% like-for-like and 30% quarter-on-quarter, again powered by the sustained growth in our LEO business. In particular, they reflected the catch-up revenue recognition in respect to our NEXUS framework contract with the French Ministry of the Armed Forces. If we zoom in each verticals on fixed connectivity, I am page 10 on the presentation. Fixed connectivity revenues stood at EUR 270 million, up by 15.6%.

[Jean-François Fallacher, CEO at Eutelsat]

Again, here, thanks to the growth of LEO-enabled solution, that was partially offset by more challenging conditions for GEO-enabled solutions. The fourth quarter revenue of this specific segment were at EUR 77.7 million, up 17% year-on-year and 27.8% quarter-on-quarter, reflecting again our LEO performance as well as catch-up revenue in the fourth quarter. Key wins in this fourth quarter included a new partner agreement with Voimatel and the delivery of LEO connectivity services in Finland, supporting critical network infrastructure, resilient communication for enterprise and public sector customers, and connectivity in high northern latitude, including Arctic regions, where our constellation is particularly strong. Let's go now to the government services segment where revenues stood up at 17.7%.

[Jean-François Fallacher, CEO at Eutelsat]

This is strong growth, this is reflecting the revenue recognition related to the CENTAURE call of contract, part of, again, the NEXUS initiative with the French MOD, as well as increased demand from other non-U.S. governments and services that we are delivering in Ukraine on the LEO constellation. Fourth quarter of this segment was up by 36.9% year-on-year and by 70% quarter-on-quarter. This was linked to the above-mentioned contract with the French procurement arm of the French MOD. Mobile now connectivity, revenues up 16% year-on-year, precisely 15.9%. This reflected the ongoing strong performance of the Aero segment, both on LEO and GEO solutions.

[Jean-François Fallacher, CEO at Eutelsat]

This is really a segment where we are benefiting from our multi-orbit capabilities at Eutelsat, as well as more limited contribution from maritime, where LEO growth was unfortunately partially offset by softer trends in the GEO services for maritime. Fourth quarter revenues stood at EUR 50 million, up 18.6% year-on-year and 11.8% quarter-on-quarter. Let me comment a few commercial successes in Q4, where we signed a multi-year, multi-million USD agreement with IST Network to expand the use of Eutelsat OneWeb LEO services as part of hybrid connectivity solutions for maritime customers worldwide. Eutelsat also signed a new partner agreement with Greece, Tototheo, to deliver the LEO connectivity services to customers across the global maritime sector. This is clearly strengthening our company's distribution network in this strategic market, which is maritime for us.

[Jean-François Fallacher, CEO at Eutelsat]

In aviation, Eutelsat signed a multi-year agreement with Anuvu for capacity on EUTELSAT 10B to enhance high-speed in-flight connectivity services, underscoring the role of the GEO capacity within Eutelsat multi-orbit strategy. Elsewhere, we are happy that our distribution partner, SES, Intelsat, entered major in-flight connectivity agreements with Japan Airlines and LATAM Airlines that will use our LEO constellation for in-flight connectivity. Our backlog now stood at EUR 3.4 billion on June 30th versus EUR 3.5 billion a year earlier. This is the equivalent of 2.7x our 2025/2026 revenues. Connectivity represented 61% of the total backlog versus 57% a year ago. As a reminder, the evolution of this backlog is reflecting the increasing weight of LEO business in the mix. As a reminder, contracts in the LEO business tend to be shorter than the contracts we used to have in the legacy GEO application.

[Jean-François Fallacher, CEO at Eutelsat]

This explains this slight decrease of the backlog. Moreover, only the secured element of take-or-pay contracts, LEO contracts, are recognized while what we call pay-as-you-go LEO contracts are not reflected in this backlog. Let's now turn to our financial performance, I will pass the floor to our CFO, Sébastien Rouge.

[Sébastien Rouge, CFO at Eutelsat]

Thank you, Jean-François. You covered revenues in detail, let's now jump straight to profitability. Adjusted EBITDA stood at EUR 632 million for the year ended at the end of June, compared to EUR 666 million a year earlier. It's down 6.5%. It was down 3.1% on a like-for-like basis. Operating expenses stood at EUR 604 million. It's up EUR 36 million. They mainly reflected an increase in cost of goods sold for our LEO business, partially offset by the revaluation of share-based compensation schemes that we booked in H1. In terms of margin, adjusted EBITDA margin stood at 51.2% versus 54.4%, down 3.2 points on both reported and like-for-like basis. If we look at the rest of the P&L, group share of the net result was a loss of EUR 457 million versus a loss of EUR 1.1 billion a year earlier.

[Sébastien Rouge, CFO at Eutelsat]

This improvement reflected lower other operating expenses of EUR 153 million as compared to EUR 777 million last year. As a reminder, fiscal year 2025-2026 included goodwill and satellite impairments totaling EUR 720 million. We have lower D&A of EUR 699 million versus EUR 808 million a year earlier, reflecting the positive effect from the securing of operational continuity of the LEO constellation following the procurement of additional 140 satellites, as well as the end of amortization of certain intangible assets, as well as lower on-ground depreciation. We have a net financial result of -EUR 232 million versus -EUR 201 million a year earlier, mainly reflecting higher interest costs, partially offset by the favorable evolution of foreign exchange gains and losses. We have a very small corporate tax charge of EUR 1.6 million versus a small gain of EUR 6.7 million a year earlier.

[Sébastien Rouge, CFO at Eutelsat]

If we look at our capital expenditure, CapEx amounted to EUR 594 million as compared to EUR 450 million a year earlier. This increase reflects the progress in the execution of LEO investment programs, primarily focused on the Gen 1 follow-up activities. It was below the EUR 900 million that we originally anticipated through our first half result communication, mainly due to changes in milestone phasings and good control over GEO and ground CapExes. It should not be extrapolated for the future years, notably 2026, 2027, where CapEx is expected to be the region of EUR 1.2 billion. In this context, the group confirms its medium-term plan covering investments of approximately EUR 4 billion over the period fiscal year 2026 to fiscal year 2029, funded by its recently completed EUR 5 billion refinancing round.

[Sébastien Rouge, CFO at Eutelsat]

If we look now at our financing structure at the 30th of June 2026, the net debt stood at EUR 1.46 billion, down by EUR 1.2 billion versus the end of last year, mainly reflecting the net proceeds from the capital increase of EUR 1.5 billion. It was partially offset by interest out and cost associated with the execution of our refinancing plan. As a result, the net debt-to-EBITDA ratio stood at 2.32x, compared to 3.9x at the end of June 2025.

[Sébastien Rouge, CFO at Eutelsat]

The average cost of debt after hedging stood at 4.37%. Along to an ample renewal of our financing capability, the group was able to take advantage of the EUR 1.5 billion capital increase, which has improved its rating and credit appraisal by lenders. The group has extended the average maturity of its debt, now at 4.2 years as compared to 2.5 years at the end of 2025. We enjoy a great level of liquidity with undrawn credit lines and cash in hand at EUR 2.3 billion, complemented by around EUR 690 million of undrawn ECA facility dedicated to future CapEx. I hand back to Jean-François for the outlook and the next steps.

[Jean-François Fallacher, CEO at Eutelsat]

Thank you very much, Sébastien. Let's now turn to the outlook, where I want to start by commenting the commercial momentum we've built over the past year. It's clearly demonstrating that our strategy is translating into tangible customer wins across all our core markets. In fixed connectivity, as you can see there, we continue to strengthen our presence with both existing and actually new partners. You can see a list here of our distribution partners and basically customers. Airtel, Orange, Paratus, InterSAT are actually reflecting the continued demand for high-quality connectivity solutions and the value of our multi-orbit offering. On governmental services, this has been a year where this segment has been a major growth driver. We secure landmark agreements, most notably with the French Defense Procurement Agency, DGA, under the NEXUS framework agreement, and alongside contracts with other institutional customers and partners.

[Jean-François Fallacher, CEO at Eutelsat]

These successes are really reinforcing our position as a trusted partner for sovereign and defense communication in an area where the demand really continues to accelerate. On the right side of the chart, you can see there that the momentum in mobile connectivity has also been strong across maritime and aviation. The list of partners we are having reselling for are including here Viasat, Marlink, Panasonic Avionics, Tototheo Global, ICT Network Station, SATCOM, and of course, SES Intelsat. Taken together, these commercial successes last year are really illustrating the breadth of our customer base, the growing recognition of our capacity and our ability to win the business across a number of verticals. They are providing us with increasing visibility on the revenue growth as our LEO business continues to scale and to increase. Of course, that while leveraging the strength of multi-orbit established GEO franchise.

[Jean-François Fallacher, CEO at Eutelsat]

One word about one of the most significant commercial achievements of last year. This is the award of the first call of contract under the French Ministry of the Armed Forces NEXUS framework agreement. The name of this contract is CENTAURE. It has a total value of EUR 350 million over eight years, it's obviously a major milestone for Eutelsat. It's validating our strategic role and the role that the OneWeb constellation can play in supporting as a dual player in supporting sovereign defense communications. This contract is actually composed of a firm commitment of EUR 138 million over the first four years, is enabling immediate deployment of secure, resilient LEO connectivity capabilities for the French armed forces. Importantly, it is bridging the gap ahead of the deployment of IRIS² by providing as we speak immediately, and we started actually already last year to provide a number of services.

[Jean-François Fallacher, CEO at Eutelsat]

This is clearly a solution that is laying the foundation for Europe future sovereign connectivity infrastructure. Beyond its financial contribution, this contract is strategically important. It is demonstrating the confidence that one of Europe's leading defense organization is placing in our technology and operational capability, and this is only the beginning. The framework agreement NEXUS has a 10-year duration, creating a significant pipeline of future opportunities as additional call of contracts are going to be awarded to support evolving operational requirements of the French Army. We believe this contract is positioning Eutelsat at the forefront of Europe's sovereign communication ecosystem and is providing an important catalyst for continued expansion of our government services business across other geographies in Europe and outside Europe. A word now on FCC Upper C-band transition in the U.S.

[Jean-François Fallacher, CEO at Eutelsat]

The recent FCC order has been establishing the regulatory framework for the reallocation of 160 megahertz upper C-band spectrum in the U.S. Under this order, Eutelsat is expecting to receive an incentive payment of $504 million pre-tax upon the completion of the transition, which is EUR 443 million pre-tax upon completion of the transition. These funds will be expected during 2031, and separately, the costs that will be associated with this transition are eligible for reimbursement by the FCC, and this is coming on top of the $504 million incentives to be received when freeing up this spectrum. Our preliminary transition plan is now under review and will be presented to the FCC in November. The proceeds from these incentive payments in 2031 will contribute to funding our CapEx requirements beyond 2030, 2031.

[Jean-François Fallacher, CEO at Eutelsat]

Now, let me say a word on this very important project, which is IRIS², and I have fresh news, a scoop, as I'm just learning at the moment now I'm speaking, that we have finalized and the European Commission has just been communicating that we have successfully passed a very important milestone for this IRIS² project, which is a so-called Rendez-vous 1 closure. What does it mean? It means that the project that was so far in a phase of design, of preparation, is going into a different operational phase where, first of all, the SpaceRISE consortium is now committed to build this project, and contracts are going to be passed to major prime key subcontractors to build this constellation for Europe's future. This is IRIS², the largest public-private partnership ever undertaken in the European space sector.

[Jean-François Fallacher, CEO at Eutelsat]

It will provide Europe with a sovereign, secure, resilient, multi-orbit connectivity infrastructure. The first Rendez-vous negotiation are clearly now finalized. We will move now to the next step of this project. This is confirming that Eutelsat has a leading role in this project as a LEO lead within the program. This is clearly reflecting the unique expertise we are bringing to this project, IRIS², as the only European player with an operational constellation as we speak. I have to underline that beyond the strategic recognition, IRIS² will provide access to enhanced network capacity and next-generation technological capabilities. This is really the next generation and the generation tool of our constellation that will strengthen our competitive position for the years to come and secure our future until 2040.

[Jean-François Fallacher, CEO at Eutelsat]

Ultimately, the program, again, firmly establishes Eutelsat, I believe, as the heart of Europe's sovereign connectivity ambition and is reinforcing our role as a key strategic infrastructure provider and supporting future growth opportunity for us across not only government but also commercial market, B2B, and really underpins now our long-term roadmap. Let's now turn to our financial outlook. For the financial year ending in June 2027, that has just started, our LEO revenues are set to drive again further strong growth. We are anticipating a rise of over 30%. As in the previous year, LEO growth, this growth will offset the decline in GEO revenues, notably video. In consequence, we expect to deliver slight growth in our total revenues of our four operating verticals with an EBITDA margin broadly at the same level that last year. This year, gross CapEx is expected to amount EUR 1.2 billion.

[Jean-François Fallacher, CEO at Eutelsat]

This is clearly reflecting a milestone shift from the previous years, as well as ramp-up of CapEx associated with the renewal of our current generation of OneWeb. Elsewhere, we are confirming our revenue expectation in a range of between EUR 1.5 billion and EUR 1.7 billion for the year ending June 2029. That will be, again, supported by the very strong momentum of LEO revenues. Our operating leverage is set to drive an improvement in operating EBITDA margin, which is expecting at this horizon of year ending June 2029 above 60%. To conclude now, to sum up, it's been a year of solid execution against our strategic priorities. First, our transformation gains momentum. LEO revenues grew by 70% last year. They are now accounting for a quarter of our group revenues. This is really demonstrating the increasing commercial traction of OneWeb.

[Jean-François Fallacher, CEO at Eutelsat]

This growth is progressively offsetting the decline and the expected decline of our legacy GEO business, which nonetheless continues to generate strong, resilient cash flows that are supporting group's investment strategy. Second, we have fundamentally strengthened our financial position. During last year, we successfully completed a comprehensive EUR 5 billion refinancing package, securing funding for our constellation renewal and other CapEx requirements throughout full year 2028/2029 while we have significantly improved the resilience and flexibility of our balance sheet. Third, we achieve an important milestone with the first major call of contract under the French MoD framework agreement that is representing more than EUR 350 million. Further on is demonstrating the growing strategic demand for sovereign LEO connectivity and our role as a dual supplier in the MoD segment.

[Jean-François Fallacher, CEO at Eutelsat]

Fourth, looking ahead, the FCC's decision on the upper C-band transition in the U.S. will provide $504 million in incentive payments expected in 2031, which will contribute to our long-term financing needs. Finally, the breaking news, the outcome of IRIS² first Rendez-vous 1, which has now been signed this morning. That is obviously a very key and important milestone for Eutelsat and also for Europe. It is confirming Eutelsat's central role in Europe's sovereign connectivity ambitions, reinforcing our leadership in LEO services and further strengthening our long-term strategic roadmap. Overall, I believe we leave the year as a stronger company, commercially, financially, strategically, with now a clear path to long-term sustainable growth. Thank you very much for your attention. Now we will take your questions.

[Operator]

Ladies and gentlemen, if you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Aleksander Peterc from Bernstein. Please go ahead.

[Aleksander Peterc, Analyst at Bernstein]

Yes, good morning, thank you for taking my question. I just have three, please, if I may. The first one is on your guidance for the current year, fiscal 2027. I'm just wondering, are you being very cautious? What's explaining yet another year of flat revenue? How should we think about your midterm guidance that does model at some point a more meaningful top-line recovery? When will we finally get this LEO traction that translates into overall group revenue starting to track towards your midterm guidance levels? Secondly, on the government and defense pipeline, I'm wondering to what extent the central program helped fourth quarter government revenues. Was this a one-off, particularly strong quarter, or should we expect similar streams going forward? I just want to know how the phasing of this program works.

[Aleksander Peterc, Analyst at Bernstein]

Thirdly, on EBITDA margins that came in a little bit below expectations. Again, we're going to get flat margins for the current year. Is this a function of mix that is detrimental with video declining and that obviously creates higher margins? Or is there anything else at play there? Thank you very much.

[Jean-François Fallacher, CEO at Eutelsat]

Thank you for your questions. I will start to take the second question. On the accounting of our contract with the French MOD, that was an exceptional quarter in the sense that we have recognized revenues because the constellation was used during the year, and we signed this contract in June. Don't derive that the June revenues are going to flow that way each quarter in 2026/2027. Clearly that was the catch-up in Q4 of some usage that the French MOD did of this constellation in the year that passed. On your first question, first of all, we maintain our expectations in terms of revenues for full year 2029 to get between EUR 1.5 billion and EUR 1.7 billion in full-year 2029. LEO revenues are expected to continue to accelerate. Again, we have a number of installations that are growing really in the right way.

[Jean-François Fallacher, CEO at Eutelsat]

We are ramping up also the backlog. Consumption is going the right direction. Basically, full year 2027, slight growth is explained by 2027 video revenues which are expected to face another tough year. As you remember, we had channel losses in Q4 2026. We had these Ekspress-81, Ekspress-82 satellites which we abandoned. From full year 2028, we expect the video decline to abate to more average market trends, and therefore growth will come next year. What you see is indeed the video is expected to have tough times again in 2027, the video GEO business. Your third question was about the EBITDA margin mix. Maybe I will pass the floor to Sébastien.

[Sébastien Rouge, CFO at Eutelsat]

Yes, I think you have the answer into your question. We are still in a stage where the LEO business is not as profitable as the established GEO one with acquisition cost and the equipment that dilute that. It will normalize throughout the year. As we said, I think we have in this transition some pressure coming from this mix that remains.

[Aleksander Peterc, Analyst at Bernstein]

Thank you very much. Thank you.

[Operator]

The next question comes from Utsav Sinha from AlphaValue. Please go ahead.

[Utsav Sinha, Analyst at AlphaValue]

Yeah. Hi, good morning. Thank you for taking my question. I just had the question about your CapEx investments going from now onwards. Initially it was planned for the replenishment of Generation 1 satellite, EUR 2 billion, but now you're projecting it to be around EUR 4 billion for your midterm CapEx investment. I just wanted to understand what would be your stable level CapEx ratio based on sales, because this EUR 4 billion looks quite heavy at the start. Also I would like to understand the revenue you expect from the IRIS² program. I understand on a technical basis that Eutelsat is the leader there. I would just also like to understand what is the return that you are getting on this kind of CapEx investments. Thank you so much.

[Sébastien Rouge, CFO at Eutelsat]

Right. What we clearly stated last year and at the beginning of the year was that we have a EUR 4 billion cumulative CapEx between FY 2026 and FY 2029, which includes in real terms the replenishment of the OneWeb constellation which was indeed, highlighted at around EUR 2 billion, and includes as well the early contribution of the IRIS² CapEx. It's important that obviously there will be some shift in phasing, but this overall envelope accumulated over four years is confirmed with, you have seen lower spending last year, and spending that will ramp up a little this year and the next two years will be important CapEx as well.

[Sébastien Rouge, CFO at Eutelsat]

We are really maintaining this EUR 4 billion cumulative over four years, which is very well in line with the refinancing package that we have, so that we are sure that we have the necessary fund to engage this CapEx.

[Utsav Sinha, Analyst at AlphaValue]

Yeah. Thank you so much. Still I would say EUR 1 billion every year, like for four years, EUR 4 billion. EUR 1 billion, and your revenue is at around EUR 1.2 billion now. As a percentage of sales, it's quite high. When do you think it will stabilize?

[Sébastien Rouge, CFO at Eutelsat]

Yes. We are well aware that it's important. We are well aware that we are in a very specific period in the life of Eutelsat, where we have to make sure that the current constellation is up and running, and that we transition to the next generation of constellation. That's really the reason why we have put in place this financing package, including the large capital increase, so that we have the means to, I would say, in a condensed timing, ensure quality of service for our customers that are more important every day and every month after the other. At the same time, prepare the future, the next generation in the European frame. We agree, very intensive timing, but we've been prepared for that.

[Utsav Sinha, Analyst at AlphaValue]

Okay. Thank you so much. That's clear.

[Operator]

The next question comes from Stéphane Beyazian from ODDO BHF. Please go ahead.

[Stéphane Beyazian, Analyst at ODDO BHF]

Good morning. Thank you. Yes. I'm just wondering to follow up on IRIS², if there is any significant deviation or change to the initial calculation that you provided, especially in terms of future revenue stream. I guess, the CapEx investment is something that we have, but probably we have a little more uncertainty perhaps on the revenue stream. I was just wondering in all the discussion, if you've been able to get more commitments, more, let's say, conviction on the future revenue stream. Second question. I was just wondering whether you can provide us a little more technical features on the new OneWeb and IRIS² satellites. I'm thinking of speed, possible download speed and capacity from those constellation. Finally, I was just wondering whether you have some takeaways from the Starlink IPO.

[Stéphane Beyazian, Analyst at ODDO BHF]

There's been the disclosure of a lot of things, their financial numbers, their strategy, market reaction. I was just wondering whether there are any surprise or any takeaway that can be interesting to Eutelsat. Thank you.

[Joanna Darlington, Head of Investors Relations at Eutelsat]

Okay. Thanks, Stéphane. It's Jo here. Jean-François said the IRIS² announcement is obviously breaking news. We will be releasing our own press release with detail. Obviously they have announced the global constellation. We will be communicating like we did last time, with details which are more specific to ourselves. I think what I would ask everybody to do is to wait for that communication, and then we'll be able to come back to you at a later stage, and answer questions on IRIS². No further communication on IRIS² in this call, please. Let's focus on the results. I'll let Jean-François comment on your Starlink question.

[Jean-François Fallacher, CEO at Eutelsat]

Yes. Thanks, Stéphane, for the question on Starlink IPO. This was of course interesting because this is the first time they had to publish a prospectus and, as you know, two days ago, they published their first quarterly results. This is of course interesting because it's a way to get more information about SpaceX Starlink. First thing we've derived is, and that was a surprise, in the prospectus we've seen that the Client A, so-called Client A, which is representing almost 25% of their revenues, is obviously the federal state, the U.S. federal state. It's clear the level of support SpaceX and Starlink are getting from the U.S. government. This is the first thing that struck us.

[Jean-François Fallacher, CEO at Eutelsat]

I think the second thing that struck us is when we look at their valuation, we see that Eutelsat is extremely undervalued because we are, as I repeat, the second operational low orbit constellation existing today in the world. You see with the results we are just publishing, the growth that we are having. Basically, the strategy that the board of Eutelsat took a few years ago and the previous management was the right one, because this 70% growth year-on-year on our LEO constellation is actually, as we see, compensating actually the decline in legacy GEO business. Again, the learning when we look at the valuation of Starlink is that we believe we are undervalued as a company, looking at the asset we are currently running and operating.

[Stéphane Beyazian, Analyst at ODDO BHF]

Thank you. Sorry, just the other question on any technical features you will share with us on the OneWeb replacement and IRIS². I guess the bottom line of my question is the generation of Starlink.

[Jean-François Fallacher, CEO at Eutelsat]

As Joanna was saying, we will communicate later today on this. I can already say that this is going to be really a next-generation and a cutting-edge technological constellation, which will have, obviously, if I'm quoting just a few features, interlink satellites. It will be a multi-layer constellation, which will be the first one of this kind. It will be a LEO MEO constellation. MEO will be also serving besides the ground station in the Earth as the backbone of the constellation. Very advanced constellation. It will provide us much more actually capacity than we have today on OneWeb. Also, I think a feature I want to state, because I think it's important, it will use 5G NTN technology. For IRIS², we want also to normalize the technology we want to use.

[Jean-François Fallacher, CEO at Eutelsat]

This is also a way to fight against the American giants, because today, each of the technology used by ourselves on OneWeb by actually Amazon or by Starlink are full proprietary technologies. Going to normalize technologies such as 5G NTN will also help bringing the cost down, having, let's say, antennas which will be actually cheaper and of a smaller size. Just to give you in a nutshell, a few hints of what IRIS² will be looking like. Now we are really, since the announcement of just this morning, entering in a new phase. It's a major milestone for the project. It's a new phase. It's an operational phase where we will invest. The European Commission will massively invest alongside ourselves in order to start contracting with the prime subcontractors, which are going to be Airbus, Thales Alenia Space, OHB, and Aerospacelab.

[Jean-François Fallacher, CEO at Eutelsat]

The contracts will start in the coming days to really start building this constellation. If we compare that to a race, I think the starter has just begun this morning, we are starting to run now full speed to reach this operational constellation as soon as we will be able to have it.

[Stéphane Beyazian, Analyst at ODDO BHF]

Great. Thank you.

[Operator]

The next question comes from Ben Rickett from New Street Research. Please go ahead.

[Ben Rickett, Analyst at New Street Research]

Hi there. Thank you. I had two questions, please. The first question, just coming back to the 2029 guidance. Your LEO revenue is obviously very strong this year, but you are guiding for that to decelerate to 30% growth next year. I think that would probably need to re-accelerate to get to the 2029 guidance. Can you talk a bit about what gives you confidence that LEO revenue growth could accelerate in that way? I had a second question. There has been some talk about the potential for cooperation between the smaller LEO constellations. This is something that Telesat has spoken about, and I think it was also a NATO alliance to facilitate some interoperability between the constellations. Just interested in your thoughts whether that is technically possible or whether that would be desirable, that sort of cooperation. Thank you.

[Joanna Darlington, Head of Investors Relations at Eutelsat]

Thanks, Ben. I will take the first question and then pass the second to Jean-François. I think, we do not see our LEO growth decelerating. Obviously, when you have grown by 80% and then 70% in the past two years, it is not exponential because obviously you are growing but off an increasingly higher base. I think the other thing is we do try to give ourselves a bit of headroom. If you remember, we were guiding to 50% LEO growth this year. It turned out to be more like 70%. We have reiterated our 2028, 2029 guidance, and that means that we are comfortable with it and that we do expect the LEO to grow sufficiently to offset the decline in the GEO verticals.

[Jean-François Fallacher, CEO at Eutelsat]

Yes. On your question about interoperability, as I was saying, on IRIS², we are going to go for 5G NTN. This is a normalized technology. For that reason, this is opening potentially some possibilities for interoperability based on the UT technology used. Nonetheless, this is still to be worked out and still to be proven. I have read, like you, the declarations of Telesat. We will need to materialize that in the future. At this stage, none of the constellations which are existing are interoperable, unfortunately. Or fortunately, I don't know, but this is the case today.

[Ben Rickett, Analyst at New Street Research]

That's great. Thank you.

[Operator]

As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. The next question comes from Roshan Ranjit from Deutsche Bank. Please go ahead.

[Roshan Ranjit, Analyst at Deutsche Bank]

Great. Morning, everyone. I've got three questions as well, please. Jean-François, you've illustrated the kind of government opportunity, and we've seen quite a lot of news flow over recent weeks, particularly the Poland MoU. How should we think about further contracts similar to the NEXUS framework, tied in with, I guess, IRIS²? Should we think about future government contracts being on IRIS², or could we see something similar to NEXUS on the existing Eutelsat network? Just tied to that, how should we think about the timing of the upside to the NEXUS framework? As you said, there's up to EUR 350 million. Is that something which we could hear in the next 12 months? We think might maybe a bit longer? Secondly, strong performance in fixed mobile connectivity, and that's supported the 70% LEO growth.

[Roshan Ranjit, Analyst at Deutsche Bank]

Is it possible to get a sense of the service versus terminal mix in there? Again, I guess that will support the future growth profile in terms of the service revenue ramping up. Lastly, just on the midterm guidance. We've talked about the revenue angle. I've noticed that the margin guidance was toned down a bit. What is the reason behind that? Is that the kind of GEO weakness or is that again, the equipment versus service mix? Thank you.

[Jean-François Fallacher, CEO at Eutelsat]

Thank you very much. On the service/terminal revenues view, we are not communicating that, so I will not comment further. On your point that it's been slightly toned down for the EBITDA in 2029, it's true, and this is actually linked to mostly GEO, which as we just said, for full year 2027 is going to unfortunately continue on a declining trend, which will be similar to the one we have seen this year. We have had, as you know, some further Russian sanctions, which are also pushing down GEO video revenues. You have seen as well in the communication we are giving, if you make the calculation yourself, that we have actually a decline also in the GEO connectivity business, which is a bit stronger than what we expected. This is explaining actually this 60% guidance on EBITDA in 2028/2029.

[Jean-François Fallacher, CEO at Eutelsat]

On your question on, let's say, contracts like NEXUS and how they will develop. Obviously that IRIS² is entering in an operational phase. We see clearer. In terms of expectations is that we are expecting actually our current OneWeb to be operational until 2034. They will be able, obviously, this constellation will be able to continue carrying services until 2034. Starting mid-2032, we will start to migrate customers to IRIS² commercial capacity because as you understood well, IRIS² will be both, I would say, hard gov military constellation and a commercial constellation. That's the timeline. Sorry, IRIS² commercial services is clearly the Gen 2 of OneWeb. We are going to migrate all our customer base, and this is going to be over with the current Gen 1, our OneWeb end of 2034.

[Jean-François Fallacher, CEO at Eutelsat]

We are going to migrate all our customers, commercial customers, to actually the IRIS² constellation commercial payload. What we believe clearly is that despite the fact that IRIS² will be clearly providing hard gov, hardened military services, there will still be space for, I would say, commercial services because why we have signed this contract with the French MoD and actually why we see actually quite a strong usage of our services in Ukraine is that basically the conflict in Ukraine has been showing that commercial services are actually working extremely well and are much less expensive than military and hard gov communication services.

[Jean-François Fallacher, CEO at Eutelsat]

if I may say so, the doctrine has changed and MoDs in the world are now open to buy dual services or the services that were not originally thought of for military usage, but that can be of a, I would say, that can be pertinent. This is what you see in the drone segment, for instance, and in, of course, also the commercial communication segment. We believe that those two will still coexist in the long term. Therefore we are very confident that our revenues, even in the government segment and in the military, in the dual, let's say, in our dual business, are going to continue beyond actually 2030 and beyond the arrival of the military hard gov services that will be provided by IRIS².

[Roshan Ranjit, Analyst at Deutsche Bank]

That's great. Thank you very much.

[Operator]

The next question comes from Stéphane Beyazian from ODDO BHF. Please go ahead.

[Stéphane Beyazian, Analyst at ODDO BHF]

Yes, thank you. I think last quarter or two quarters ago, we discussed about some business opportunities that you were looking at, such as selling some payload capacity or selling some ground infrastructure capacity. We also discussed the highway industry. I was just wondering whether you can update us whether you have identified possible future new revenue streams. Thank you.

[Jean-François Fallacher, CEO at Eutelsat]

The answer is yes. Actually, we have signed a first contract. This one is confidential, we cannot communicate it. We have signed a first contract for hosted payload. We have a very nourished sales pipe on hosting payloads. We see a lot of appetite in a number of geographies, not only in Europe but across the world, for actually this service. I remind that this is a service we are offering on the 340 satellites tranche, the second tranche that we have ordered in January last year to Airbus. I confirm that the pipe is extremely nourished. We hope to be able to make announcements in the coming months around this. The second, let's say, side business where we see also a lot of appetite is around our ground. As you know, we have a number of teleports.

[Jean-François Fallacher, CEO at Eutelsat]

We have more than 42 operation ground stations for OneWeb across the entire planet. These are quite wide areas, a few hectares of fields with 8 to 12 antennas, which are obviously key to have our OneWeb constellation operational all across the planet. We see a lot of appetite to host additional antennas or, let's say, to sweat these assets. We have been structuring ourselves in order to derive as much as possible additional revenues from this asset of ours which, as you remember, last year we were about to sell. This has been actually stopped by the lack of authorization from the French government. I think it has wakened us up in terms of the capacity to derive revenues from this asset. We have structured ourselves internally to boost this additional business.

[Stéphane Beyazian, Analyst at ODDO BHF]

Thank you. What about the railway industries? Are there some potential-

[Jean-François Fallacher, CEO at Eutelsat]

Yeah

[Stéphane Beyazian, Analyst at ODDO BHF]

in the aviation industry?

[Jean-François Fallacher, CEO at Eutelsat]

Thanks. Yes. On the rail, yes, we see potential. More for the French around this call. We are engaged for now a good year with SNCF on how they will actually equip potentially the fast trains in France. We've been trying to understand their needs more precisely to be ready at the moment that we launch an RFP, and that I understand should come pretty soon. We will be ready. I'm very happy to report that actually we are going also to answer an RFP for Renfe, which is the Spanish trains. We have conducted actually two weeks ago a very successful test with PKP, which is the Polish railways, on a fast train going from Warsaw to Kraków. That train we have equipped in one of our rail antenna.

[Jean-François Fallacher, CEO at Eutelsat]

We have made progress because we have certified an antenna for the rail actually to be precise two months ago, so it's pretty fresh. We just tested it two weeks ago very successfully in one of the wagons of this train which is also paving the way for PKP in Poland to start a tender and to choose actually to complement, I would say, the classical mobile connectivity on rail by satellite connectivity. We obviously will be present. Of course, there will be competition, to be clear. We will fight, and we will do our utmost to convince these rail entities that the OneWeb Eutelsat solution is the right one for them.

[Stéphane Beyazian, Analyst at ODDO BHF]

Thank you. Sorry about that. Can just follow up a little bit on that, just to understand the size of the market or the size of these contracts. For now, those companies are looking to put connectivity in just a couple of major train lines, or we are talking about 20%, 40% of their trains? I'm just trying to understand what we're talking about.

[Jean-François Fallacher, CEO at Eutelsat]

Just to be clear, this is a sizable market. What we understand is these company are really looking for equipping a vast majority of their trains, whether those are fast trains or whether those are more, let's say, regional classical trains. Clearly, the feedback we are getting from the rail is that, as in aviation, the customer experience and the customer satisfaction on the specific item, which is onboard connectivity, is a black spot, I would say. That's what they are saying. This is really a topic that they would wish to solve. For those of you which are taking the train between Paris and London, you are probably experiencing once you cross the Channel really awful connectivity. We have ourselves this experience. Clearly, the expectations of these rail companies are actually to equip a vast majority of their trains.

[Jean-François Fallacher, CEO at Eutelsat]

I'm talking for those with whom we are discussing, SNCF, Renfe, PKP in Poland. As you know, each country has its own company. We are also in discussions with British Rail. Each country has its own company. The overall market is vast. Once more, the OneWeb constellation is flying all across the planet. I didn't want to tell you guys, but we have already equipped trains in Kazakhstan, and we have trains which are equipped in Democratic Republic of Congo, for instance. Well, I'm not sure these are very valid reference for speed trains, but nonetheless, there are going to be opportunities in the rail all across the planet in many different geographies. We see that as alongside the maritime and alongside aero. We see that as a potential very interesting segment, and this is a very sizable one.

[Stéphane Beyazian, Analyst at ODDO BHF]

That's very clear. Thank you for that.

[Jean-François Fallacher, CEO at Eutelsat]

Thanks.

[Operator]

Ladies and gentlemen, thank you for your participation. This concludes our conference. You may now disconnect. We wish you a pleasant day.

Participants

Analysts

• Jean-François Fallacher, CEO at Eutelsat
• Sébastien Rouge, CFO at Eutelsat
• Aleksander Peterc, Analyst at Bernstein
• Utsav Sinha, Analyst at AlphaValue
• Stéphane Beyazian, Analyst at ODDO BHF
• Joanna Darlington, Head of Investors Relations at Eutelsat
• Ben Rickett, Analyst at New Street Research
• Roshan Ranjit, Analyst at Deutsche Bank