EUTELSAT COMMUNICATIONS Investor Presentation June 2020 Agenda
1 FSS Industry 2 Eutelsat in a snapshot 3 Q3 2019-20 performance 4 Outlook 5 Appendix
2 The satellite value chain
TV broadcasters, Satellite Satellite Satellite Telecoms, Consumers manufacturers launchers operators Governments and businesses
3 Business characteristics
► High barriers to entry
• Finite resource of orbital positions and frequencies, heavily regulated at international level with key commercial orbital positions have already been developed
• High upfront CAPEX before operations
• High technology and technical expertise through satellite lifecycle
► Profitable business model
• Significant backlog with long term contracts
• Economies of scale
• High operating margins
• Predictable operating cash flow
4 Trends in our heritage businesses
BROADCAST: UNDERLYING DATA & PROFESSIONAL VIDEO: GOVERNMENT SERVICES: RESILIENCE STRUCTURALLY CHALLENGED POCKETS OF OPPORTUNITY
► Growth in emerging ► Global demand driven ► US DoD demand markets by increasing stabilizing, albeit • Robust channel growth connectivity needs at lower prices • Increasing HD penetration • MENA and SSA leading ► Large HTS systems ► Slower migration to HTS growth adding to existing than Data Services overcapacity • Prices well-oriented ► Opportunities in APAC ► Ongoing severe and MENA ► Broad stability in Europe pricing pressure • Broadly stable channel ► ETL Quantum to bring count ► Occasional use new flexible capacity • HD and UHD ramp-up temporarily halted by • Improving encoding Covid-19 and compression
Stable to slightly Broad In decline growing stability
5 Longer-term potential in Video and Connectivity
VIDEO FIXED AND MOBILE CONNECTIVITY
► Satellite and IPTV set to dominate ► Nascent markets with huge potential global video distribution in the longer term ► Massive growth in bandwidth usage per consumer ► Opportunity to enhance satellite value proposition by offering IP-like viewer ► Significant addressable market for experience Fixed Broadband via satellite: c. 2-3% of households ► Outsourcing of services by broadcasters will create additional ► Long-term potential in Aero and sources of demand Maritime Mobility
► Impact of Covid-19 on airline and maritime traffic on Short/Medium term
► VHTS a pre-requisite in terms of volume and pricing for mass-market adoption
6 Video drivers: Channel growth and image quality
CHANNEL GROWTH INCREASED IMAGE QUALITY
TV Channels in EMEA and LATAM HD penetration rate by major region
~23,000 49% CAGR: +1.1% ETL footprint 22%
Russia and 38% Central Asia 12% 2027 2017 SSA 23% ~20,900 5% 48% MENA 22%
58% LATAM 28%
Central 55% Europe 20% Western 84% Europe 34% 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 North 86% America 41%
Predominantly driven by Everywhere, including mature emerging Video markets Video markets
Source: Euroconsult 2018 7
Video drivers: Capacity requirements versus compression technology
EVOLUTION OF IMAGE QUALITY NUMBER OF CHANNELS PER (NUMBER OF CHANNELS) 36 MHZ TRANSPONDER
25 000
20 000 Format Modulation MPEG-2 MPEG-4 HEVC
15 000 DVB-S ~15 - - SD 10 000 DVB-S2 - ~26 -
DVB-S - - - 5 000 HD DVB-S2 - ~9 ~15
0 UHD DVB-S2 - - ~3 2017 2019 2021 2023 2025 2027 Standard Definition High Definition Ultra High Definition and 3D
Source: Euroconsult 2018, EMEA and LATAM
8 Video: Satellite’s competitive advantage over OTT / IP
COST-EFFICIENCY UNIVERSAL REACH SERVICE QUALITY
FTTP COVERAGE1 BANDWIDTH REQUIREMENT (Mbps)
Cost OTT 1 UHD channel in HEVC 20
1 HD channel in MPEG 4 7 58% 53% Satellite
22% 1 SD channel in MPEG 2 3
# viewers Italy Poland EU Average
► Satellite a fraction of TV platforms ► High cost of fibre roll-out ► Higher quality of image leading operating costs to increased bandwidth usage ► Terrestrial networks cannot ► CDN costs rise in line with reach entire population ► Congestion of terrestrial networks audience growth • Lower image quality • Video will represent >80% of IP traffic in 2021 ► For a large Pay-TV platform, OTT • Or even no service distribution would be much more expensive than satellite
Satellite more cost efficient >50k Satellite provides full coverage Satellite and hybrid solutions viewers in Western Europe of a market give unimpaired viewing experience
Source: Eutelsat analysis, European Commission - Broadband Coverage in Europe 2017, CISCO VNI 2017 1 FTTP and DOCSIS 3.0 coverage 9 Video: Satellite resilience in Eutelsat’s main European markets1
MILLION TV HOMES BY DISTRIBUTION MODE IN IP GAINING SHARE VS. TERRESTRIAL, NOT SATELLITE WESTERN EUROPE
74 73 73 ► Slight increase in total number of TV homes 74 million 26 26 25 ► Satellite reception broadly stable at 5 6 7 c.25 million homes 9 9 9 ► Satellite market share of 35%
34 33 33 ► IP gaining share
2016 2017 2022
DTT Cable IP Satellite
Source: Digital TV Research, 2018 10 1 Italy, UK, Poland, Greece, Serbia Video: Satellite gaining market share worldwide
MILLION TV HOMES BY DISTRIBUTION MODE - GLOBAL
1,720 ► Total number of TV homes to 1,604 1,624
increase by 95 million to 1.7 bn by 475 2022 411 426
171 195 247 ► Satellite reception to grow by 50 million homes to 475 million by 2022 566 555 560
► Satellite market share to rise from 26% to 28% 456 448 439
2016 2017 2022
Terrestrial Cable IP Satellite
Source: Digital TV Research, 2017 11 Agenda
1 FSS Industry 2 Eutelsat in a snapshot 3 Q3 2019-20 performance 4 Outlook 5 Appendix
12 Eutelsat in a snapshot
KEY DATA REVENUE BREAKDOWN BY APPLICATION
By geography ► FY 19 revenues of €1.32bn 7% 3% Western Europe Central Europe 10% 30% MENA ► Fleet of 39 satellites; global RCA 10% coverage SSA Americas 7% 9% APAC ► Operating >1,350 transponders 24% Unallocated and others By application ► Broadcasting ~7,000 channels
6% 6% ► Backlog of €4.2bn, representing Broadcast 12% 3.2 years of revenues Data & Professional Video Government Services 60% Fixed Broadband 15% Mobile Connectivity
13 Breakdown of revenues by application
Direct-to-Home (DTH) Broadcast 61% Cable headends
Data & Mobile backhaul Professional 14% Corporate networks Video Professional Video
Government Military CORE BUSINESSES Services 12% Security
Fixed Internet access for Broadband 6% households and corporates
Mobile In-flight Connectivity Connectivity 6%
CONNECTIVITY Maritime Connectivity
As of 31 December 2019. % of revenues excluding Other revenues 14 Eutelsat’s global network
15 Equity story in a nutshell
Consistent delivery on below-topline objectives despite challenging environment for core businesses
Successful execution of cash generation strategy with cash flow/revenue ratio doubled in three years, and DFCF target reached a year early
Substantial medium term growth opportunities in Connectivity, with associated Capex and Opex already factored into financial objectives
Further leverage of all elements of cash generation with follow-on ‘LEAP 2’ cost-savings plan generating resources to invest in growth verticals
Relative resilience to Covid-19 context of our overall activities which are expected to remain highly cash generative
High level of shareholder remuneration maintained despite a 30% dividend cut: re-based dividend still representing a 9% yield and regular Dividend Policy to be resumed as soon as circumstances permit
16 Long term resilience of Core Broadcast revenue
Broadcast: quarterly revenues (€m)
198 197 197 197 196 195 197 197 193 192 196
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
FY 18 FY 19 FY 20
At constant currency and accounting standards Excluding Fransat Converted at FY19 €/$ rate of 1.14 Excluding ETL 25B and Q1 FY18 data proforma for Noorsat integration
17 Bond and Bank Debt maturity schedule
ONGOING DEBT OPTIMISATION BOND AND BANK DEBT MATURITY SCHEDULE AT END DECEMBER 20191
of which €25m drawn ► Net Debt/EBITDA ratio of 3.2x of which €26m drawn • vs 31 Dec. 2018 (3.1x) of which €300m drawn in March 2020 €67m • December representing seasonal peak €800m
► Average cost of debt after hedging €600m reduced to 2.4% €500m €200m €53m
• vs 2.8% in H1 2018-19 €300m
2.0% ► Average weighted maturity of 4.2 years €600m 2.25%
€450m • vs 2.7 years at 31 Dec. 2018 1.125% €80m 3.125% ► Commitment to Investment Grade ratings 2021 2022 2023 2024 2025 2027
► Strong liquidity at end December 2019 Undrawn lines of credit Outstanding Bonds (Eutelsat S.A) • €373m cash Term loan / undrawn line of credits of Eutelsat Communications
• €798m undrawn credit lines Note: Maturities are provided on a calendar year 1 Bond and Bank debt maturity schedule as of 31 December 2019, excluding ECA o Of which €300m drawn in March 2020 loans and finance leases
18
Shareholder structure
EUTELSAT SHAREHOLDING STRUCTURE AS OF 30 JUNE 2019
Bpifrance 19.8%
1 Free float CIC 6.7% and others 66.0%
FSP2 7.5%
1 China Investment Corporation 2 Fonds Stratégique de Participations 19 Agenda
1 FSS Industry 2 Eutelsat in a snapshot 3 Q3 2019-20 performance 4 Outlook 5 Appendix
20 Q3 Highlights
Continued improvement in Operating Verticals trends
Resilient Broadcast; return to slight growth QoQ
Solid outcome of Spring renewal campaign with USG
New commercial win in Maritime Mobility
MoU to connect schools in DRC, highlighting the opportunity represented by government programs
Updated financial objectives confirmed
21 Continued improvement in Operating Verticals trends
PROGESSIVE UPTURN OF YOY QUARTERLY RETURN TO SLIGHT SEQUENTIAL GROWTH TRENDS FOR OPERATING VERTICALS
Like-for-like YoY change for Like-for-like QoQ change for Operating Verticals revenues Operating Verticals revenues
Q1 Q2 Q3 Q1 vs Q4 Q2 vs Q1 Q3 vs Q2 +1.2%
+0.4% -1.6%
-3.7%
-3.7% -6.2%
22 Konnect Africa to connect thousands of schools in DRC
► MoU to provide high speed connectivity to 3,600 schools in DRC as part of Schoolap project
► Access to a digital platform of high quality teaching materials provided by local partners
► Scope to expand in the future • > 20,000 rural schools in DRC • Potential expansion to other countries
► Highlights opportunity of government needs in e-education, e-agriculture, e-administration…
Strong potential of government-backed digital inclusion programs in SSA
23 Q3 2019-20 revenues
Q3 2019-20 Y-O-Y REVENUE BRIDGE (€M)
► Total revenues of €322m, down 4.4% +4 ► Lower Other revenues -1.6% • Positive one-off last fiscal year (13) (5) ► Positive currency effect • €/$ rate of 1.10 vs 1.14 last year 337 322 ► No perimeter impact
► Revenues from the Operating Reported Currency Change in Operational Reported Verticals down 1.6% like-for-like Q3 2018-19 Other 1 trend Q3 2019-20 Revenues
1 Including Hedging revenues 24 Q3 2019-20 revenues by application
REVENUE REVENUES LIKE -FOR-LIKE2 CHANGE 1 CONTRIBUTION (€m) YoY QoQ
Broadcast 62% 199 -0.2% +2.1%
Data & Professional 14%10% 45 -7.6% +0.2% Video
Government 12% 40 -2.4% +2.3% Services
Fixed 6% -2.6% -2.3% Broadband 19
Mobile 6% +2.0% -3.5% Connectivity 21
Total Operating Verticals 323 -1.6% +1.2% Other revenues (1) 3 -€13m -€1m
1 The share of each application as a percentage of total revenues is calculated excluding “Other revenues”. 2 At constant currency and perimeter 25 3 Of which -€3m related to Hedging revenues Broadcast
REVENUES (€M)
► Revenues of €199m, stable like-for- like1 on a y-o-y basis • Return of a couple of transponders in Russia • Higher revenues in MENA and at 28.5°East ► Revenues up 2.1% Q-o-Q Q4 198 • Positive one-off for circa €1m
► Robust commercial activity Q3 198 Q3 199 • New DTH platform in SSA Q2 196 Q2 195 • Renewal and expansion of business in Western Balkans at 16°East Q1 198 Q1 195 ► Entry into service of Eutelsat 7C 2 • 19 Incremental transponders in SSA FY 2018-19 FY 2019-20 ► Eutelsat 5 WB replacing Eutelsat 5WA
1 At constant currency and perimeter 26 2 Includes one month contribution of EUTELSAT 25B (€1.7m) Data & Professional Video
REVENUES (€M)
► Revenues of €45m, down 7.6% y-o-y like-for-like1
► Revenues stable Q-o-Q
► Environment remains highly competitive Q4 49
► Ongoing pricing pressure Q3 48 Q3 45 ► Improving trends vs H1 Q2 51 • Better volumes Q2 45 • Easing comparison basis Q1 52 Q1 43 ► Professional Video affected by Covid- 19 in March; deeper impact expected FY 2018-19 FY 2019-20 in Q4
1 At constant currency and perimeter 27 Government Services
REVENUES (€M)
► Revenues of €40m, down 2.4% y-o-y like-for-like1 • Carry-forward effect of 2019 renewals rates (85% in Spring and 90% in Fall) • Contribution of EGNOS since mid- Q4 40 February
Q3 40 Q3 40 ► Revenues up 2.3% Q-o-Q
► USG renewal rate above 85% in Q2 39 Q2 39 Spring campaign Q1 42 Q1 39 ► Q4 to benefit from • Full quarter contribution of EGNOS FY 2018-19 FY 2019-20 • Relocation of ETL 7A
1 At constant currency and perimeter 28 Fixed Broadband
REVENUES (€M)
► Revenues of €19m, down 2.6% y-o-y like-for-like1
► Broadband Europe • Lack of capacity
• Lower contribution from traditional Q4 21 distributors • Growth of PPP Q3 19 Q3 19 ► Broadband Africa • Modest revenues Q2 20 Q2 19 • Focus to remain on trialling distribution
models on a limited scale Q1 20 Q1 20 • MoU to provide high speed connectivity to schools in DRC FY 2018-19 FY 2019-20
1 At constant currency and perimeter 29 Mobile Connectivity
REVENUES (€M)
► Revenues of €21m, up 2.0% y-o-y like-for-like1 • Continued ramp-up of Maritime
► Revenues down 3.5% Q-o-Q • Reflecting a positive one-off in Q2 21 Q4 ► Effect of Covid-19 20 Q3 21 • Limited to a slowdown of capacity Q3 contracts on KA-SAT in March so far • Impact of lower airline and maritime Q2 19 Q2 22 traffic more pronounced in Q4
Q1 21 Q1 20 ► Commercial win in Maritime
• Ku coverage on a regional basis for FY 2018-19 FY 2019-20 selected sailing areas • First reference customer for Konnect VHTS in Mobility
1 At constant currency and perimeter 30
Backlog and Fill Rate
BACKLOG (€BN) OPERATIONAL AND UTILIZED TRANSPONDERS
1,418 1,387 1,377
4.4 4.3 4.2 960 966 959
Broadcast 73% 68% 67%
31 March 2019 31 Dec. 2019 31 March 2020 31 March 2018 31 Dec. 2019 31 March 2020 Fill 67.7% 69.7% 69.7% rate ► 3.2 years of revenues Operational transponders Utilized transponders ► Total backlog of €4.2bn ► Impact of changes in the fleet • E12WB in inclined orbit ► No significant Broadcast renewals • Entry into service of E7C ► Broadcast accounting for 67% • Transfer of services from E5WA to E5WB
Based on 36 MHz-equivalent transponders (TPE), excluding HTS capacity 31
To Sum Up
Continued underlying improvement in revenue trends as expected
Resilient Broadcast, with return to slight growth QoQ
Solid financial position with strong cash generation capacity, even in an environment of lower growth
High level of shareholder remuneration even after 30% dividend cut
Well-positioned to face Covid-19 thanks to resilient businesses, high backlog, strong financial position and high level of cash-generation
32 Agenda
1 FSS Industry 2 Eutelsat in a snapshot 3 Q3 2019-20 performance 44 Outlook 5 Appendix
33 Eutelsat is well positioned to weather Covid-19 crisis
► Nominal operations allowing full business continuity
► Highly resilient activity • Long-term contracts • Substantial backlog representing 3.2 years of revenues • Criticality of our capacity for customers
► Business to remain highly cash generative
► Robust financial health • Headroom relative to the 4.0x covenant on non-Bond Debt • Well-spread refinancing schedule; no maturities before June 2021 • Strong liquidity position comfortably above €1bn at end-March1
1 Cash, cash equivalents + undrawn credit lines 34 Impact of Covid-19 on revenues: highly resilient activity
LIMITED IMPACT ON FY 20 FY 21 IMPACT UNDER ASSESSMENT
► Resilience of core ► FY 20 effects likely to be broadcast (>60% of revenues) reflected at least into early FY 21
► Professional Video, in particular ► Likely delays in deployment plan Occasional Use (c.1%) impacted pushing out revenues by cancellation of sport events • Rollout of Ground gateways of KONNECT ► Mobile Connectivity (6% of revs.) • Launch of EUTELSAT QUANTUM affected by lower traffic ► Generalised slowdown in the ► Fixed Broadband (6% of revs.) pace of new business facing more challenging customer gathering
Limited impact of c.€20m Assessment of FY 21 on FY 20 revenues impact underway
35 Financial outlook adjusted on April 9 is confirmed
OPERATING VERTICALS REVENUES1 ► FY 2019-20: around €1,250m
► FY 2019-20 to FY 2021-22: not exceeding average CASH CAPEX of €400m2 per year
DISCRETIONARY ► Temporary suspension of objective pending FREE CASH FLOW3 assessment of Covid-19 crisis impact on future years
LEVERAGE ► Maintain investment grade credit rating ► Aiming at medium-term net debt / EBITDA around 3x
► FY 2019- 20 dividend reduced by 30%4 ‘Stable to progressive’ dividend policy to be restored DISTRIBUTION once circumstances permit ► Suspension of Share Buy-Back program
1 Based on current perimeter and € / $ rate of 1.14; When converted at €/$ rate of 1.10, this would be equivalent to €1,268 million. 2 Inc. cash outflows related to ECA loan repayments and capital lease payments; 3 Net cash flow from operating activities less Cash Capex less Interest and Other fees paid net of interest received. 36 3 30% cut relative to the FY 19 dividend of 1.27€ Reminder: Our strategic roadmap
Step 1 Step 2: return to growth
GROW TOPLINE EXTRACT VALUE MAXIMIZE CAPTURE THE FROM THE FREE CASH-FLOW CONNECTIVITY BROADCAST GENERATION OPPORTUNITY BUSINESS
37
Highly secured dividend
SUBSTANTIAL HEADROOM TO DIVIDEND COVER SECURED ELEMENTS UNDERPINNING FUTURE DFCF GENERATION
2.0x dividend Starting from FY 19 reported basis 600 cover (€408m), future DFCF will benefit from:
500 ► Washout of negative one-off 410 elements : ~€50m2 400 ► Secured reduction in Bond 300 203 247 Coupons: ~€35m 207 DFCF200 to revenues 16% 29% ► Secured tax savings: ~€20m ratio 100
0 FY 3y average Headroom to FY 20 1 2 2015-16 FY 17-FY 19 dividend recommended Dividend
1 Based on a 30% reduction relative to the €1.27 dividend^paid in Nov. 19 38 2 Negative hedging accounting for €20m and impact of E25B disposal for €31m Targeted growth capacity to progressively support topline trends (before Covid-19 impact)
Incremental Key capacity markets 2020 2021 2022 2023
Video June January EUTELSAT 7C 19 Ku Sub-Saharan Africa January KONNECT1 65 Ka spotbeams Broadband 75 Gbps Europe/Africa
EUTELSAT 8 “QUANTUM” Government QUANTUM² beams Flexible
H2 H2 KONNECT VHTS ~230 Ka spotbeams Connectivity 500 Gbps Europe
2022 H1 EUTELSAT 10 B ~100 Ku spotbeams Mobility c. 35 Gbps EMEA
2020 2021 2022 25 IoT ELO Test phase Gradual rollout3 nanosatellites Global
FY 2019-20 FY 2020-21 FY 2021-22 FY 2022-23
Launched Upcoming Launch X Approx. launch date X Approx. time to entry into service
1 Entry into service likely to be partially delayed due to do the Covid-19. Impact under assessment ² Launch likely to be delayed due to the Covid-19. Impact under assessment 39 3 If test phase of 5 nanosatellites proves successful, other satellites will be added to the constellation to reach a total of 25 satellites by 2022 Limited maintenance capex requirement beyond FY 22 providing flexibility to further support cash generation
TOP 15 ORBITAL POSITIONS BY FY 19 REVENUE ► 15 heritage orbital positions generating c.90% of total Orbital position Launch between revenues FY 23 and FY 28 13°E (Hotbird) No ► Replacement of most positions 36°E Yes completed by end FY-22 7°W Yes 8°W No ► Only four require a launch 9°E No between FY 23 and 28 7°E No 16°E Yes ► Design-to-cost generating 117°W No additional productivity gains 3°E No 10°E No 70°E No 172°E No Average maintenance capex 21°E No requirement limited to c.€220m 113°W Yes p.a. for FY 23–28 5°W No
Nb: Impact of Covid-19 on deployment plan is under assessment 40 Nominal deployment plan under review as assessment of COVID-19 impact is underway
KONNECT EUTELSAT EUTELSAT Name VHTS HOTBIRD 13F HOTBIRD 13G EUTELSAT 10B
Orbital TBD TBD 13° East 13° East 10° East Position
Launch date1 Q3 20203 H2 2021 H2 2021 H2 2021 2022
Manufacturer
Launcher TBD TBD TBD TBD
EMEA, Atlantic & Coverage Flexible Europe Europe Europe Indian Ocean
Government Connectivity Mobile Applications Services Government Video Video Connectivity
Total Capacity N/A ~230 Ka / 500 73 Ku4 73 Ku4 12 Ku / 20 C / (TPE/Spotbeams) Gbps c. 35 Gbps
2 ~230 Ka / 500 -48 Ku o/w Expansion N/A Gbps - - c. 35 Gbps
1 Calendar year 2 Excludes unannounced redeployments Electrical propulsion HTS Payload 3 Likely to be delayed due to the Covid-19. Impact under assessment 4 “Nominal capacity corresponding to the specifications of the satellites. Total operational capacity at the HOTBIRD orbital position will 41 remain unchanged with 102 physical transponders (95 TPE), once regulatory, technical and operational constraints are taken into account.” Agenda
1 FSS Industry 2 Eutelsat in a snapshot 3 Q3 2019-20 performance 4 Outlook 55 Appendix
42 Appendix
5.1 H1 2019-20 financials
5
5.2 Miscellaneous
43 Profitability
EBITDA (€M)
► EBITDA margin of 77.9% at 518 constant currency vs. 78.8% in 496 H1 2018-19 • Lower revenues • Higher costs associated with Margin at 1 Broadband activities constant 78.8% 77.9% currency • Strong cost discipline in core 77.4 77.4 77.5 businesses • No ‘LEAP 2’ benefits at this stage
H1 2018-19 H1 2019-20
1 Reported EBITDA margin stood at 77.8% 44 Net income
Extracts from the H1 H1 consolidated income Change statement in €m1 2018-19 2019-20
Revenues 658 637 -3.3%
2 518 496 -4.4% EBITDA
Operating 297 225 -24.0% ► Capital gain related to EUTELSAT 25B income disposal in FY 19
Financial result (53) (41) -22.2% ► Reflecting the benefit of the refinancing realized last year
► Tax Rate of 18% vs 35% last year Income tax (85) (34) -60.4% ► Impact of the change in Tax territoriality treatment in France
Group share of net income 150 141 -6.4% ► Net margin of 22%
1 Rounded to closest million 2 EBITDA defined as operating income before depreciation, amortization, impairments and other operating income/(expenses) 45 Discretionary Free Cash-Flow reflecting capex phasing
In €m
353 1 (1) 108 (189) (3) FX & perimeter (56) impact 105
(1) Net cash Flow from Cash Capex Interest and Other Discretionary Free operations fees paid net of Cash-flow interest received Change at constant (39) (59) (33) (132) FX & perimeter
Reported change (25) (59) (33) (117)
1 Cash Capex includes capital expenditure and payments under existing export credit facilities and long-term lease agreements on 46 third party capacity. Evolution of Net Debt
In €m
+€162m
9 3,235
(108) (55) 316 3,073
Net Debt at Discretionary Acquisitions/ Dividend paid Other Net Debt at end-June 19 Free Cash-Flow Disposals end-Dec. 19
47 Financial structure
NET DEBT / EBITDA RATIO1
► Net Debt/EBITDA ratio at 3.2x • vs 3.1x at Dec 31, 2018
► Average cost of debt after hedging 3.2x reduced to 2.4% 3.1x • vs 2.8% in H1 2018-19
► Average weighted maturity of 4.2 years • vs 2.7 years at 31 Dec 2018
► Strong liquidity
• €373m cash 31 December 2018 31 December 2019 • €798m undrawn credit lines
1 Based on net debt at the end of the period and last twelve months’ EBTIDA 48
Appendix
5.1 H1 2019-20 financials
5
5.2 Miscellaneous
49 Successful Launch of EUTELSAT KONNECT
► Launched on January 16
► Entry into service in Q4 2020
► 75 Gbps of incremental Ka-Band HTS capacity
► Enabling provision of high-speed Broadband services
► Two-fold objective: • Europe: Offload congested beams in zones of high demand • Africa: Enhance coverage, enabling full- speed rollout of African Broadband
Key milestone of connectivity- based return to growth
50 Channel count stable
CHANNEL COUNT HD PENETRATION MPEG-4
-2% stable +10% -2% 7,021 1,667 4,818 4,731 6,879 6,867 1,509
22% Penetration 24% 69% Penetration 69%
March Dec. March 2019 2019 2020 March 2019 March 2020 March 2019 March 2020
► Half of YoY channel ► HD continuing to ► MPEG-4 considerably count decline reflecting grow more advanced African platform and than HD negative one-off ► Penetration still only ► Channel count stable 24% QoQ
Slight growth in Mbps consumption 51 Launch of ‘LEAP 2’ cost savings program
► Objective of €20 to 25m savings by FY 22 confirmed
► Multiple measures addressing mainly staff costs • Reduction of c.100 in headcount outside of France • Global hiring freeze in the legacy businesses • Austerity measures within France o Including a global compensation freeze over three years
► Savings destined to support deployment in Connectivity while preserving the EBITDA margin
► Project was presented to relevant staff representative bodies
52 Testing market traction in IoT to add a future growth lever to Connectivity
SIGNIFICANT MARKET ELO: AN UNMATCHED VALUE COMPELLING RISK / RETURN OPPORTUNITY PROPOSITION PROFILE
► Strong growth in demand ► Nano-satellite constellation ► Fully scalable • Connected objects to offering global coverage • First batch of four represent 10s of billions of commercial satellites in FY units by 2030 ► Low latency at full-speed 2020-21 with extension • Less than 1h to receive subject to test outcomes ► Diverse applications emitted message • Up to 25 sats in service by • Agriculture, Oil & Gas and end-22 to provide viable Industry / logistics offering ► Compelling commercial offer commercial proposition • A few $s per chipset; ► Insufficiency of terrestrial single-digit price per annum ► Limited cost networks • Capex: <€1m / sat • Coverage of just 15% of ► Strategic partnership with • Opex: Mid-single digit €m the Earth and 50% of the market leader, Sigfox per annum at full speed land • Already included in our capex envelope
Satellite an ideal complement Seamless integration with Low risk given providing ubiquitous coverage terrestrial networks Opex/Capex flexibility
53 Significant progress on all components of cash generation since FY 16
Item Achievement Status
Guidance reduced from €500m to Cash Capex Delivered €400m
LEAP 1 program generated €32m Opex savings in FY 19. LEAP 2 targeting In Progress a further €20-25m by FY 22
>€60m savings through Cash interest Secured bond refinancing
Asset >€600m asset sold at a ~9x Delivered Disposals average EBITDA multiple
Reduction of >€70m in tax Corporate burden after change in French Secured tax Finance law
54 Robust asset disposal program
H2 2016 H1 2017 H1 2018 H2 2018 H1 17 H2 17 H2 18 H1 19 49% of 34% stake in Interest Wins/DHI European Hispasat in EUTELSAT Broadband 25B
€60m €132m €302m €135m
>€600m asset sold in two years at a ~9x average EBITDA multiple
55 Launch of Eutelsat CIRRUS…
► State-of-the art, cloud-based Turnkey TV distribution service technology ► Turnkey end-to-end video distribution ► Seamless multi-screen end-user experience enabling combined DTH/OTT offers ► Modular, evolving feature-set • Subscriber management and Multi-screen via cloud OTT security solutions • EPG services and catch-up • Start-Over and 7-days • VOD, recommendations, targeted advertising ► Scalable Capex / opex-light model
56 …benefiting both Eutelsat and its customers
MAIN BENEFITS TO OUR CUSTOMERS MAIN BENEFITS TO EUTELSAT
► Simplified delivery logistics ► Improved customer knowledge
► Mutualized cost ► Increased customer loyalty
► Off-the-shelf solutions ► Seize new revenue opportunities • New platforms or projects to launch a ► Access to a portfolio of optional mobile app to complement DTH services to enhance viewer distribution experience • Upsell with existing clients
57 Mobile Connectivity: current and future resources
CURRENT RESOURCES FUTURE RESOURCES
► KA-SAT ► KONNECT VHTS • Several contracts signed using capacity on • Unrivalled Cost/Gbps to serve the fixed KA-SAT over Europe broadband and mobility applications • Significant distribution commitments with Thales
► EUTELSAT 172B HTS payload • Expected to be launched in H2 2021 • Capacity fully sold to 2 major customers on a long-term basis ► EUTELSAT 10B • HTS payloads providing optimal mix of throughput and coverage at competitive ► Widebeam capacity cost • Contracts with prominent service providers • Firm multi-year pre-commitments with in Maritime and In-Flight connectivity major providers
• Expected to be launched in 2022
58 Satellite programme Capex profile
BREAKDOWN OF TYPICAL TIMING OF CAPEX CAPEX PAYMENTS
30% 30% 40%
YEAR 1 YEAR 2 YEAR 3
Others ► Capex generally split equally over three Insurance years prior to launch Launcher Satellite ► Insurance paid in year three
59 HOTBIRD constellation replacement showcasing effectiveness of our design-to-cost policy
COMPELLING PROCUREMENT TERMS ENHANCED QUALITY OF SERVICE
► Two large satellites replace three for ► Improved wide-beam performance the same number of operational transponders ► Additional high-power superbeam
► Improved match of coverage with ► Incremental anti-jamming features customer requirements ► High level of restorability ► Electrical propulsion enabling larger satellites for a given mass
► Increased in-orbit life
Greater value extracted Enhanced service levels from our core Video delivered with significant business capex savings
60 Satellite economic model1: Regular capacity
1 For a greenfield satellite, using chemical propulsion 61 IR Contacts
Joanna DARLINGTON T: +33 1 53 98 31 07 E: [email protected]
Cédric PUGNI T: +33 1 53 98 31 54 E: [email protected]
Alexandre ENJALBERT T: +33 1 53 98 46 81 E: [email protected]
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