8/14/2024 - Written By Chris Quilty
It’s been a pretty miserable decade if you’re a GEO operator. The spectrum skirmishes over Ku and Ka-bands kicked things off, followed by a relentless arms race to launch increasingly more powerful HTS satellites. Meanwhile, consumers started cutting the cord, and the video cash cow tipped into decline beginning in the late 2010s. But the real blow came from Starlink’s efforts to decimate the GEO industry, particularly in the maritime sector, where LEO is anchoring itself as the dominant technology. KVH Industries, a top-five maritime bandwidth seller, has shuttered its GEO antenna product line and is now onboarding ~600 new Starlink subscribers each quarter — compared to just ~600 GEO subscribers annually in the past.
With that context, Eutelsat’s Q4 earnings report was a breath of fresh air. Eutelsat grew annual revenues for the first time in eight years, and backlog is up for the first time in four years. The catalyst for the turnaround? Aside from new GEO capacity, the biggest growth driver was OneWeb. While Eutelsat does not disclose OneWeb revenues, we estimate OneWeb FY24 revenues at ~€80M, or 7% of revenues. That’s a disappointment relative to Eutelsat’s revised July 2023 target of €125-€225M, due to delays in deploying the ground network that have pushed back OneWeb’s global service launch by eight months to date. This delay will prevent OneWeb from hitting its 2027 revenue target of >€600M, but even achieving half of that would account for 21% (1) of Eutelsat’s revenues and contribute to rapidly expanding EBITDA margins.
The takeaway? Eutelsat faced plenty of skepticism over its OneWeb acquisition, but it’s clear now that OneWeb represents the company’s most compelling growth opportunity. As it turns out, there is life after GEO for operators bold enough to bet big on a hybrid network strategy.
1. 1. Assumes legacy GEO business remains flat.
SOURCE: https://www.eutelsat.com/files/EC_consolidated_financial_statements_FY24_vDEF_en.pdf