Eutelsat Communications SA (LSE:ETL) shares fell around 5% on Thursday after the satellite operator unveiled a weaker-than-expected profitability outlook for fiscal 2026-27 and announced a substantial increase in planned capital expenditure. The cautious guidance overshadowed quarterly revenue that exceeded market forecasts.
By 09:20 GMT, the shares were trading about 5% lower at €2.04, lagging the wider French market. Investors reacted negatively after Eutelsat projected an adjusted EBITDA margin broadly consistent with the 51.2% recorded in fiscal 2025-26, below analyst expectations of roughly 54%.
Revenue Beats Expectations but Guidance Disappoints
Morgan Stanley noted that fourth-quarter operating vertical revenue came in approximately 10% ahead of consensus estimates, while full-year adjusted EBITDA of €632 million also modestly exceeded market forecasts.
Despite the stronger-than-expected results, attention shifted to the company’s outlook for the new financial year. Eutelsat expects adjusted EBITDA margins to remain broadly unchanged while forecasting gross capital expenditure of around €1.2 billion, significantly above analyst expectations of approximately €825 million.
LEO Growth Offsets Weakness in Legacy Business
For the financial year ended 30 June, Eutelsat reduced its share of the group’s net loss to €457.3 million from €1.08 billion a year earlier. Revenue edged down 0.6% to €1.24 billion, while adjusted EBITDA declined 6.5% to €632.4 million, with the EBITDA margin narrowing from 54.4% to 51.2%.
The company’s low-Earth orbit (LEO) operations remained its strongest area of growth, with revenue increasing by nearly 70% to €297 million. This performance helped offset ongoing weakness in its traditional video broadcasting business. Connectivity services also delivered double-digit revenue growth across government, fixed broadband and mobility markets.
Investment Programme to Accelerate OneWeb Expansion
Looking ahead to fiscal 2026-27, Eutelsat expects modest growth in operating vertical revenue, supported by LEO revenue growth of more than 30%. However, continued declines in its geostationary (GEO) operations are expected to continue weighing on overall profitability.
The company also plans to invest around €1.2 billion in gross capital expenditure as it accelerates the renewal and expansion of its OneWeb satellite constellation.
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