Hello. And welcome to the Eutelsat Group Second Quarter and First Half 2024-2025 Results. My name is Caroline, and I’ll be your coordinator for today’s event. Please note this call is being recorded and for the duration of the call, your lines will be on listen-only mode. However, you’ll have an opportunity to ask questions at the end of the call. [Operator Instructions] For today’s event, we have Eva Berneke, the CEO; and Christophe Caudrelier, the CFO. I will now hand over the call to your host, Eva Berneke, the CEO, to begin today’s conference. Thank you.

Good morning. Welcome and thank you for joining us today for Eutelsat Group second quarter and first half 2025 results presentation. I’m Eva Berneke, the CEO, and I’m joined by Christophe, our CFO. Today’s agenda, as usual, we’ll run through a few of the key events of the first half, as well as our operational and financial performance. And we’ll take a few next steps for the remainder of our financial year, which ends this summer, and then wrap up around the financial outlook. Start out with the key events of the first half. Key event was, of course, the signature of the agreement that will set the SpaceRISE consortium designing, building and operating the Iris2 multi-orbit constellation. This was a big step in Eutelsat’S LEO build-out strategy. The signature was on December 16th in Brussels. Following this confirmation of the Iris2 contract, Eutelsat procured the first batch of 100 LEO satellites that were required to ensure continuity, enhancement of services, and new technology compatible with the Iris2 future assets. In December, we also exercised the put option of the sales and leaseback of passive ground infrastructure, where proceeds are still expected due in first half calendar 2026. In terms of financial results, we reported a first half with operating vertical revenues of €600 million, up just shy of 4% at 3.9%, and an adjusted EBITDA in the margin -- EBITDA margin of 55.2%, which is stable year-on-year. This performance enabled us to confirm our full year revenue and EBITDA margin objectives, albeit with less headroom than in the beginning of the year. Elsewhere, our gross CapEx is now expected to be lower than initially guided, expected to be between €500 million and €600 million, thanks to the timing of LEO investments and reinforced vigilance on GEO expenditures. Finally, on a less positive note, we took a goodwill impairment of €535 million on various GEO assets, reflecting a lower expected future cash flows from these assets. I’ll come back to this. Quick look at the key numbers. Total revenues at €606 million, up by almost 6%, at 5.9% on a reported basis and a 4.4% on a like-for-like. As you remember, we only integrated OneWeb at the end of Q1 last year. When we look at our operating verticals, revenues for our four operating verticals stood at €600 million, up by 3.9% or almost 4% on a like-for-like basis. Reported adjusted EBITDA stood at €334.9 million at the end of the year 2024, compared to €365.6 million a year earlier. On a like-for-like basis, adjusted EBITDA was up 4.9%. The adjusted EBITDA margin stood at 55.1% in constant currency versus 63.8% reported and 54.8% on a like-for-like basis. The net debt to adjusted EBITDA ratio stood at 3.92%, compared to 3.79% at the end of June 2024, and 3.79% at December 2023. I’ll hand over to Christophe to look at a bit more details on the operational and financial performance before I come back to some of the strategic outlook for the year.

Thank you, Eva. Good morning, everyone. As mentioned above, total revenues for the first half of 2024-2025 stood at €606 million, up by 5.2% on a reported basis and by 4.4% like-for-like. It reflected a perimeter effect of €8 million due to the acquisition of OneWeb, a €2 million negative currency effect, and a €5 million positive swing in other revenues, mainly from hedging. Excluding other revenues, revenues of the four operating verticals were up 3.9% on a like-for-like basis. Let’s have a look at the segmental reporting. Video, representing 51% of revenues, stood at €309 million, a decline of 6.4%. Fixed Connectivity revenues, representing 20% of the Group total, rose 22% to €119 million. Government Services, 16% of revenues, stood at €96 million, a rise of 22%. And finally, Mobile Connectivity revenues, representing 13% of the Group total, stood at €75 million, a rise of 7%. Let’s go into more details, starting with Video. First half revenues were down by 6.4% to €309.2 million, in line with the broader secular market decline. Second quarter revenues stood at €157.4 million, down by 5.6% year-on-year and up 3.8% on a sequential basis, reflecting the linearization of revenue recognition on certain contracts. This trend does not alter the underlying patterns in Video of the single -- of the mid-single-digit decline and the second half is expected in line with the trend of the first half. Moving to Fixed Connectivity, first half revenues stood at €118.9 million, up 22% year-on-year, mainly reflecting the continued growth of LEO -enabled connectivity solutions, as well as a one-off impact from catch-up revenues from a LEO customer. Second quarter revenues stood at €62.2 million, up 16% year-on-year and by 9.9% on a sequential basis, mainly reflecting the above-mentioned one-off impact. Key contracts signed during the past quarter include a new multiyear agreement with Q-KON to expand LEO satellite services across Sub-Saharan Africa, as well as a multiyear multi-million-dollar partnership with NIGCOMSAT to deliver LEO satellite services in Nigeria. Second half revenues will reflect more challenging conditions for LEO -enabled consumer broadband in Europe, notably by this temporary stop of revenue recognition from a specific customer on a KONNECT VHTS satellite. Against this backdrop, Eutelsat is repurposing capacity on KONNECT VHTS to address a broader range of applications, notably Mobile Connectivity. First half Government Services revenues stood at €96.4 million, up by 21.9% year-on-year, reflecting the contribution from LEO services. Second quarter revenues stood at €50 million, up by 23.3% year-on-year and by 8% quarter-on-quarter. This vertical is benefiting from improved U.S. DoD renewals in the latest campaign, as well as increased demand from non-U.S. governments. And finally, Mobile Connectivity revenues stood at €75.3 million for the first half, up 7% year-on-year, mainly reflecting demand for LEO -based solutions, notably for maritime applications. Second quarter revenues stood at €33.3 million, down 4.5% year-on-year and by 20.4% quarter-on-quarter. This decrease reflected lower GEO revenues, as well as a one-off contract in Q1 of around €3 million, not repeated in Q2, and higher equipment sales in Q1. As a result, the backlog stood at €3.7 billion at the end of December 2024 versus €3.9 billion a year earlier. This decrease reflects the natural erosion of the backlog, especially in the Video segment, partly offset by the growing LEO backlog. The backlog was equivalent to 3.1 times of 2023-2024 revenues, with connectivity representing 56% of the total and LEO now accounting for 48% of this segment. Let’s turn now to the financial performance. Reported adjusted EBITDA stood at €335 million at the end of December 2024, compared with €365.6 million a year earlier, down by 8.4%. On a like-for-like basis, adjusted EBITDA was up 4.9%. The adjusted EBITDA margin stood at 55.1% at constant currency versus 53.8% reported and 54.8% on a like-for-like basis. Operating costs were €64.3 million higher than last fiscal year, reflecting the impact of the consolidation of OneWeb for six months of the current fiscal year, compared with only three months for fiscal year 2023-2024. On a pro-forma basis, costs were up 3.7%, reflecting on one hand the embarkation of OneWeb at full operational run rate, and on the other, cost control measures implemented since the merger. Group share of net income was a loss of €873.2 million versus a loss of €191.3 million a year earlier. This reflected higher other operating expenses of €690.8 million, compared to €183.9 million last year. They included a goodwill impairment of €535 million in respect of GEO assets, based on the test performed at the end of December 2024. It reflects the cash flow forecast adopted by the Group in its latest five-year plan, embarking the lower future cash flows the Group expects to be able to generate from its existing GEO assets. These take account of increased competition in the connectivity market and a greater-than-expected decline in demand for Video services. This is consistent with the impact already experienced by the Group in lower Video customer renewal rates, and more recently, the transfer of demand from GEO to LEO connectivity services. Then, higher depreciation of €433.7 million versus €316.1 million a year earlier, reflecting the perimeter effect from OneWeb, as well as higher in-orbit and on-ground depreciation. EUTELSAT 36D satellite and 20 LEO spares entered service during the first half. Net financial results of 99.1 million negative versus minus €60.7 million a year earlier, reflecting higher interest costs, partly offset by favorable evolution of foreign exchange gains and losses. Corporate tax expense of €7.6 million versus a tax gain of €28.5 million a year earlier, implying an effective tax rate of minus 0.9%. It reflects the non-recognition of deferred tax assets related to losses in France and in the U.K., the net impact of the exemption mechanism for profits allocated to satellites operated outside France, the effects of the tax rates of foreign subsidiaries, and the impact of impairments on the Group satellites, particularly those in the Satmex arc. Losses from associates of minus €1 million versus minus €23 million, reflecting the contribution of the stake in OneWeb in the first quarter of 2023-2024 now fully consolidated. Moving to CapEx. Gross CapEx amounted to €174.8 million versus €313.7 million last year. This decrease reflects the GEO satellite program delivery on launch last year, as well as lower LEO on-ground CapEx versus last year. First half CapEx is not representative of expected 2024-2025 outturns, which will embark the 100 LEO satellite batch order. Nevertheless, CapEx for the full year is now expected in the €500 million to €600 million range, lower than previous ranges of €700 million to €800 million, reflecting the timing of LEO investments, as well as increased vigilance on GEO CapEx. At the end of December 2024, net debt stood at €2,695.8 million, up €151.6 million versus end of June 2024. It was mainly due to CapEx-related movements and higher financial costs, partially offset by net cash flow generated by activity. The result? The net debt-to-adjusted EBITDA ratio stood at 3.92 times, compared to 4.13 times at the end of December 2024 and 3.79 times at the end of June 2024. The average cost of debt after hedging stood at 4.84% were 3.16% in H1 2023-2024. The weighted average maturity of the Group debt stood at three years, compared to three years at the end of December 2023. Undrawn credit lines and cash stood at around €1.24 billion. Now, back to Eva to comment the outlook and next steps.

Thank you, Christophe. The past three months have been an alignment of several strategic elements paving our way for our LEO build-out strategy. First, we exercised the put option with the EQT Infrastructure fund regarding the sale of a majority stake in our passive ground infrastructure, leading to the signing of a binding share purchase agreement. As a reminder, the transaction consists of the carve-out of Eutelsat’s passive ground infrastructure assets to form a standalone company in which EQT will acquire 80% while Eutelsat will remain committed as a long-term shareholder, anchor tenant and partner of the new company with a 20% holding. The transaction value is in the new entity at an enterprise value of €790 million, with the closing of the deal expected in the first half of calendar year 2026. This will deliver net proceeds of around €500 million after tax to Eutelsat at the sale of 80% and will strengthen our financial resources and contribute to the LEO constellation extension. The second very important element is the SpaceRISE consortium and the signature of Iris2. SpaceRISE consortium, where we are a leading member, received the go-ahead from the European Union to design, build and operate the Iris2 Constellation. Due to enter service in 2030 with an initial 12-year concession contract. As a reminder, the project is valued at €10.6 billion, with the public funding representing around 60% of the total project cost, supplemented by private financing from the three consortium members. Eutelsat will invest in the region of €2 billion back-end loaded to the later stages of the project and it will allow Eutelsat to have access to the additional sellable LEO capacity of around 1.5 terabits out of a total of 2 terabits of LEO capacity. Access to the KaMil capacity, which is not consumed by sovereign needs of the EU. Scaled advantages and a shared fixed infrastructure and R&D investments in new technology funded by EU and ESA. Commitments from EU and other member states for Iris2 capacity worth several hundred millions of euros in take-or-pays. And a clearly capped financial commitment with strict milestones providing for exit and compensation in the event of missed targets that will compromise returns to Eutelsat. Eutelsat is expected to generate around €6.5 billion of revenues over the 12-year concession period. And finally, given that Iris2 is now confirmed and moving forward, this also allows the confirmation of our involvement and represents a key step in our strategy of how to develop and expand our LEO constellation. Specifically, it gives a clear roadmap for the extension of the existing LEO constellation in terms of technology roadmap, which is compatible with the future Iris2 assets. Following confirmation of the Iris2 contract, Eutelsat therefore procured the first batch of 100 LEO satellites to be delivered by the end of calendar 2026 that will ensure continuity and enhancement of services. We estimate the extension of LEO constellation up to the availability of Iris2 will require further 340 satellites on top of these initial 100. And this equates the total of the extension program in the order of €2 million to €2.2 billion between this financial year 2024-2025 and 2028-2029. As mentioned, our contribution to Iris2 will be back-end loaded during the period ahead of the availability of the constellation. The availability of the constellation is expected end 2030 and thereby our back-end loaded contribution will be beginning in 2028-2029. We are actively working on a financing plan in line with our strategic roadmap and also in line with our longer term leverage target. So with all of that, we confirm our first half performance was in line with our expectations, enabling us to confirm the financial year 2024-2025 revenue and profitability objectives. As a reminder, the 2024 -- the 2025 financial year revenues of our four operating verticals around the same level as financial year 2024 and an adjusted EBITDA margin slightly below the level of 2024. Nevertheless, these objectives will be more challenging in light of GEO consumer broadband headwinds identified above and Christophe -- and in Christophe’s notes. Our gross capital expenditure for this year, initially expected in the range of €700 million to €800 million is now expected around €200 million lower in the range of €500 million to €600 million. That also means we continue to target a leverage of 3 times in the medium-term. So a few words to sum up before we go to Q&A. H1 revenues and EBITDA margin in line with expectation and our objectives for financial year confirmed. Our CapEx is now expected €200 million lower at €500 million to €600 million range. The put option for the sale and lease back of our passive infrastructure and ground stations is expected to generate the €500 million in H1 calendar 2026. And the go-ahead of Iris2 constellation representing a key milestone in our multi-orbit strategy, also allow us to define the roadmap for interim LEO extensions. With that, I wrap up here and Christophe and I are ready to take your questions. Thank you for listening.

Thank you. [Operator Instructions] We will take the first question from line Roshan Ranjit from Deutsche Bank. The line is open now. Please go ahead.

I’ve got three, please. Eva, you mentioned and highlighted in the release the increased vigilance on GEO and Christophe mentioned the headwinds. Is this driven by cannibalization of the GEO business from LEO? And when, I guess, if we think about the LEO business, that ramp up, is that enough to kind of offset the new kind of GEO decline that you are highlighting today? Secondly, and tied to that, around the normalized GEO CapEx, you provided the envelope for the LEO extension, €2.2 billion over four years, so roughly €500 -- just over €500 billion a year. How much GEO CapEx should we layer on top of that? Are we still thinking over the midterm, €700 million, kind of €800 million annual CapEx prior to Iris2 started or Iris2 CapEx started? And lastly, just a quick question, we’ve seen a lot of noise around the C-band development, a potential new auction. How much C-band do you guys actually have that you could monetize? Thank you.

Thank you for your questions. Those are important. The vigilance on GEO is, of course, a key element in terms of the headwinds. But I think, especially in what we would call B2C connectivity, it is clear that that is where especially Starlink is picking up a lot, and by the way, also driving a bigger market. So we see in our market estimates -- actually, market estimates or addressable markets for B2C connectivity from space actually being increased continually and in that segment for B2C, it’s very clear that we see headwinds. And as you know, we do have KONNECT VHTS satellite, which was specifically targeted for B2C connectivity over Europe and Africa. And that’s where we are -- we’ve seen those headwinds specifically there. And I’d also say we are looking at alternative solutions, especially within the Mobility segment for the KONNECT VHTS satellite. So we hopefully will be able to or we will be able to use it also for other things than pure B2C connectivity. So yes, we do see, especially in the B2C segment, a move towards LEO on the connectivity. Now, you’ll say B2C is not our key focus and that is absolutely right. We are a B2B player, but we do also see Starlink starting to come into some of the B2B segments as expected. We’d expect that Starlink would also start addressing the large B2B market. So that’s seen in Mobility, especially in maritime mobility. And you’ve also seen some of the announcements on Aero, where we also have a very strong backlog on Aero and Starlink is starting to come in there as well. So it is clear that we do see some of that also being a switch between GEO and LEO in the connectivity market. We still expect to see the connectivity market being a very strong growth market in total. The LEO extension and the GEO CapEx is, of course, and just given your first question, you’ll be happy to hear that, of course, we’re being very vigilant on our GEO CapEx going forward, because if it’s the switch we’re seeing and we’re seeing the market trend slightly more negative on GEO compared to LEO, that is a key one. So that is something we’re looking at in the next -- over the next five-year period. And we have also in our outlook there pinpointed a few places where we’ll be very vigilant on the GEO CapEx in terms of how we renew it. That goes, of course, for Video, which has been a trend for a while. We’re mid-single-digit decline. So, of course, there, everything we could do in terms of being smart about how we renew long-term strategic assets and that will go also for GEO connectivity. On the C-band, we do note the recent comments by the FCC. We don’t know exactly when or if at all it will be repurposed. We do have the capacity on three satellites, 172, 115, 170. And the latest two are over the CONUS that is relevant. So we will have a little bit less than we had previously because we no longer have the 113, which counted in the previous C-band round. But we will have our -- if it moves forward, we will, of course, have our relatively small part of the C-band. The majority, as you know, is with CS and IntelSat should this move forward. But right now, we simply don’t know whether this has been just a discussion. By the way, you know the discussion has been going up for at least a couple of years now. So, still no confirmed timeline on it. Can we take the next question? Thank you.

Thank you. We will take the next question from line Mark Watts from Citi. The line is open now. Please go ahead.

Hi, guys. Just a few points here. So, on the ground terminal proceeds, can you just clarify what the lease cost will be going forward on a cash basis? And also, of the €500 million cash proceeds that you mentioned, what the intended use might be there? Second one is just on the bond side, on the refinancing and capital allocation. So, how are you thinking about the 2027 wall? It’s fairly sizable out to 2029. So, can you understand how you think about the interest cost side of the business, if I could?

Okay. So, let me maybe start with the second one and come back. I’m not quite sure I got your first question. But the second question is, of course, we have a 2027 refinancing. And as we put out, we are looking at various financing options. Now, we have both the Iris2 CapEx and also our rich CapEx [ph] clear. It is looking at the various financing options is one of them that can go through partnerships. Of course, we’re exploring quite a lot of export finance as well. And also, how we time the especially Iris2 CapEx will be towards the end of the period. So, with that, we are looking at various financing options actively in this moment. Christophe, do you want to take the one that I didn’t get? Maybe you got it.

Yeah. Yeah. Maybe before answering precisely on the question, we also have to take into consideration that the impact of the operation will have -- will be a decrease also of the CapEx. And this is very important to notice. We estimate the annual cost around €70 million to €80 million, most of which actually should not be leased cost. There should be OpEx. Just a small part of the cost would be treated or should be treated as leasing.

Yeah. So, the total is, of course, that we will have these additional annual costs, a mix of OpEx and CapEx, and overall lower CapEx envelope because we no longer have to invest in our ground infrastructure that will be picked up by the company. And then the around €500 million cash in. So, those are kind of the key elements.

Got you. And then, sorry, can I just clarify that at the end of the year, there was obviously some headlines around kind of some outages, system outages. Do you mind just clarifying…

Yes. We…

… what the issue was?

Yes. We had a software glitch with a supplier, which meant that the ground infrastructure became out of sync with the satellite. Ground infrastructure was operating perfectly and satellite infrastructure was operating perfectly, but the match between the two were off in a date. This was simply a software supplier who had forgotten we had a leap year last year. Not a very brilliant thing to do, but we did experience an outage around at least 24 hours and got that reset and got the two dates back in sync. We estimate kind of penalties and costs being around €1 million of this. And of course, we have a bit of a heated discussion with our software supplier on this point. It doesn’t seem to be rocket science to know that last year was a leap year, but it seems to be that way.

Thank you.

We will take the next question from line Ben Rickett from New Street Research. The line is open now. Please go ahead.

Hi. Thanks for the questions. Firstly, just a follow-up question. You mentioned you were hoping to use ECA financing. Could you talk a bit about how much of the €2 billion to €2.2 billion of Gen-1 continuity CapEx you would hope to finance with ECA? I think this time last year you were talking about two-thirds to four-fifths. Is that still the right sort of range?

I think pretty much, yes.

Okay. That’s helpful. Second, another sort of hopefully quick CapEx question. On Slide 24, you’re showing the Iris2 CapEx. From the diagram, it almost looks like it’s out beyond 2030. I was just wondering if you could clarify the exact phasing of when you’re expecting to pay the Iris2 CapEx?

I think we expect the Iris2 CapEx, which is the order of magnitude of €2 billion starting a bit in 2028. In 2029, we’ll have a chunk, but then in 2031 and 2032, we’ll also have it. It’s one of the key advantages of Iris2 for us is that we’ll be able to push the CapEx much closer towards the go-live date. We have a little bit cut in 2028 and then 2029, we’ll start stepping it up. 2029 and 2030 are the two bigger years.

That’s great. If I could have one final question. It was just on the OneWeb trajectory. It looks like you did OneWeb revenue of about €40 million in H1. You’re saying the OneWeb backlog is still at around €1 billion. I’m just wondering, what gives you confidence that you will see OneWeb revenue ramping up towards the €6.5 billion that you mentioned?

So, the €6.5 billion is Iris2. I think you’re talking about the Iris2 billion, right? The €6.5 billion revenues is over the concession period out of the 1.5 terabits of capacity that’s in Iris2. As you know, that will be a sub-part of our LEO consultation. That will be additional capacity to Eutelsat. So that’s where the €6.5 billion comes in. LEO revenues are ramping up well. We don’t split our connectivity revenues in LEO and GEO. But I don’t really fully recognize your numbers where the LEO revenues are ramping up nicely. That is part of how we can also confirm our full year guidance.

Okay. Thank you.

Thank you. We will take the next question from line Wulgong Salik from Saria [ph]. The line is open now. Please go ahead.

Yes. Hello. Thank you very much. I just have a few questions that are probably revealing that I’m a relative beginner on satellite. Could you tell -- remind me again what led to the relatively sudden drops at the moment in CapEx in the last quarter and where your current rollout is of that Gen-1 LEO generation? It seems to be delayed. Where are you there in resolving that delay? Have you resolved it or is perhaps the drop due to ongoing delays? I’m not entirely sure there. Please correct me if anything I’m saying is wrong. And another question would then be one with revenue. Is that all equipment still or is it already capacity? And then my last question would be obviously that OneWeb constellation as you’re outlining it with that second-generation or additional satellites of I think Gen-1 that you’re looking at here, 340 additional Gen-1 satellites, that is still going to be a lot smaller than say your big competition out of the U.S. How are you intending to compete there? Can you remind us of your strategy there, how that’s going to work? Thank you.

Those are pretty big questions. But let me start out with the drop in CapEx. The drop in CapEx is as much in this financial year which as you know end over -- end by the end of June. So there’s some of that that of course flows into next year. So there’s an element of it which is the exact payment schedules of the orders of the next satellites which influence this. So I think that is a good chunk of the drop in CapEx. There’s also some CapEx linked to the finalization of the LEO rollout. As you know we’ve been talking into gateways. We still have around five gateways to go in some of the complicated places like Tanzania and Senegal and Martinique. And those are flowing into second half of the year which also means that that impacts some of our coverage that is driven by that. That’s linked to delays in the partners that are helping us building those five hard gateways. We have 39 now passing commercial traffic so that has started to go live. But the last five are still dragging their feet a little bit into second half of the year. So that is the same story on the delay in rollout but that also moves CapEx into a slightly later period. In terms of OneWeb revenues, no, it is certainly mostly capacity. Service revenues is what we call it. There is a bit of huge heat in there but it is by -- it is a smaller part of the OneWeb revenues. The major part is certainly service revenues in the OneWeb revenue numbers. And then finally in terms of the additional satellites, as you know we fly higher than Starlink and Amazon. So they are around 400 kilometers to 500 kilometers, which means that just to cover the Earth they need many more satellites. Just statistics if you want to point to any point on Earth. So we only need around 400, 450 to 500 satellites to actually cover and have global coverage. And that also means that we don’t need the thousands of satellites simply to have global coverage. We have a B2B focused strategy as well whereas Starlink has started out with a very standardized B2C product. So attacking kind of consumer broadband, driving volume in terminals whereas we have opted for a B2B strategy where we work with distributors in the market. So those are two very different approaches. Now Starlink is also starting to address the B2B market just as we do address B2C market in a much smaller scale. So we are currently the only alternative to Starlink as the Kuiper and Lightspeed is not expected before 2028 earliest. And I think we see most customers not necessarily want to be in a monopoly situation. Lots of customers are putting a lot of importance also to have non-U.S., non-Chinese alternatives. So this is not a question only of resilience. A lot of customers want multiple networks for resilient purposes and some customers simply want to have alternatives. One example is our large contract recently signed with the Taiwanese government for coverage on Taiwan. They wanted to have an alternative to the Starlink and we see that in quite a lot of places. And of course we also see especially European and other MODs being very interested in having all the alternatives available. Not only for kind of geopolitical reasons but of course also for resilience. So I think the main point is you want to have access to multiple networks for resilience purposes.

Thank you. that’s -- thanks very much. I just have two tiny follow-up questions there. How high do your satellites fly and how many do you need to guarantee service levels?

Okay. So that’s simple. It’s around 1200 kilometers. And I think I said that but we need around the 400 kilometers mark to have full global service and a bit extra. So that will give a good global service everywhere, poles, equator, everything else. Now we have around 600 flying right now which enables you to have slightly better elevation angles. The big question is what kind of elevation angle. You need a decent number of satellites if you want to have flat panels. Parabolic antennas are a little bit less -- a little bit easier to operate with fewer satellites. So that’s one of the key questions when we have. But with 400 we have good elevation angles on flat panels which is what customers want today.

Thank you.

We will take the next question from line Sami Kassab from BNP Paribas. The line is open now. Please go ahead.

Thank you. Good morning, Eva. Good morning, Christophe. I have a few questions, please. The first one, you talked about the several hundred millions of take-or-pay commitments from the EU on Iris2. Is that on the Eutelsat part or on the whole program? And can you be more specific on the compensation mechanisms that should ensure minimum returns on the project and possibly share what the minimum guaranteed rate of return is on your €2 billion investment? Secondly, you have suggested that GEO connectivity trends are perhaps a bit weaker than expected. And yet in the preface you suggest that the cessation of revenue recognition on KONNECT VHTS is said to be temporary. When will you resume recognizing revenues and why is it temporary? Thank you.

So let me start with the commitments of Iris2. There are some take-or-pay plans for especially hardgov and softgov capacity for EU. That is not yet distributed partly because we’re talking about capacity that’s going to be needed beyond, let’s say, from 31 and on. So it’s a bit early and it will be a mix of kind of commercial, and of course, CKA mill hardgov competence. So that’s a total for the entire consortium. And, of course, if it’s NEO, it’s more likely that’s where SES has its main interest. If it’s NEO, it’s where we have the main interest. But it is not finalized yet. That is part of the discussion. The way -- the -- I think the other one was how the compensation was gone around or how the protection was going to be for the internal rate of return. And I think you know the mechanism of this first rendezvous point, which is in about a year’s time, which is a key element of having a confirmation of both time line cost and quality. And we have an exit option if we don’t at that time see a supply chain that can meet those obligations. The same thing, by the way, of Iris2. So right now we’re in the process of confirming the supplier setup, which is probably what you’ll hear from a lot of the Airbuses, OHPs and others, that they’re in competition to enable us to ensure that we can build this constellation on time at €10.6 billion marks. So on the KONNECT VHTS, we had initiated a discussion with TIM. TIM is one of our customers on EUTELSAT KONNECT and EUTELSAT KONNECT VHTS. And TIM has not started migrating customers from KONNECT to KONNECT VHTS, as was the original agreement, and is debating whether they have an interest in that and that’s why we have stopped recognizing revenue with TIM. We have a multiyear take-or-pay with them. So we are right now in discussions with him on how to bring that into the future.

And on Iris2, is there a minimum IRR that you can share on your investment?

Yes. It’s in line with our typical IRRs of 10% to 12%.

And that’s the minimum that’s in line with 10% or that’s the expected one?

No. That’s the minimum one. That’s the one we expect…

Thank you.

…to at least have. Yeah.

Thank you very much.

Thank you. [Operator Instructions] We will take the next question from line Alexander Peterc from Bernstein. The line is open now. Please go ahead.

Yes. Hi. I just have a little follow-up on CapEx first. So the €200 million shift of CapEx out of this year, is that going into later years or did you just reduce the entire approach and reduce the amount to spend here? And then when you talk about increased vigilance on GEO CapEx, is this a warning that you may have to drastically reduce your spending going forward, given the disruption in the market from LEO? Is that what’s going on? And then I have a follow-up. Thank you.

I think on the CapEx, we see a lower CapEx this year. We don’t necessarily guide multiyear CapEx on it. I think there is some switch, which is simply the payment schedules and some of the ground infrastructure rollout that we will have in the second half of the year as well. But there is also a real reduction in it. And I think on GEO CapEx, what you’ll see is that we will be looking at many types of partnerships. You saw the partnership we have with Thaicom as an example, right, a way of launching connectivity capacity in partnership, in this case with Thaicom, where we share a satellite rather than launch one each. And I think those are the type of partnerships, which both enable us to lower our own GEO CapEx or simply share the risk with other players. So those could be types of ways of being vigilant on future GEO CapEx spend.

Thank you. And then the follow-up will be on your comments regarding the B2C disruption of Starlink. And you seem to be implying that prospects for KONNECT VHTS on the B2C side are materially weaker now. Does that mean that at least part of the capacity there is going to be a write-off or very little occupies?

No. No. I think…

What exactly is going on there?

Yeah.

Yeah.

No. So…

Yeah.

…on KONNECT VHTS was originally meant for connectivity over Europe. And we actually are providing a lot of connectivity via KONNECT VHTS both on Spain, Switzerland and on France. And a lot of the capacity that you, as an example, see Orange, has been doing a very strong job on migrating their satellite customers to KONNECT VHTS and allow them much higher bandwidth with actually quite some solid success, because it’s a very strong value proposition for the consumer segment. So it’s only TIM that’s opted not to do an active migration into the KONNECT VHTS. However, we will probably not sell all of the capacity. It’s a 500-gigabit satellite, KONNECT VHTS. So what we’re doing right now, we’re developing terminals for also Mobility use. As you know, we’ve seen quite a lot of attraction in the Mobility market and it’s a market that’s actually very hungry for capacity, whether it’s for land mobility, whether it’s for maritime or for Aero. That is the segment that is really increasing capacity requirements because it’s a segment that simply gets other options. So for the Mobility segment, we need slightly different terminals than the B2C terminals that we had for KONNECT VHTS and adapting that satellite to be able to serve the Mobility market is happening as we speak. So we’re in the first test of that. So we will be able to leverage that capacity into the Mobility market, which is actually not bad news in terms of pricing because it’s typically a market where prices have been better. However, we do need to get the capacity out there as it’s a segment that is asking for it.

Thank you. And then my last question would be on the opportunity for LEO connectivity in Mobility, Aero markets and IFC. I’ve seen Starlink taking sizable deals there, not least Air France-KLM, Qatar and United. So my question is, do you have a roadmap for OneWeb serving these markets? Do you have any wins in this area? What’s the timeline for developing this vertical? Thank you.

Yeah. Thank you for the question because we actually do. It’s been one of our core segments for a long time. We have a backlog of around 1,000 aircrafts that are scheduled for installation. You’ve probably seen, I think we put that out on LinkedIn, some of the very positive early installations for Air Canada. But we also have American Airlines, Alaska and Japan. It is not us direct. We, as you know, are working with distributors. We have a B2B approach. So you’ll see that through Intelsat, Panasonic, even ViaSat are using our LEO capacity for their Aero services. So we are working with all of them. And we now have Gogo Business Jets for smaller jets. There’s also one of them who started to fly with our capacity. So we have a very strong backlog actually in Aero for our LEO services. And then for Europe, we’ll be able to put some KONNECT VHTS on top of that and that will be even stronger. So aviation has been a very strong backlog element for us. Why it’s taken a bit longer for it to start actually to generate revenue has to do with the different approval of the FFA for terminals, and of course, the test flights and then of course just installation on the fleet. But as I say, we have more than a 1000 aircrafts in the backlog and Starlink is more recent into the market. Again, not a surprise that Starlink will start being interested in the B2C market, which has typically been three quarters of the satellite market and also in Aero. And you saw especially the United deal where they, I think, are also going to install themselves. And then with Air France, which I believe is more that they’re bringing Starlink into the mix, they’re looking for a replacement. But I would expect the many aircraft carriers and distributors who would want to take in the different types of capacity, just like we’re seeing in the maritime market that a lot of our distributors have both OneWeb and Starlink capacity and mixing the two.

Okay. So just to understand, so the strong backlog you have in Mobility in LEO, is that going to transpire in your revenue trajectory? What timeframe? Is it the next year’s event or longer? How long does it take?

I’m not sure I understand your question. Can you just maybe reformulate?

Yeah. Just to reformulate then. So looking at Mobility, it fell well short of expectations in the report this quarter. And so my question is, at what point will your strong backlog in LEO connectivity for Aero start to transpire in the Mobility supply?

Okay. So Aero will probably start -- we’ll start seeing some of it in next financial year -- start to ramp up in next financial year, some from the summer. I mean, it’s going to be very small over the summer and then it’s going to start ramping up with the installation on the fleet over the next financial year.

Excellent. Thank you very much.

Thank you. We will take the next question from line Stephane Beyazian from ODDO. The line is open now. Please go ahead.

Thank you very much for taking the question. I have got two, if that’s possible. The first one is related to CapEx. Would you be able to give us an idea of how big is going to be your GEO fleet, let’s say -- I don’t know, but let’s say at the end of this decade versus today? I’m just trying to understand to what extent you are re-dimensioning the GEO fleet? And my second question is regarding IRIS2 again and just a follow-up. Could you give us more color on how the revenue calculations have been made? I guess what I’m trying to understand is how much extra EU state spending you’re expecting versus what the states are actually spending today? Thank you very much.

Those are big questions. What I can tell you by the end -- by 2030, we’re probably still going to have around 35 satellites flying because we’re talking much longer investments. I think your question, and I’ll pass on the actual CapEx to Christophe, is that what we are and that’s just the rhythm of GEO satellites, is that within the next year, we’re going to have to start thinking about the satellites that will go into service by 2030, 2031. So that’s just the rhythm of how long it takes to develop, launch, bring into orbit, test into orbit and then actually start migrating customers on it. So we’re on some very long things. But of course, and I think that’s what we’re looking at closely with Christophe on, is that let’s not spend on something that’s going to go into service as early as 2029, but more likely 2030 and 2031. Let’s make sure that we don’t overspend because they are going to be in service after that. So Christophe, do you want to put a word or two on GEO CapEx and how we think about it?

Yeah. What we are -- thanks, Eva. What we are looking at, obviously, we have orbital position that we need to keep and use, exploit. So in terms of, we are also thinking of different ways of different types of either satellites, either smaller satellites or partnerships. But clearly, if your question is related to how much CapEx we would spend in the coming years to replace the current fleet, it would be obviously much lower than in the past for the reasons that we have just mentioned. And just to give an idea of the range, it would be below €200 million.

Okay. Thank you.

Thank you. We will take a follow-up question from line Sami Kassab from BNP Paribas. The line is open now. Please go ahead.

Yes. Thank you. I have a question on India. Given that one of your largest shareholders is a large Indian telecom, given that India is a large, perhaps attractive market, can you please elaborate and tell us where you stand with market access rights into India, and perhaps, the business plan for India and how much revenues might India contribute to by the end of this decade? Thank you.

I don’t know where India is going to be by the end of this decade, but it is clearly one of our core markets. We right now have some testing ongoing for specific use cases and they’ve opened up for actually allowing for kind of governmental and remote connectivity use cases in India. So we’re the only one testing there. As you know, neither Starlink nor us have actually full market access rights in India yet. That’s part of a geopolitical trend we see in quite a lot of places where governments are spending a lot of time studying what LEO connectivity will and which conditions they want for market access. And so India, we expect to open up, especially for remote and government uses, and we are already testing. We’ve had a couple of quite successful tests with the Indian military, and of course we are helped by one of our large shareholders in collaboration with Airtel on this. So Bharti Telecom and Airtel are a close collaboration with them, and we have actually a significant take-or-pay on India already, which will kick in at the time where we actually gain market access to India. So we have a backlog sitting on India which is ready to go live as soon as we get market access. We have the gateways in India up and running, so it’s simply a question of regulatory approval of that market. So we’ll likely get it at the same time as Starlink is my best guess, but it’s been quite a long administrative process with the Indian regulator.

And I imagine you would not disclose the size of the take-or-pay contract in the backlog, would you?

No. But it is quite significant because India is a big market with quite a lot of interest as well.

Fantastic. Thank you very much, Eva.

Thank you. It appears no further questions at this time. I’ll hand it back over to your host for closing remarks.

Well, thank you. Thank you for showing up this morning, numerous and with some great questions, and some more operational. Just want to take the opportunity to sum up the year. Strong revenue and EBITDA margin in line with the expectations and objectives confirmed. CapEx lower with about €200 million less than previously guided. And three very strategic steps forward; first of all, Iris2, of course, which allow us to pave the way of continuity and increased functionality on our LEO constellation towards an Iris2. And the signature of the put option with Stargate, which is also on track for 2026. So, all in all, a year that was busy both on the operational but also on the strategic front. With that, I just want to thank you for showing up this morning and have a wonderful Friday. Take care.

Thank you for joining today’s call. You may now disconnect.