Rodolphe Belmer - CEO Michel Azibert - Deputy CEO and Chief Commercial Officer Sandrine Teran - CFO

Sami Kassab - Exane Nick Dempsey - Barclays Giles Thorne - Jefferies Laurie Davison - Deutsche Bank Patrick Wellington - Morgan Stanley

Good day, and welcome to the Eutelsat Communications Full Year 2016-2017 results presentation. Today's conference is being recorded. At this time, I would like to turn the conference over to Rodolphe Belmer, CEO. Please go ahead.

Welcome and thank you for joining us today for full year fiscal year '16-'17 results presentation. I am Rodolphe Belmer, CEO of the company. I'm joined on today's call by Michel Azibert, Deputy CEO and Chief Commercial Officer and Sandrine Teran, our CFO. I know there are a lot of company results today. So I will try to keep things brief to give time for your questions at the end. Let's take a quick look at the highlights for the year. First of all, I'm pleased to report that we have either delivered or over-delivered on all of our financial commitments. Revenue was down 2.2% or in the middle of our target range of minus 3% to minus 1%. Our EBITDA margin at 76.6% at constant currency and 76.7% reported is well above the floor of 76% we set ourselves, which itself was revised at, from above 75% at the mid-year. Discretionary free cash flow, up 65% is significantly above our commitment to 10% compound annual growth over three years. This has enabled us to make a significant reduction [indiscernible], which at 3.2 times EBITDA is below our target threshold of 3.3 times. And we are recommending a 10% increase in dividend from EUR1.10 per share to EUR1.21 per share. I'm very satisfied I must say with this performance and most particularly, with our achievement on our discretionary free cash flow, which we recall, is a metric introduced a year ago. Net operating cash flow of 87 million reflects the drop through of early cost cutting gains as well as the efforts made on working capital and notably the reduction in DSO. As committed last year, CapEx has been contend below 420 million, 414 million actually, to be precise, reflecting notably the success of the design-to-cost approach and the reduction in ground CapEx. Net interest cost up slightly, reflecting the full year impact of the Eutelsat 36C lease and June 2016 bond issues. I remind you that in fiscal year 2018, interest cost will start to come down, thanks to mainly the refinancing of the bond last year. All-in-all, discretionary cash flow of EUR408 million, up 65% on fiscal year 2016. Obviously, this means that we have already exceeded the 3-year target set in July last year of 3-year CAGR of above 10%. I will come back to this later on. It enables us to cover the strongly growing dividend by 1.4 times. 2016-17 saw also a solid commercial performance in video, accelerated ramp up of HD ad HOTBIRD, Michel will come back to this in a minute, important renewals with major customers in Europe and MENA, notably Arqiva at 28 degrees East and Digiturk at 7 degrees East and multi-year contract with Russia's NTV-Plus at Express-AT1 and Express-AT2. In other verticals, with contract wins for capacities of the in-flight connectivity with integrators, including ViaSat, Panasonic and Taqnia. I remind you that in this segment, our aim is to remain very much at the wholesale infrastructure part of the value chain. The selection of EUTELSAT 5 West B to host the EGNOS payload, the contract valued at around EUR100 million over 15 years and the satisfactory outcome of the last two US renewal campaigns under the expectation of stability in this application going forward. As well, we have continued to strengthen our financial profile with the successful launch of the LEAP cost-savings plan, aimed at generating EUR15 million in savings in fiscal year '18, rising to above EUR30 million in fiscal year '19; leading to an improvement in EBITDA margin. As a reminder, we already raised our target during the fiscal year '16 and '17 from above 75% to above 76% now. As I said earlier, our net debt to EBITDA ratio is reducing. During fiscal year '17, we have refinanced some of our credit lines, improving debt maturity and we added the pre-hedge of the Jan. 20 bond. Finally, we undertook several non-core asset disposals and we have agreed the consideration of EUR302 million for the sale of our stake in Hispasat. Finally, we have taken many actions laying the foundations for ongoing value creation. First, securing durable cash flow generation through CapEx efficiencies with the application of design-to-cost policy with 30% CapEx savings achieved on the procurement of EUTELSAT 5 West B, further diversification in the options for access to space with the Blue Origin contract and the recent multi-launch agreement with Arianespace, ongoing benefit from the uptake of electrical propulsion with EUTELSAT 172B just launched and all electrical satellites and two upcoming launch in our manifest, EUTELSAT 7C, and African Broadband Satellite. And we will work further, generating further efficiencies in the design and build process, driven by technical progress. Second, paving the way for a return to top line growth, driven by the connectivity vertical with the launch of the Russian Broadband service, the launch of Konnect Africa and the signing of the joint-venture with ViaSat for European broadband and mobility to be followed by the joint procurements of ViaSat [indiscernible] in connectivity in EMEA from early 2020s. Now, over to Michel Azibert for look at the overall performance of the company.

Thank you, Rodolphe. So total revenues for fiscal year '17 stood at EUR1,478 million, down 2.2% at constant currency in perimeter. I remind you that they include other revenues, not shown on this slide of EUR55 million. On a reported basis, revenues were down 3.3%, reflecting a 1.7 point negative perimeter effect, disposal of Alterna'TV, Wins/DHI and DSAT Cinema and a 0.6 points positive currency effect. Revenues for the fourth quarter stood at EUR359 million, with a like-for-like change of minus 3.1% year-on-year and minus 0.9% quarter-on-quarter. You can find details in the Annex to the press release. If we look at revenues by application among the core businesses, video was down 3.3% like-for-like at EUR908 million, fixed data by 14% to EUR168 million and Government services by 4.1% at EUR176 million. The two connectivity verticals on the other hand, both showed strong growth with fixed broadband up 18.4% to EUR96 million and mobile connectivity by 22.5% to EUR75 million. Let's turn to each application individually. Starting with video. So as we saw, total revenues from video applications were down 3.3% like-for-like to EUR908 million. Revenues from Broadcast were down 2.2%. I will comment on them in more detail in the next slide. Professional Video revenues were down 12.4% year-on-year, continuing to reflect the tough competitive environment in this application. Fourth quarter video revenues stood at EUR224 million, down by circa 5% on a year-on-year basis and by 1.4% quarter-on-quarter. The quarter-on-quarter decline reflects mainly a negative one-off. At the end of June 2017, the total number of channels broadcast by Eutelsat satellites stood at 6,630, i.e., plus 288 channels year-on-year or plus 4.5%. High Definition penetration continued to increase, representing 17.2% of channels compared to 13.6% a year earlier, or a total of 1,142 channels, up from 863 a year earlier, i.e., 32% rise. Let's take a closer look at pure broadcast revenues. As a reminder, broadcast revenues in fiscal year '17 were negatively impacted by three factors of unusual nature, the rationalization of capacity at the HOTBIRD position, the end of the TV d'Orange contract and lower comparative revenues at FRANSAT, which I remind you were boosted in 2016 by an exceptional level of cost sales for that of the HD transition of GTT channel in France. If we exclude these elements, underlying broadcast revenues actually rose by 2.7%. This reflects the contribution of incremental capacity launch last year, mainly EUTELSAT 36C for sub-Saharan Africa for an additional 7.5 months compared with 2016 and a continued solid performance at several video neighborhoods, covering emerging markets such as 7 degree East over Africa and MENA and 8 West on MENA. Let's take a closer look at trades on HOTBIRD. Channel count is resilient. If we exclude the unusual circumstances of the loss of the TV d'Orange contract at the end of December, the lineup would have grown by circa 50 channels or approximately 1.5%. Year-on-year, the number of HD channels is up 29% to 275, a growth rate which is much stronger than the ramp up of MPEG-4 channels of 10% to 523 and conforming the inflection identified during the course of the last year. Moreover, MPEG-4 penetration remains considerably more advanced than HD at 52% versus 27%, implying that this trend is set to continue. Examples of HD uptake during the year include the migration [indiscernible] the transition of several live channels in Italy to HD, the launch of 80 channels by Channel Central Television and the launch of new HD platform by [indiscernible]. Turning now to fixed data, revenues were down 14% like-for-like to EUR168 million. They continued to reflect ongoing pricing pressure as a result of highly competitive environment in all geographies, which is still not offset by additional volumes. Fourth quarter revenues stood at EUR41.1 million, down by 11.5% on a year-on-year basis and by 0.8% quarter-on-quarter. As you can see from the graph on the left, sequential underlying trends have improved throughout the year. However, this does not alter our cautious view on the long-term prospects of this vertical. Revenues from Government Services were down 4.1% like-for-like to EUR176 million, reflecting the carry-over effect of lower renewals in the US Department of Defense Spring 2016 campaign. In fiscal year '17, commercial activity was much more favorable with renewal rates of circa 90% in fall 2016 and 85% in spring 2017, together with new contracts, representing an additional seven 36-MHz equivalent transponders. Fourth quarter revenues, which include a positive one-off, amounted to EUR45 million, up 6.1% year-on-year and 0.9% quarter-on-quarter. Excluding these negative elements, revenues would have been down circa 2% quarter-on-quarter. Fixed Broadband revenues stood at EUR96 million, up 18.4% year-on-year. This reflected, on one hand, the positive effect of the entry into service in May 2016 of EUTELSAT 65 West A, on which the Ka-band payload is fully leased, and a solid European broadband performance driven by positive ARPU trends. On the other hand, the negative effect of the early termination of the contract for Ka-band capacity on EUTELSAT 3B in December 2015, and which has been since resold to a mobility customer. Fourth quarter revenues amounted to EUR23 million, up 5% year-on-year and down by 2.2% quarter-on-quarter. The launch of Konnect Africa in June '17, and to a lesser extent the ramp-up of the Russian broadband project should support revenue growth next fiscal year. Finally, Mobile Connectivity revenues stood at EUR75 million, up 22.5% year-on-year. They reflected the effect of the agreement with Taqnia for the sale of four spotbeams on the High Throughput payload of the EUTELSAT 3B satellite as well as widebeam capacity sales at several orbital slots, notably at 10 degrees East, 21 degrees East and 172 degrees East and over the Americas with customers including Panasonic and Google. EUTELSAT 172B, successfully launched in June, will bring additional capacity dedicated to this application in fiscal year '18. Let's now turn to the backlog and fill rates. Backlog stood at EUR5.2 billion, down 7.6% year-on-year. It is stable quarter-on-quarter with video recording a slight rise. The backlog at 10 June includes revenues of capacity with Digiturk at 7 degrees East and Arqiva at 28 degrees East. It was equivalent to 3.5 times 2016-17 revenues with 85% represented by Video. The number of operational 36 MHz-equivalent transponders stood at 1,372 at the end of June '17, up 44 transponders over 12 months. This mainly reflects the entry into service of EUTELSAT 117 West B in January 2017. The fill rate stood at 67.9%, compared to 70.9% a year ago, mostly reflecting the entry into service of this new capacity mentioned. Now, over to Sandrine for the financial performance.

Thank you, Michel. Starting with a look at profitability. EBITDA amounted to EUR1.134 billion compared to EUR1.165 billion at 30 June 2016, down 2.7%. Moreover, despite the decrease in revenues, the EBITDA margin stood at 76.7%, 76.6% at constant currency, compared to 76.2% last year, reflecting the first benefits of cost-savings measures, a lower level of bad debt and the positive impact on margin of the disposal of Wins/DHI. Let's take a quick dive into the LEAP cost-savings plan to give you some color on the types of savings that are being targeted. This slide shows you a broad breakdown of the areas targeted as well as their contribution to the overall plan and the degree of advancements already achieved. There are two broad categories, technical first, which include owned teleports, other technical spend as well as insurance, external teleports and leased lines. And indirect, mainly consultants, marketing, real estate, facility management, IT and telecoms and ground wide travel and group wide travel sorry. So we have well identified all the [indiscernible] and we have made headway on all of them, which gives us confidence in being able to deliver on our target. Going back to the P&L, operating income stood at 615 million, down 7%. It reflected an increase in the depreciation charge of EUR32 million, principally due to the entry into service of new capacity in the past 18 months, partly offset by other operating income of EUR14 million, reflecting mainly the capital gain on the disposal of Wins/DHI. The financial result of minus EUR131 million was slightly less favorable than last year, minus EUR123 million, on the back of lower capitalized interest and the full-year impact of the financial lease of EUTELSAT 36C. In context to that EUR120 million, implying an effective tax rate of 24.8% versus 37.1% last year, it reflects the recognition of a positive non-cash one-off related to deferred tax liabilities, following the future reduction in French corporate tax rate to 28% in 2020 and the partial tax exemption of the capital gain in respect of the disposal of Wins/DHI. The absence of significant income from associates is due to the fact that our stake in Hispasat is classified as an asset held for sale. As a result of all this, group share of net income stood at EUR352 million versus EUR349 million in 2015-16, an increase of 0.9%. The net margin stood at 23.8%. Net cash flow from operating activities stood at EUR983 million compared to EUR896 million in 2015-16, up EUR87 million. The decrease in EBITDA was more than offset by lower tax paid, relating to the timing of tax payments and the decrease of tax rate in France in fiscal year '17 from 38% to 34.4%, as well as favorable change in working capital as a result of actions taken to optimize DSO. Cash CapEx amounted to EUR414 million compared to EUR514 million a year earlier, in line with objectives and showing the first results of the design-to-cost approach and a strong reduction of ground CapEx. Interest and other fees paid net of interest received stood at EUR161 million versus EUR134 million in fiscal year '16. The EUR27 million increase reflected notably the full-year impact of the interest related to the financial lease of EUTELSAT 36C, which entered into service in February 2016 and the payment of the coupon on the new bond issued in June 2016. As a result, as Rodolphe said earlier, discretionary free cash flow stood at EUR408 million, up EUR161 million or 65% on last year. At June 30, 2017, net debt stood at EUR3.64 billion versus EUR4 billion a year earlier. Discretionary free cash flow covered the dividend payments of EUR266 million by 1.4 times, while equity asset disposals generated a cash inflow of EUR55 million. Export credit financings and financial leases decreased by EUR140 million. As a result, the net debt to EBITDA ratio stood at 3.2 times, a 0.2 point improvement on the level of 3.4 times a year earlier, which takes us below our target of 3.3 times. The average cost of debt was 3.1%, down from 3.5% in fiscal year '16. I remind you that the repayment of the March 2017 bond will generate EUR30 million savings in fiscal year '18. Throughout the year, Eutelsat continued to optimize its debt. We exercised the option to extend by a year the maturity of both the 600 million term loan and the 200 million revolving credit facility. These facilities will now mature in March 2022. The EUR450 million revolving credit facility maturing in September 2018 was refinanced at attractive terms. The new revolving credit facility will mature in April 2022 with two options for a one-year extension. I remind you that the January 2019, EUR800 million bond mid-swap was pre-hedged at 1.45% in fiscal year '16. Furthermore, ahead of the refinancing of the EUR930 million bond maturing in January 2020, the 7-year-mid-swap rate has also been pre-hedged at 1.12%. At June 30, 2017, the weighted average maturity of the group's debt stood at 3 years. Now, I will hand you back to Rodolphe to speak on the outlook.

Thank you, Sandrine. Quick reminder of our strategic roadmap, which is articulated in two steps. Step 1, up to 2019, clear focus on optimizing our existing assets in order to maximize the free cash flow generation of our businesses and guarantee a healthy return to shareholders, while preparing for step 2, from 2019 onwards, reach onto growth in the medium term by building on our core video business and in the longer term, paving the way to capture the connectivity opportunity. So within this framework, what are our priorities for the years ahead? First, I'm sure we'd deliver on our commitments to stabilize revenues via return to stability at HOTBIRD, from the second half of the year. In general, an ongoing proactive video strategy aimed at stimulating HD pickup, progressively deploying the new pricing policy and optimizing distribution. We'll continue to also fill empty fixed data capacity and leverage new resources, notably EUTELSAT 172B to grow connectivity. Second, continue to strive for financial optimization, ensuring that we deliver on the LEAP cost saving plan, maintain on working capital, content CapEx below our EUR420 million and continue to de-lever. Third, prepare for a return to growth by successfully marketing EUTELSAT QUANTUM, execute on the deployment of Konnect Africa and build on the partnership with ViaSat, including the procurement of the ViaSat 3 satellite. Turning now to the outlook. Following our performance in 2016 and '17, all the elements in our financial outlook are either maintained or raised. We continue to target broadly stable revenues in fiscal year 17-18. The comparison basis and timing of new capacity mean top line progression this year will be back end loaded. For fiscal year '18-'19 onwards, we expect to reach on to slight growth in the period before the step up in connectivity revenues. We target EBITDA margin for the current year above 76%. From 2018-19 onwards, we are raising our target and now expect EBITDA margin to be above 77%. We maintain our objective of average annual CapEx not exceeding EUR420 million and we will roll this commitment forward by one year to fiscal year '19, '20. Similarly, we our discretionary free cash flow objective by one year to fiscal year '19, '20. Even after the significant rise of 65% last year, we remain committed to further growing this metric and target mid-single digit compound average growth to June 2020 from base of EUR408 million, with growth back-end loaded in the other two years. This represents a very significant upgrade compared to operators target of 10% CAGR of a base of EUR247 million in fiscal year '16. In terms of leverage we remain committed to our investment grade rating after reducing net debt to EBITDA to below 3.3 in fiscal year 2017 but we'll continue to deleverage with a net debt to EBITDA targeted below 3.0 times within the next couple of years. And of course we returned our commitments to a stable - to progressing dividend which we continue to be comfortably covered by cash flow. So, to sum up, in fiscal year '17 we delivered on all our financial objectives and each has been either maintained or raised. In particular, we generated strong growth in discretionary free cash flow and we continue to do so with a commitment to compound mid-single digit growth of a very high base in fiscal year '17. This has enabled us to sever and fully cover the strongly-rising dividend and to obtain our jeering target of below 3.3 times and will continue to deleverage to below 3.0 times. Our LEAP cost-savings plan is well on track and we are starting to obtain tangible results on CapEx efficiencies. In fiscal year '18, we will retain our strong focus on this elements while continuing to pave the way for an uplift in growth from 2020 onwards. Thank you for your attention, and we are now ready for your questions.

[Operator Instructions] Thank you. And now we will take our first question from Sami Kassab from Exane. Please go ahead your line is now open.

It's Sami at Exane, I have a few questions please. The first one, can you update us on the progress regarding the Russia broadband and the Konnect Africa initiative please. Perhaps share some KPIs of what you've achieved so far there. Secondly, are you still targeting EUR30 million of cost savings or do you feel confident in providing updated target number today. And lastly, how many commercial UHD channels do you have on the fleet, how has that changed in the last six months and can you comment on the pace of UHD adoption, is that in line with your expectation, is it going ahead or slower than expected? Thank you.

Thank you Sami, on the Russian broadband initiative, we opened the commercial operations during the course of this fiscal year and we have been able to sign a very important partnership with Tricolor, which is the leading pay-tv operators in Russia, which will distribute this service under of the form of a triple-play offer to the subscribers. We don't give specific KPIs for those operations which are of small size. But I must say that after an initial start which was slower than expected. We believe that this activity will grow according to our plans during next fiscal year. On the LEAP program, which is a very important program to improve our cost and to improve also the efficiency and the agility of our organization beyond the mere fact of the cost saving. We said we would generate EUR15 million in fiscal '18 and EUR30 million in the following year, in fiscal year '19. What we believe that we will be doing more than that is evidenced the target but as you know we try to do better than what we say, it's sort of the informal commitment that we can take. HD, Ultra HD, it's at the core of our strategy in video, we want to stimulate the penetration of HD and Ultra HD because it's a key driver of the growth of the demand in volume and volume of megabits, which is a very important notion that we will focus on in the next few years. And actually development of HD has been very successful since we have put in place a new commercial strategy on the rest of our fleet as you've seen the number of HD channels have grown by more 30% year-on-year which is an impressive achievement a very strong basis for the future growth in this segment in terms of volume driven. UHD is coming at lower pace evidently because it's only the beginning of this technology, but still we have five UHD - commercial UHD channels on our fleet and well within our plan. As you know in the next three years we should reach 20.

In Konnect Africa, where are you there?

Konnect Africa, well the operations are running we have been able to replace the capacity of AMOS-6 satellite that fell, as you know by capacity that will lease on ViaSat and our activities are starting. We signed many contracts with distributors in a number of African countries. And it's true that figures in terms of revenues are still low, but are in line with our target. And that's supposed to accelerate quite significantly during the course of fiscal year '18. As we said, Sami, [indiscernible] we said that we would generate out of this initiative revenue of around EUR15 million in fiscal year '18 and we are in line to achieve this kind of order of magnitude.

Thank you. And now we will take our next question from the queue, Nick Dempsey from Barclays please go ahead, your line is now open.

Two questions please, first of all in terms of the other line in FY '18, we saw EUR6 million of other in Q4. Is that a sensible number to use on a quarterly basis in the coming year or do you expect anything else to pop up in there because [indiscernible] represents two point headwind for FY '18 growth, I just want to see whether that's my way? Second one, similar kind of thing, fixed data, you've seen the quarterly progression clearly getting better, what sort of improvement are you factoring into your guidance in fixed data?

It's true that on the revenue lines is an important element of your outcome and our forecast for fiscal year '18. In fiscal '17 this line was particularly high at above EUR50 million. And it's expected to be significantly lower in an order of magnitude of 30 million next fiscal year, which we present as you said 2 percentage point of growth. And that's why we say and we indicated that we are ready for fiscal year '18 is stable, growth stability, because we have some growth in our business lines and most importantly interconnectivity business line. Video will be slightly growing and government service is also is stabilizing. Fixed data is in decline but also in better shape than previously, I will come to back later on. Connectivity is slightly growing, this mobility or consumer broadband meaning that our business will be in good shape. But there is this other revenue line which weigh negatively on our total topline and the net outcome will be broadly steady. Fixed data this fiscal year showed a decline of 14% in revenue, on the back of the decrease in price by around 10% and the rest is decrease in volume. We believe that the trend will continue to be difficult in a fiscal year '18 even though there are some slight indications that pricing wise that trend is less negative that used to be meaning that there is a very slight improvement, but still in a decelerating context in this segment. But we must say that we have lots of capacity available and we'll strive to sell as many capacity as possible to mitigate the negative impact of the price decline.

Thank you. And now we will take our next question from Giles Thorne from Jefferies. Please go ahead your line is open.

Three questions please, I wanted to start with an incredibly unimaginative question, but we've seen a major renewal at a major European video neighborhood in the past day. And that obviously talks to the biggest debate in the sector. So for the record, could you give us any color on any changes in volume and pricing in Arqiva renewal yesterday at 28 degrees east? Secondly, coming back to Konnect Africa, in an interview, Laurent Grimaldi had suggested that a business model could see Eutelsat taking more market risk than you did with KA-SAT in Europe and specifically your distributors will have more of a pay as you go capacity model rather than an upfront commitment that's traditional and is that correct. And lastly, ViaSat in an interview has suggested that fix for the residential broadband problem in Europe is to have better capitalized distributors. Given they are going to be leading the effort on the retail front, it again raising questions around your financial commitment to the ViaSat-owned RetailCo and so could we have any update there on how RetailCo will be capitalized. Thank you.

Thank you Giles, on the first question, we announced yesterday that we renewed a very contract with Arqiva added 28 degrees east position which is very important position because it services the UK market. For more color maybe I will turn to Michel Azibert.

It's a renewal of maturity of the capacity that we have with Arqiva at this position. And the renewal comes with better prices. Going forward, it's not being effective on fiscal year '18 but the following year and it's essentially a capacity, which is committed by the customer, so it's a very good contract. Volumes of course is renewal, so it's' equivalent [indiscernible]. We have also as you know renewed contract with Digiturk in Turkey, so this is different. So the ABG platform at 7 degrees east is our main customer in the region in a difficult I would say political and economic context and that's very good because it's secures the business you know that we will launch a satellite at 7 degrees east in the next few years. So we are secured that and also we've a slight increase in pricing going forward.

If I can add a comment on that, this is very important, these two pieces of news are very important because that's two contract very important with bluechip customers and very large video regions which came with favorable terms to us, which is a sign that what we have consistently saying that our video business is resilient and has room for slight growth going forward. It's proven with what - there are indications that it's true because of those two very important contrast. Konnect Africa, it's true the business model is different from the model we had in other applications, it's the case in the broadband segment in general. Our distributor they don't take pre-commitment, pay us on sort of pay as you go basis. The fact is that they informally commit to a certain degree of investment. And we align together on their objectives in terms of revenues and that's objective that are the basis of our contractual relationship with them. And it's true that when we quote some objectives of revenues for Konnect Africa, it's not pre-commitment that's target, the targets that had been double checked with our distributors and that's the addition of all the targets of our distributors in this geography. But it's exactly the same approach as we had in Europe. In the European geography it's true that our deal will ViaSat is now or our joint venture with ViaSat is now up and running, and particularly the retail part of our joint venture which is based in Lausanne and we achieved a joint up and running from the people from Eutelsat and people from ViaSat. This JV is controlled or the retail part of the JV, the retail JV is controlled at 51% by ViaSat. We have some commitments to participate to the capital needed to this JV to a certain extent. And we can decide to go above or not because we have made it clear that we are in no intention to consolidate or to expand in the retail business. It's consistent across all of our applications. We want to remain as much as possible at the infrastructure level of the value chain and we rely on distributors to distribute specific service to the market. Why do we do that, because the name of the game for us is the fill rate of our capacity that's the way we create value and for that we need to rely on many different distributors partly, different segments of the markets.

Thank you. And now we will take our next question [indiscernible]. Please go ahead, your line is now open.

First of all, I have a small question with regards to the taxes. Sandrine, you indicated that partially the current status of the net cash flow was as a result of the timing effect in the payment of taxes. Can you please share with us when and how much additional taxes you expect to pay to somewhere during Q1 or Q2 of the following year? And then the second question I had, would it be possible for you to share your motivation and the current status of the court case you brought to the European courts together with ViaSat surrounding Inmarsat's European aviation network? Thank you.

Okay, so I'll take the question of the tax first and then I will pass to Rodolphe. So on the tax side, yes, we had high comparison basis for the cash allocation taxes in '16. This is why we have a favorable impact in our cash flow in '17 due to the change in taxes. For the next year I expect the cash tax to be consistent with the accounting chart. So this effect that we have in the cash tax in our discretionary free cash flow for '17 is one off.

Now, on your question on our court case at the European level, on the ATG situation. We believe that we have a very strong case that we have - that we have brought to the General Court Of Justice to claim that the usage of the license to serve ATG, the 2-gigahertz license was a distortion of usage. The license has been attributed back in 2008 with certain conditions, which are not respected as all by the ATG and we think we have a very strong run. And that's why we joined ViaSat litigation. And second, we most probably engaged into litigation at local level if needed.

Thank you. And now we will take our next question from the queue, Laurie Davison from Deutsche Bank. Please go ahead, your line is now open.

Just a follow up on Digiturk that and on Arqiva. Can you confirm that, you said that a majority of the capacity was renewed and pricing was better? Can you confirm that revenues will be increasing from that contract versus the prior contract that's for both Digiturk and Arqiva. And then the second question you mentioned that some numbers for video performance, ex the one offs and including the new launches. How much did the new launches contribute to that underlying video growth which you stated? Thank you.

On the Arqiva and Digiturk contract, as you can understand very well we cannot disclose or precisely all the detailed elements closes of those contracts. What we can say is that we expect increasing revenues in absolute terms from the Arqiva contract and also from our Turkish operations. On the proportion of new revenues coming the new launches, I will turn to Michel.

The answer is that the effect of the carry forward of the satellites we've announced in '16 had a positive effect represents broadly two-third of the net growth that we see after deducting the exceptional [indiscernible] two-third of that is carry forward, one for this organic growth.

[Operator Instructions] And we will take our next question from the queue, Patrick Wellington from Morgan Stanley. Please go ahead, your line is now open.

Two questions, just going back to video, your minus 5.4 I think minus 4 in Q3. You talked about a one off, what was the one off in Q4. And this business has been kind of riddled with accidents, TV Orange, Transat and so. Can you just talk about your video business and whether you see the likelihood of any of these, sort of one-off events in FY '18. And then secondly can you just update us on the second part of ViaSat-3 deal, so the new deal to encompass ViaSat-3 over Europe. Where are you in the negotiation, can you give us any update on what the terms of that deal to bring ViaSat-3 into the joint venture likely to be?

On Q4, actually in video we had one-off related to credit notes that we had concede to a specific customer in a very specific situation. On the likelihood of one-off like Orange TV in the future, we don't see any sign of any one-off of this kind happening in the future. But it's absolutely impossible to predict, but to our knowledge there are absolutely no signs of anything of that sort to the contrary. I cannot tell more than that, but to the contrary. On the ViaSat-3, the JV - infrastructure JV and the retail JVs are signed and are up and ready based in Lausanne as I said. But it's based on our current KA-SAT satellite. No we have entered negotiations with ViaSat for the procurements of the ViaSat-3 satellite to service the European footprint and actually the infrastructure JV will acquire this ViaSat-3. The key elements of the contract have been pre-negotiated before the signature of the JV meaning the price, the capacity, the timing of delivery of the bird. And now we are entering negotiation of the long-term contract. This negotiation will take time because it's very sophisticated and complex negotiation with detailed technical and financial elements. And we expect the conclusion and signature of that procurement contract to o take place by the end of this civil year. That's the target that we have fixed together with ViaSat. At the moment we are at the beginning of it and we have no things specific to report.

I ask the question because volumes have allegedly saying the terms as announced by you on the terms that they want to do the deal. Do you see any sign of that are they committed to the sorts of heads of agreement that you've made with them.

Well, I must respectfully for our partners at ViaSat that they are extraordinary good negotiators. We are in a negotiation, everybody is trying to take advantage of this negotiation and that's all what I can say. I can just reiterate and confirm that the key terms has been pre-negotiated and signed by both parties. But still what's bothering now is still a negotiation even if it's a long form and I'm pretty sure that if ViaSat can gain or can expect to gain some ground in this negotiation they will do it and most probably we will also try do it, that's the game in a negotiation. But the fact is that, the important fact I must say is that ViaSat and ourself, we do confirm that we are partnering, and our intention is to bring together the ViaSat-3 for Europe and that's what matters at the end of the day.

Thank you. And as there are no further questions in the queue, I would like to hand the call back to our host for any additional or closing remarks.

Well, no closing remarks, thank you to all of you for attending and I wish you a good celebrate for those who are leaving on vacation tonight.

Thank you. So ladies and gentlemen that will conclude the Eutelsat Telecommunications full-year 2016-17 results presentation. Thank you for your participation, you may now disconnect.