Shares of Eutelsat (EU:ETL) fell more than 6% in Paris on Wednesday after the satellite operator reported first-quarter revenue that came in slightly below market forecasts, with a slump in its video business offsetting solid gains in government services.
Revenue for the quarter totaled €293 million, representing a 2.2% drop on a reported basis and a 0.3% decline at constant currency. Sales from the four core operating segments reached €283 million, down 1.2% like-for-like and 11% lower than the previous quarter, also impacted by a €10 million currency headwind.
This result missed analyst expectations of €295 million, according to company figures.
The video unit, which provides satellite broadcasting services to over a billion viewers and accounts for almost half of Eutelsat’s total revenue, fell 10.5% year-on-year. The company attributed the drop to structural weakness in the video market as well as sanctions affecting Russian channels. French authorities recently instructed Eutelsat to stop broadcasting two Russian networks, a decision the company estimates will cost around €16 million in annual revenue.
“We still see a strong progress of Starlink on the broadband and B2C (business-to-consumer) segments,” said Chief Financial Officer Christophe Caudrelier, noting that “the demand for connectivity by satellite is growing fast.”
Government services continued to be the company’s bright spot, climbing 18.5% to €52.4 million, bolstered by growing demand in Ukraine and other markets.
Eutelsat reaffirmed its full-year and long-term guidance, but analysts remained cautious.
Kepler Cheuvreux analyst Alessandro Cuglietta reiterated a Hold rating on the stock. “We remain cautious,” he said. “The business model is structurally capital-intensive, with sustained negative free cash flow expected through the end of the decade.”
Cuglietta also noted that Eutelsat’s return on invested capital (ROIC) is unlikely to turn positive before fiscal 2030, “and even then, should remain below 10%.”
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