Etalon Group Q3 Earnings Call Highlights

Key Points

• Revenue grew modestly in Q3, with total revenue up 3.1% like-for-like to EUR 293 million as strong connectivity performance offset weakness in video. Eutelsat said the quarter was in line with expectations.
• Connectivity remained the growth engine, rising 15.3% year over year, led by a 65% jump in LEO-enabled solutions, while video revenue fell 13.3% due to sanctions and satellite contract terminations.
• The company reaffirmed its full-year outlook and said its EUR 3.4 billion backlog was stable, supported by renewals and LEO growth. It also highlighted new aviation, maritime, and government contracts, including a major French defense framework and progress on IRIS²-related revenue.

Eutelsat Group reported modest growth in fiscal third-quarter revenue and reaffirmed its full-year objectives, as strength in connectivity services offset continued pressure in its video business.

Chief Financial Officer Sebastien Rouge said operating verticals revenue for the third quarter of fiscal 2025/2026 totaled EUR 283.7 million, up 0.9% year over year on a like-for-like basis. Total revenue was EUR 293 million, up 3.1% like for like, including a EUR 20 million negative currency effect and a EUR 10 million positive swing in other revenue, mainly tied to recognition of IRIS² revenue and Eutelsat’s role as consortium system development prime.

Rouge said the quarter was “in line with our expectations” and highlighted continued growth in connectivity, where revenue rose 15.3% year over year to EUR 155.7 million. Low Earth orbit, or LEO, enabled solutions grew 65% year over year.

Connectivity Growth Offsets Video Decline

Video remained Eutelsat’s largest segment, representing 45% of revenue, but third-quarter video revenue fell 13.3% year over year to EUR 128 million. Rouge said the decline reflected the impact of sanctions on Russian channels imposed at the beginning of the year, as well as the termination from March 26 onward of capacity contracts on the Express-81 and Express-82 satellites.

On a sequential basis, video revenue was down 3.6%, also reflecting the contract terminations. Rouge noted that Eutelsat had renewed multiple capacity agreements, including deals tied to the 7/8 West video neighborhood serving the Middle East and North Africa, agreements in Mexico with Cadena Tres and PCTV using EUTELSAT 117 West A, and a new partnership with Co-op Cable for direct-to-home and connectivity services across the Caribbean using EUTELSAT 65 West A.

Fixed connectivity revenue rose 10.6% year over year to EUR 60.3 million, reflecting momentum in LEO-enabled connectivity solutions, partly offset by more challenging conditions for GEO-enabled services. Sequentially, fixed connectivity revenue declined 12.9%, which Rouge attributed to a one-off positive impact in the prior quarter from upfront revenue recognition related to a capacity contract.

Government services revenue rose 11.8% year over year to EUR 50.4 million, driven by LEO-enabled services, including services delivered in Ukraine, and rising demand from non-U.S. governments. Mobile connectivity revenue increased 27% year over year to EUR 45 million, supported by growth in the aeronautical segment across both GEO and LEO solutions.

Commercial Wins Include Aviation and Maritime Deals

Eutelsat cited several commercial developments in connectivity during the quarter. In fixed connectivity, the company signed a multi-year agreement with MTN Côte d’Ivoire to deliver satellite connectivity services using EUTELSAT KONNECT high-throughput capacity.

In mobility, Eutelsat announced a new connectivity agreement involving Japan Airlines, with more than 40 wide-body aircraft expected to be equipped with next-generation in-flight connectivity solutions. During the question-and-answer session, Chief Communications and Investor Relations Officer Joanna Darlington clarified that Eutelsat is not the integrator on the Japan Airlines deal and that the contract is through a distributor, SES.

“It’s pure capacity as are all of the contracts or the LEO capacity that we sell to airlines via distributors,” Darlington said, adding that Eutelsat’s distributor partners also include Panasonic, Gogo and Anuvu.

Eutelsat also entered a multi-year partnership with Singapore-based Can Marine to deliver maritime LEO connectivity services. In addition, Eutelsat and India’s Station Satcom signed an expanded multi-year, multi-million-dollar agreement to scale deployment of LEO connectivity services across Station Satcom’s global maritime fleet.

Backlog Stable, Outlook Reaffirmed

Eutelsat said its backlog stood at EUR 3.4 billion at the end of March 26, stable compared with the end of December 25. Rouge said natural backlog erosion was offset by the renewal of the Polsat video contract and growth in the LEO backlog. The backlog was equivalent to 2.8 times fiscal 2025 revenue, with connectivity representing 58% of the total.

The company reaffirmed its full-year fiscal 2025/2026 objectives. Eutelsat expects revenue from its four operating verticals to be in line with the prior year, LEO revenue to grow 50% year over year, and adjusted EBITDA margin to be slightly below the fiscal 2024/2025 level. Gross capital expenditure is expected to be around EUR 900 million.

Rouge also said Eutelsat completed the closing of a EUR 1.5 billion senior note offering during the quarter, the final milestone in the group’s EUR 5 billion equity and debt refinancing strategy. Following the completion of a capital increase in December 2025, the company estimates net debt to EBITDA at about 2.7 times by year-end.

French Defence Framework and India Approvals Discussed

Asked by Deutsche Bank analyst Roshan Ranjit about expected fourth-quarter government revenue, Rouge pointed to Eutelsat’s framework agreement with the French government’s DGA. He said the agreement spans 10 years and is valued at around EUR 1 billion, covering both capacity and specific projects.

Rouge said Eutelsat expects to sign firm commitments with specific deliverables under the framework and may recognize revenue in the fourth quarter depending on the timing and technical setup of the contract. He declined to provide a specific amount, saying revenue would “gradually increase year on year between now and the next decade.”

Ranjit also asked about the Indian market for consumer broadband. Darlington said Eutelsat is still awaiting approval from the Indian regulator to offer fixed LEO broadband services in India, adding that all operators seeking to provide such services are in the same position.

“We get asked every quarter, and we don’t know,” Darlington said regarding timing. She added that the regulatory delay does not stop Eutelsat from doing India-related business, including supplying Indian maritime companies.

IRIS² Talks and Capacity Pricing

New Street Research analyst Ben Rickett asked about the IRIS² “Rendezvous One” process and whether terms of the contract could change. Rouge said the program is large and complex, involving a dual-use infrastructure, multiple partners and several stakeholders. He said the process has taken longer than anticipated, but added that this does not imply Eutelsat’s portion of the contract would be lower than expected.

Rouge said Eutelsat believes it is “a matter of weeks” before the conclusion of the Rendezvous One process, though he declined to give a specific deadline.

On capacity pricing, Rouge said Eutelsat does not comment on specific prices. He said that while more LEO capacity may come to market over time, Eutelsat is currently the only alternative to Starlink in terms of LEO capacity. For GEO capacity, he said there remains “a structural abundance,” though the pricing environment depends on geography, service and duration. Rouge said Eutelsat’s combined GEO and LEO capabilities remain an asset, particularly in mobile connectivity.

About Etalon Group LON: ETL

Etalon Group 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.

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