Eutelsat reported first-quarter revenue of €286 million for fiscal 2026-2027, down 0.9% on a like-for-like basis, as continued growth in low Earth orbit, or LEO, connectivity partly offset declines in video and fixed connectivity services.
Chief Executive Officer Jean-François Fallacher said the quarter was in line with the company’s expectations and supported its confirmation of full-year financial objectives and longer-term targets. LEO revenue increased 30.1% year over year to €70.9 million, driven by higher service revenue across connectivity activities.
The company also highlighted the start of the construction phase for the European Union’s IRIS² satellite program. Eutelsat said the milestone added €8.9 billion of construction-related revenue backlog, contributing to a total backlog of €12.1 billion as of Sept. 30, 2026.
Connectivity Growth Offsets Video Pressure
Revenue from Eutelsat’s four operating verticals declined 2.1% on a like-for-like basis. Video, which accounted for 40% of revenue, fell 17.8% to €110 million. Chief Financial Officer Sébastien Rouge attributed the decline to the carry-forward effects of contract renewals, customer capacity optimization and the termination of capacity contracts on the Express AT1 and AT2 Russian satellites.
Fallacher said the effects of those factors should lessen over time, with video revenue expected to return toward underlying market trends in the short term. The company renewed video distribution agreements with Record in Brazil, A1 Group in Central and Eastern Europe, and Télédiffusion d’Algérie during the quarter.
Connectivity revenue rose 11.9% to €168 million, representing 60% of revenue from operating verticals. Mobile connectivity was the fastest-growing segment, with revenue up 38.1% to €48.3 million, led by aviation connectivity and continued adoption of LEO services in maritime markets.
- Fixed connectivity: Revenue fell 4.6% to €59.6 million amid more difficult conditions for GEO-enabled solutions and lower LEO terminal sales.
- Government services: Revenue increased 14.3% to €60.3 million, supported by the CENTAURE call-off contract under the French Ministry of the Armed Forces and Veterans’ NEXUS framework, services in Ukraine and demand for sovereign connectivity.
- Mobile connectivity: Revenue increased 38.1% to €48.3 million, with growth in both GEO and LEO aviation solutions.
In fixed connectivity, Eutelsat announced a partnership with Portuguese telecom operator MEO to expand OneWeb LEO services. It also expanded a GEO capacity agreement with EuroSkyPark to provide connectivity for offshore energy infrastructure in the North Sea.
The company said it does not currently face supply-chain bottlenecks for terminals. Fallacher said service revenue accounted for the larger share of LEO growth in the quarter, while terminal sales were lower, adding that increased terminal deployment would support longer-term service revenue growth.
IRIS² Construction Program Adds Backlog
Eutelsat said the IRIS² program has moved from definition into industrial execution. The company will design, deploy and operate the LEO component of the broader multi-orbit European sovereign connectivity system as part of the SpaceRISE consortium.
The planned LEO constellation will include 264 dual military Ka-band and Ku-band satellites and 66 military Ka-band satellites. Eutelsat expects the system to provide more than 2 terabits per second of sellable commercial LEO capacity by mid-2032, more than twice the capacity of the current OneWeb constellation.
Total IRIS² program funding is €15.6 billion, with 74% publicly funded, according to the company. Eutelsat’s capital expenditure commitment totals €3.4 billion, including €2.23 billion for shared infrastructure and €1.16 billion for its commercial payload. Those investments are expected to be deployed between fiscal 2027 and fiscal 2034.
Rouge said the €8.9 billion included in backlog represents Eutelsat’s portion of the EU contract for activities under its responsibility. Revenue will begin with engineering and design work before increasing with satellite manufacturing and launch services. The company recognized €5 million of IRIS² construction revenue in the first quarter.
Management stressed that construction activity will carry a low margin compared with Eutelsat’s service businesses. Rouge said the company plans to report IRIS² construction revenue separately to allow investors to compare the underlying performance of its existing operations.
The company expects construction revenue to become material during the current fiscal year, reaching hundreds of millions of euros, though the recognition pattern is expected to be back-end loaded as manufacturing and launches progress. Most of the €8.9 billion is expected to be recognized over roughly five years.
Outlook Maintained
Eutelsat reaffirmed its fiscal 2026-2027 outlook, projecting LEO revenue growth of more than 30%. The company expects LEO growth to offset continuing declines in GEO and video revenue, resulting in slight growth in revenue from the four operating verticals and an EBITDA margin broadly in line with the prior year.
Gross capital expenditure is expected to be about €1.2 billion this fiscal year, reflecting timing shifts from earlier years and the ramp-up of spending to renew the current OneWeb constellation.
For the year ending June 2029, Eutelsat maintained its revenue target range of €1.5 billion to €1.7 billion, excluding IRIS² construction revenue. It expects operating leverage to lift EBITDA margin above 60% by that point.
Fallacher said OneWeb is expected to reach EBITDA breakeven in the current year, after previously consuming EBITDA. He added that the commercial portion of IRIS² is expected to be fully operational by mid-2032, with customers progressively migrated from the current OneWeb system through 2034.
Eutelsat estimates that IRIS² could support €10 billion in service revenue from 2032 through 2040. Management said the primary strategic rationale for the project is to secure next-generation LEO capacity and extend the company’s growth opportunity beyond the capacity constraints it otherwise could face around 2032.
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