Welcome to the Eutelsat Third Quarter 2025, 2026 Revenues Call. For the first part of the conference, the participants will be in listen-only mode. During the questions and answer session, participants will be able to ask questions by dialing pound key five on their telephone keypad. Now I will hand the conference over to the speaker, Sebastien Rouge, Chief Financial Officer. Please go ahead.
Good evening. Welcome, and thank you for joining us today for Eutelsat 3rd quarter 2025, 2026 revenue presentation. I'm Sebastien Rouge, Chief Financial Officer, and here with me, Joanna Darlington, Head of Investor Relations, and Hugo in her team. Let's start with the highlights of the past quarter. 3rd quarter operating verticals revenue of EUR 283.7 million, up 0.9% year-on-year, in line with our expectations. Connectivity saw further double-digit growth of 15% driven by LEO-enabled solutions, up 65% year-on-year. During the quarter, we successfully completed the closing of a EUR 1.5 billion senior note offering. That was the final milestone in the group's comprehensive EUR 5 billion equity and debt refinancing strategy. Finally, based on the performance of the first nine months, we confirm our objectives of the full year.
If we turn now to the Q3 performance. As a reminder, all comments are on a like for like basis, which means at current scope and currency. Total revenues for the third quarter stood at EUR 293 million, up 3.1% on a like for like basis. They reflected a EUR 20 million negative currency effect and a EUR 10 million positive swing in other revenue, mainly driven by the recognition of IRIS² and related to Eutelsat's involvement as consortium system development prime. Revenues of the four operating verticals were up 0.9% on a like for like basis. Let's now have a look at the segmental reporting. Video representing 45% of revenue stood at EUR 128 million, a decline of 13.3%.
Fixed connectivity revenues representing 21% of the group total rose 10.6% to EUR 60 million. Government services, 18% of our revenue stood at EUR 50 million, a rise of 11.8%. Finally, mobile connectivity representing 60% of our group total stood at EUR 45 million, representing an increase of 27%. Let's start with the details of video. As said above, third quarter video revenues amounted to EUR 128 million, down 13.3% year-on-year. This reflects the impact of sanctions on Russian channels imposed at the beginning of the year and from March 26th onwards, the termination of capacity contract at the Express-81 and Express-82 satellites. On a quarter-on-quarter basis, revenue were down 3.6%, reflecting notably the above-mentioned termination of 81 and 82 contracts.
Since February 26, Eutelsat has renewed multiple capacity agreements, notably with Eutelsat at the 7/8 West video neighborhood to support development of broadcast market in MENA. In Mexico with Cadena Tres, part of Grupo Imagen, and with PCTV, a leader in continued distribution of video services using our EUTELSAT 117 West A satellite. Elsewhere, Eutelsat inked a new partnership with Co-op Cable for direct-to-home and connectivity offering across the Caribbean, leveraging our EUTELSAT 65 West A satellite. Let's now take a closer look at connectivity, which accounts for 55% of our sales, well over half of our operating verticals revenue. Total connectivity revenue for the third quarter stood at EUR 155.7 million, up 15.3% year-over-year. Once again, they were driven by the strong LEO growth, up 65%.
If we look now at each vertical in more detail. Third quarter fixed connectivity revenues stood at EUR 60.3 million, up 10.6% year-on-year. They reflected the continued momentum of LEO-enabled connectivity solutions, partially offset by more challenging conditions for GEO-enabled services. Quarter-on-quarter revenues were down 12.9%. This was due to the one-off positive impact that we shared in Q2 coming from the upfront recognition of revenue relating to a capacity contract. On the commercial front, Eutelsat signed a multi-year agreement with MTN Côte d'Ivoire to deliver satellite connectivity services using EUTELSAT KONNECT high-throughput capacity. Third quarter government services revenues stood at EUR 50.4 million, up 11.8% year-on-year. They reflected continued growth in LEO-enabled solution, notably through services delivered in Ukraine, alongside rising demand from non-U.S. governments.
Quarter-on-quarter revenues were up 10%, notably due to the acceleration of LEO activities. In the fourth quarter, Eutelsat expects to recognize revenue from the NEXUS framework agreement with the French Ministry of Defence. As previously communicated, revenues will ramp over the 10-year duration of this agreement. Third quarter mobile connectivity revenues stood at EUR 45 million, up 27% year-on-year, reflecting the ongoing growth in the aero segment across both GEO and LEO solutions. Quarter-on-quarter revenues were up 8.3%. In aero mobility, a significant new connectivity agreement, powered in part through our LEO network, was announced for Japan Airlines, with more than 40 wide-body aircraft set to be equipped with a next generation of in-flight connectivity solutions. It adds to the significant numbers of aircraft already equipped and in the pipeline.
Elsewhere, Eutelsat entered a multi-year partnership with Singapore-based Can Marine to deliver maritime connectivity LEO services. Furthermore, Eutelsat and its long-standing partner, India's Station Satcom, a leader in maritime connectivity, signed an expanded multi-year, $ multi-million agreement to scale the deployment of LEO connectivity services across its global maritime fleet. Finally, Eutelsat continued to expand its portfolio of user terminals for rail applications with partners, including Kymeta and Hughes Network Systems, developing and testing dedicated rail-certified hardware optimized for the OneWeb LEO network. If we look at the backlog, it stood at EUR 3.4 billion at the end of March 26, stable as compared to end of December 25. The natural erosion of the backlog was completely offset by the renewal of Polsat video contract and growth in the LEO backlog.
It was equivalent to 2.8 times our fiscal year 2025 revenues, with connectivity representing 58% of this backlog. Let's now turn to the outlook. On the back of the performance of the first nine months, well in line with what we thought, we confirm our objective for the full year 2025/2026. Revenue of the four operating verticals in line with the level of last year. LEO revenues to grow by 50% year- on- year. Adjusted EBITDA margin slightly below the level of the one of fiscal year 2024/2025. We expect gross capital CapEx, capital expenditure to be around EUR 900 million. Following the successful completion of the capital increase in December 2025, net debt to EBITDA is estimated at circa 2.7 times by year end.
Our longer-term objectives in terms of revenue and EBITDA margin are also confirmed. I thank you very much for your attention, and we are now ready to take some questions.
Ladies and gentlemen if you wish to ask a question please dial pound key five on your telephone keypad to enter the queue, if you wish to withdraw your question please dial hash tag six on your telephone keypad.
The next question comes from Roshan Ranjit from Deutsche Bank. Please go ahead.
Hi, evening, everyone. Thank you for the presentation. I've got three questions, please. Sebastien, you mentioned in your presentation the government revenue pickup expected in Q4. Now this was around the French framework agreement. Can you remind us, is there a kind of nominal amount for the absolute framework? And what the time period for that is, please? Secondly, on to mobile connectivity and the Aero aviation installation. You highlight a connectivity agreement with Japan Airlines. Is that a pure capacity agreement? Does that also involve some installation revenues as well? And within the 600 installations that you highlight, can you give us a kind of mix as to which geographies that is predominantly based, please?
Lastly, just a kind of high level question. We've seen continued interest around the Indian market for consumer broadband. From my understanding, we're still waiting for regulatory approvals. Can you give us just a bit of an overview as to what approvals are specifically needed, and when you think you can have a service starting in that region? Thank you very much.
Okay. Thanks for your questions. We start with the government. You remember that we are with the French government, the DGA. We have signed a global frame agreement that we announced was over 10 years and around EUR 1 billion, covering both capacity and more specific projects embedded into that. The way it works is that actually as part of this frame agreement, gradually we sign firm commitments with specific deliverables. One of them we are actually about to sign very soon. Depending on the, you know, the exact timing and the final technical setup of the contract, we'll be able to recognize revenue in Q4.
We have no real doubt on the fact that we will enter that into the agreement. The exact date and the exact 20 fiscal year revenue recognition will depend on the very specifics. Overall, we do not comment on the specific size of the contract. They will keep on building up, that's for sure. We will start with revenue in Q4 that hopefully will be noticeable, but will actually it's a little bit too early to speak about the amount directly. Throughout the years, it will gradually increase year- on- year between now and the next decade.
Hi Roshan. I see you snuck in three questions rather than being limited to just two. On your second question concerns Japan Airlines. Just to be clear, we are not an integrator. The Japan Airlines contract that we allude to is via a distributor. In this case, it's SES. I think SES alluded to it on their call this morning. SES distributes LEO capacity, as do other distributors, which as you know includes Panasonic, it includes Gogo, it includes Anuvu. That is what that Japan Airlines contract alludes to. It's pure capacity as are all of the of the contracts or the LEO capacity that we sell to airlines via distributors.
Of the installations, I think some of them. Obviously Japan Airlines is one of the latest ones. Can Marine is another one. I don't have the exact the ones that off the top of my head, but it's pretty global. There are some in North America, there are some in the Middle East, obviously with JAL now, where there are some in the Far East. It's a global business, so it's not limited to any particular market. On your third question, the Indian market, we're still waiting for approval from the Indian regulator. That's the case for all of the operators who want to who want to address or to offer LEO services.
I mean, basically, I mean, in a nutshell, the approvals that we're waiting for or the green light is from the Indian regulator to give the go-ahead for operators of LEO broadband services to operate in India. Straightforward. All of the operators are in the same situation, whether it's ourselves, it's Starlink, it's Jio, it's Airtel. It's the same for all of us.
That's super helpful. Thanks so much. Any visibility on that timeframe or just wait and see?
We get asked every quarter, and we, I mean, you know, we don't know. I mean, it's no secret that we're obviously pushing very hard. We're bringing all of the influence to bear that we can, including, of course, the support of our, one of our major shareholders, but we can't comment. It's out of our hands.
Okay, thank you.
I mean, I would just add that it doesn't stop us from doing business, which is India related. Particularly, you know, we have some examples where we are, you know, dealing with and supplying Indian maritime companies. It's the kind of fixed within India that is awaiting the approval of the regulator.
The next question comes from Ben Rickett from New Street Research. Please go ahead.
Hi there. Thank you. I had two questions, please. The first question on the IRIS² Rendezvous One process. The process has been going on for a while now, and I was just wondering, like, what should we be expecting in terms of, like, how significantly the terms of the contract could change? Are they just negotiating the technical details, or could we see, you know, big changes to the contract, for example, reducing your contribution? Second question. This again is quite a sort of general question. I wonder if you could talk at all about what you're seeing in the market for capacity pricing. What sort of level you see capacity pricing at, and how rapidly that pricing is declining over time?
Particularly given the huge amount of capacity that Starlink is putting into orbit. Thank you.
Thanks, Ben. On IRIS², it's a very large comprehensive program. You have that in mind with a dual use infrastructure being put in place with several partners and different stakeholders. We cannot enter into all the details of all the discussions. Indeed, it takes a little bit more time that what anticipated. It does not mean that our portion of the contract would be anywhere lower than what we had in mind. Eutelsat is working very actively along with its partners, with the European, with the EU to make it happen. I think there is a very large commitment and engagement towards the signature of the contract itself.
I think it's also well described that the LEO responsibility is under Eutelsat's hands. With that many stakeholders, such a big contract which is a little bit unique, it does take more time. We believe it's a matter of weeks before we get to the conclusion of the Rendezvous One. Up until that, we cannot give more specific deadlines or comments on the way it will turn. Again, except that the scope is very large. We have multiple stakeholders that are all motivated to make that happen. On capacity pricing, we do not obviously comment on specific capacity price.
I think the big fee, and it's the answer is part of the question. Everybody has in mind that there will be down the road, probably other players with capacity going on. The truth is, as of today, the only alternatives to Starlink in terms of LEO capacity is with Eutelsat. We have the natural advantage of being in the first joiner to the club. On the GEO capacity, I would say here, not a lot of changes right now as compared to the overall trend.
There is a structural abundance of GEO capacity and but when you look in the detail, it's more about making sure that we have dedicated capacity in each and every of the geographical location that does require and where GEO is still the best fit for purpose. Saying that there is no pressure on price would be probably a little bit too much. You know, the strategy is in the details of what you can supply for how long, in which services and in which in which geography. I would say still and, we have multiple examples. The combination for connectivity, our GEO and LEO capabilities is also a good asset for a fair amount of mobile connectivity business in particular.
Okay. Thank you. That was Okay.
There are no more questions at this time. I hand the conference back to the speaker to conclude the call.
Just wanted to thank you for your time for this third quarter revenues that were, I think that's the headline, in line with our expectations, and I wish you all a good evening.
Thank you, ladies and gentlemen. The conference is over. You may now disconnect.