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(Sharecast News) - Eutelsat Communications reported a near 60% surge in low earth orbit (LEO) revenues in the first half of its 2026 financial year on Friday, as strong momentum in connectivity offset continued structural pressure in its video business.
For the six months ended 31 December, total group revenues stood at 591.6m, down 2.4% on a reported basis but broadly stable on a like-for-like comparison.
Revenues from the four operating verticals reached 573.8m, slipping 0.6% like-for-like.
Connectivity revenues rose 11.8% year-on-year to 307.3m, driven primarily by LEO services, which increased 59.7% to 110.5m and now account for around 20% of total group revenues and more than one-third of connectivity sales.
By contrast, GEO revenues declined 4.5% to 196.8m. Video revenues fell 12.3% to 266.5m, reflecting additional sanctions on Russian channels and ongoing structural decline in broadcast markets, although the company secured capacity renewals with clients including beIN Group and Polsat+.
Within connectivity, fixed connectivity revenues climbed 17.2% to 132.1m, supported by demand for LEO-enabled solutions and a one-off contract.
Government services rose 7.7% to 98.6m, including LEO-related services in Ukraine, while mobile connectivity increased 8.5% to 76.6m, helped by nearly 600 certified aircraft antenna installations out of a 1,500-plane backlog.
Adjusted EBITDA fell 8% year-on-year to 308.2m, with the margin declining to 52.1% from 55.2%, reflecting the mix effect from ramping LEO activities and the impact of sanctions on video.
The group's net loss narrowed significantly to 236.5m from 873.2m a year earlier, when results were weighed down by impairments.
Its contracted backlog stood at 3.4bn at the end of December, compared with 3.7bn a year earlier.
Eutelsat strengthened its balance sheet during the period through a 1.5bn capital raise and nearly 1bn in Export Credit Agency financing, contributing to rating upgrades from Moody's and Fitch.
Net debt fell to 1.3bn, with the net debt-to-adjusted EBITDA ratio improving to 2.0x from 3.92x a year earlier.
Capital expenditure totalled 291.5m in the first half, with full-year capex now expected at around 900m, below earlier guidance.
The group also cancelled its planned Flexsat Americas satellite, generating expected savings of more than 100m.
Operationally, the company confirmed procurement of 440 next-generation LEO satellites to secure long-term continuity and technological upgrades for its OneWeb constellation.
Chief executive Jean-Franois Fallacher said the first half marked "a decisive step forward" after refinancing and securing the future of the LEO fleet, adding that the group was entering its next phase with confidence and focusing on unlocking the full potential of its LEO business.
Shares rose more than 7% following the results, reflecting investor support for the company's strategic shift towards multi-orbit connectivity and its improving financial position.
Eutelsat reaffirmed its full-year 2026 targets, expecting operating vertical revenues to remain in line with the prior year and LEO revenues to grow around 50% year-on-year.
The adjusted EBITDA margin is forecast to be slightly below last year's level.
Separately, Fallacher said Europe's planned IRIS2 constellation must offer competitive pricing and performance to attract customers, echoing concerns raised by telecoms operators including Orange and Deutsche Telekom.
According to Reuters, he said IRIS2's 10.6bn budget was appropriate for a system of that scale and indicated that Eutelsat plans to launch next-generation OneWeb satellites alongside IRIS2 after 2030, as competition intensifies from rivals such as Starlink and Amazon's planned LEO network.
Reporting by Josh White for Sharecast.com.