Hispasat revenue grows but EBITDA falls on satellite delay
March 24, 2017
PARIS — Satellite fleet operator Hispasat on March 24 reported a 4.2 percent increase in revenue for 2016 but a dip in EBITDA margin because of the costs of leasing a satellite to make up for a satellite that was years late in being put into service.
Madrid, Spain-based Hispasat is one of the operators that has been the most affected by delays in satellite production and launch.
The Hispasat 36W-1 satellite, launched in January, was three or more years late following multiple delays at its manufacturer, OHB SE of Germany. The satellite was the inaugural model of OHB’s SmallGEO satellite production line, which has been financed in part by the European and German space agencies.
Third-party capacity lease to mitigate satellite delay effect
To compensate for the delays, Hispasat was forced to look for temporary third-party capacity and eventually struck an agreement with Paris-based fleet operator Eutelsat — a major Hispasat shareholder. Eutelsat in 2016 moved its Eutelsat 12 West A satellite to 36 degrees west longitude after concluding an agreement with Hispasat.
For the 12 months ending Dec. 31, 2016, Hispasat reported revenue of 228.9 million euros, up 4.2 percent from 2015 — an increase that compares favorably with the 2016 performance of other fixed satellite services providers — especially given the satellite delay issues.
EBITDA, or earnings before interest, taxes, depreciation and amortization, was 76.7 percent of revenue. Hispasat said the EBITDA margin would have been 81.2 percent were it not for the costs associated with leasing capacity while waiting for 36W-1 to launch, and the cost of moving customers to new spacecraft.
The company said its backlog stood at 1.49 billion euros at Dec. 31, or 6.5 times 2016 revenue, a ratio it said was “one of the best in the sector.”
Capital expenditure in 2016 totaled 168 million euros, mainly for the three satellites that were under construction.
Hispasat President Elena Pisonero said 2016 was “a very intense year in which the company faced several challenges and unexpected situations, but even so we were able to overcome them and keep growing our revenue.
“Despite the complicated situation in the satellite market, Hispasat continues to be one of the most profitable and efficient operators in the sector,” Pisonero said in a statement on the financial results.
Hispasat owner Abertis of Spain and Eutelsat have been in long-drawn-out negotiations on a price for Eutelsat’s 34 percent stake in Hispasat. The transaction is expected to occur this year. In February Eutelsat told investors that the negotiations had entered into an arbitration phase to set a value for the Eutelsat shares.
Little clarity in launch schedules with SpaceX, ILS
Near-term revenue growth will come from the launch of two satellites that Hispasat says should launch in 2017. But here, the bottlenecks are with the launch-service providers and not the satellite manufacturer.
The two satellites are scheduled for launch on SpaceX Falcon 9 and International Launch Services (ILS) Proton rockets. Both vehicles are coming off periods of inactivity due to previous issues — a September failure at SpaceX, an autumn discovery of substandard components used by a Proton motor builder.
Reston, Virginia-based ILS said earlier this month that Proton’s return to flight should occur in April or May, and that Hispasat’s payload is one of three missions the company hoped to perform before the end of the year.
SpaceX has already returned to flight but is managing a crowded manifest of customers awaiting launches. It is unclear where Hispasat stands in the SpaceX manifest, which includes the U.S. Air Force and NASA in addition to commercial customers.
Peter B. de Selding