Earnings Transcript for ETL.PA - Q1 Fiscal Year 2019

Executives: Rodolphe Belmer - Chief Executive Officer and Director Michel Azibert - Deputy CEO and Chief Commercial & Development Officer Sandrine Téran - Chief Financial Officer and IT Officer

Analysts: Alexander Peterc - Societe Generale Paul Sidney - Credit Suisse Michael Bishop - Goldman Sachs Patrick Wellington - Morgan Stanley Wilton Fry - Royal Bank of Canada Sami Kassab - Exane

Operator: Good day, ladies and gentlemen, and welcome to today's Eutelsat Q1 2018-2019 Revenue Conference Call. For your information, today's call is being recorded. At this time, I would like to hand the call over to Mr. Rodolphe Belmer, CEO. Please go ahead, sir.

Rodolphe Belmer: Good evening, ladies and gentlemen, and thank you for joining us tonight on this call, where we'll present our first quarter revenues. I am Rodolphe Belmer and I am joined today by Michel Azibert and Sandrine Teran. Before looking at the numbers, let's take a look at recent key events. In August, we sold our interest in a non-core asset EUTELSAT 25B to Es'hailSat for a cash consideration of EUR 135 million in line with our policy of portfolio rationalization. We successfully refinanced our EUR 800 million January 2019 bond. This will reduce pre-tax cash interest by some EUR 24 million on analyze basis from fiscal year '20 onwards and extend our debt maturity profile. We took an important step in our strategy to extract more value from our video business with the launch of our hybrid satellite-OTT turnkey delivery solution Eutelsat CIRRUS. In broadband, we are progressively rolling out Konnect Africa service in several countries. I will return to both these topics later. As well we are members of the newly created C-Band Alliance consortium, designed to facilitate the clearing of U.S. mid-band spectrum for 5G. Finally, one set back, the latest round of contract renewals with the U.S. Government resulted in a disappointing outcome with a renewal rate of around 70%. This leads us to marginally adjust our total revenue objectives for the current year from slight growth to broadly stable. This has no impact on the other financial objectives, including EBITDA margin and DFCS which are fully confirmed for the current subsequent. More of this later. Turning to the numbers now. First quarter revenues amounted to EUR 335 million versus EUR 349 billion in Q1 '19. They included the positive perimeter effect with the impact of the acquisition of Noorsat last year, mostly offset by the disposal of EUTELSAT 25B this year, a negative impact from the implementation of IFRS 15. At constant currency, perimeter and accounting standards, revenues down by 2.7%. Excluding other revenues, the revenues of our five operating verticals on which we base financial objectives went down by 1.8%. I'll remind you that the revenue profile of the current year is back and loaded due to the ramp of Konnect Africa and the start of the China Unicom mobility contract in January. Now over to Michel Azibert for look in more detail at the operational performance.

Michel Azibert: Thank, Rodolphe. Let's take a look at the Q1 performance by application. As you all commands are on a like for like base i.e. of constant currency, perimeter and account standards. Starting with the core business, video 65% of total revenues recording Q1 revenues of EUR 217 million, down 1.7% versus last year. Government services 13% of revenues. So revenues of EUR 42 million up 4%. Fixed data now 10% of group total, so revenues of EUR 33 million, down 12%. Turning to connectivity. Fixed broadband 6% of our revenues to that EUR 20 million, a decline of 7% year-on-year. Mobility 6% of revenues as well. So revenues of EUR 21 million, up 11%. Finally, other revenues to that EUR 1 million, there is no extrapolation to the right from this figure given the length nature of this line of revenues. Let's look at each vertical in more detail. First video, the 1.7% decline in revenues reflected; one, high single digit decline in professional video; and, a lower contribution from FRANSAT. As a reminder, FRANSAT in our French DDT platform. Its activity was marked by a peak in card sales related to the HD transition in France two years ago and it's facing the decline of the pendant license revenues. Excluding these two factors, core broadcast revenues were stable. At the end of September 2018, the total number of channels broadcast by Eutelsat satellites stood at 6,999 up 3.6% year-on-year. Excluding the impact of the disposal of EUTELSAT 25B, they would have been by 4.9%. The number of HD channels stood at 1,419 versus 1,210 a year ago, up by 17%. It represented the penetration of 20.3% of channels up from 17.9% one year ago. During the quarter, a multi-year contract was signed with Orange Slovensko in Slovakia for a capacity on EUTELSAT 16A to broadcast a new platform. This contract is a further illustration of the role of satellite for telecom operators seeking to extend the reach of the offers beyond that of terrestrial networks. Thanks to this contract as well as other business opportunities in the pipeline. Trends in broadcast are expected to improve in the coming quarter. Let's take a look at trends on HOTBIRD. Channel count was broadly stable at 998 channels at the end of September. Over the quarter, the number of MPEG-4 channels rose by 1% to 578. This growth rate was slower than the ramp up in HD channels at plus 4% to 341 channels. Yet MPEG-4 remains considerably more advanced than HD with a penetration rate of 58% versus 34% for HD channels. As a result, the consumption of megabit per second at HOTBIRD was up 1% in the quarter. Government services revenues stood at EUR 42 million, up 4.2% year-on-year. This performance reflect the carry forward effect on the renewal campaigns of fiscal year of '17-'18 with the U.S. Department of Defense and incremental business secured at the 174 East orbital position last year. However, the latest round of contract renewals with the U.S. government autumn 2018 result in a lower renewal rate of circa 70% in value. This outcome is principally due to the non-renewal of a single sizable contract with a specific service provider and it does not reflect the underlying market trend which has seen an improvement in recent quarters. On Fixed Data, first quarter revenue stood at EUR 33 million, down 12% year-on-year. They continue to reflect the ongoing pricing pressure in the highly competitive environment in this application in particularly in Latin America. Fixed Broadband revenues were down 7.3% year-on-year. It is partially due to the expiring of a contract with the Middle-Eastern customer for one spotbeam on EUTELSAT 3B which has been re-contracted to Taqnia in the Mobile Connectivity vertical. And it continues to reflect lower revenues in European broadband in a context of scarcity of available capacity in Western Europe. This quarter as in the launch and progressive rollout of the commercial service of the Konnect Africa broadband service, the contribution to revenues will start to be visible in the second half of the current financial year. Turning to Mobile Connectivity. First quarter revenues were up strongly at almost 11% year-on-year, reflecting the new contract with Taqnia at 3 degrees East and 70 degrees East secured in July. They entry into service of EUTELSAT 172B at the end of November of last year and the ongoing ramp up of capacity contract on KA-SAT. In the second half of the year, this is vertical will benefit from the stop of the UnicomAirNet contract on EUTELSAT 172B in January 2019. Turning to the fill rate and backlog, the number of operational 36 MHz-equivalent transponders stood at 1,416 at the end of September '18, down by 11 units versus the end of June '18, reflecting the disposal of EUTELSAT 25B. The number of utilized transponders was up by 5 units quarter-on-quarter. The main contributor to quarterly growth being the ramp up of EUTELSAT 174A. As a result, the fill rate stood at 69% at the end of September versus 68.1% at the end of June. The backlog stood at EUR 4.7 billion at the end of September 2018 versus EUR 5.2 billion a year earlier and EUR 4.6 billion at the end of June '18. The year-on-your decrease is due to the impact of the integration of Noorsat, representing a negative delta EUR 400 million. The quarter-on-quarter increase reflects the inclusion in the backlog of the commitments from Orange and Thales on KONNECT VHTS. This more than offsets the perimeter effect related to the disposal of EUTELSAT 25B, the slightly negative effect of change in accounting standards as well as backlog consumption. The backlog was equivalent to 3.4x 2017-2018 revenues with video representing now 77%.

Rodolphe Belmer: Thank you, Michel. Let's turn now to the outlook. Starting with the quick remainder of our key priorities for fiscal 2019 and the progress we have met so far. Our cash generation lead is fully interact to deliver its targeted EUR 30 million in savings by the end of this year. We are secured EUR 24 million in pre-tax internet settings from fiscal 2020 onwards through the recent bond. The disposal of our interest in EUTELSAT 25B was conducted at a high single-digit EBITDA multiple. We are continuing our CapEx optimization strategy with the replacement of the HOTBIRD constellation at highly compelling terms and the signature of a long-term service agreement with Arianespace, covering five launches until 2027, providing cost-effective, assured access to space with schedule flexibility. At the same time, we continue to lay foundations for future growth in video with the launch of Eutelsat CIRRUS and continued rise in HD penetration leading to a 4.5% rise in megabit per second conception at key video positions. With Fixed Broadband with a commercial launch of Konnect Africa and ongoing buildup of our VHTS strategy in Europe. A brief reminder on our asset disposal program of the past couple of years and that streamlining our business portfolio with the disposal of non-core assets at attractive terms. They include the America in service business Wins/DHI, 49% of KSAT to ViaSat, 54% stake in Hispasat, and a couple of months ago, our minority interests in the EUTELSAT 25B satellite. Collectively, these operations have generated over EUR 600 million contributing to an accelerated deleveraging. A quick remainder now on Eutelsat CIRRUS. CIRRUS is a Greenfield platform aimed at providing technical solutions to the evolving needs of our customers in particular the rapid deployment of video content through DTH and OTT, a consistent end-user experience on all screens and then reached branch of services. As such, it is designed to deliver the turnkey end-to-end video distribution solution including cloud-based service management and materialize platform among clients. The seamless multiscreen end user experience enabling straightforward combined DTH OTT offers, thanks to a native hybrid platform. The flexible and evolving feature sets including Best Practice Security Solutions BPG service and catch up, start over in seven days VOD recommendations and targeted advertising. Its business model is fully scalable with modest growth CapEx and OpEx. It means that our customers can access, simplify delivery logistics, materialized costs allowing economies of scale and of-the-shelf solution and a portfolio of optional services to enhance the viewer experience. The all out of CIRRUS is an important element in leveraging the value creation potential of our video vertical by deepening our customer knowledge and enhancing customer loyalty. It also opens up the potential for incremental revenue opportunities with new platforms of projects to launch the mobile app to complement DTH distribution by up selling within existing customers and monetizing a share of the additional value provided by the new services. Turning to Konnect Africa. As a reminder, Al-Yah 3 capacity at the end of the first quarter. Finally, enabling the commercial service of the Konnect Africa broadband service to be progressively rolled out. The service is currently available in eight countries and will gradually be extended to 19 countries in sub-Saharan Africa. Digital markets response is very positive with keen interest from both additional telecom service providers and more capillary local retail partners. At this stage, more than 10 distribution agreements have been signed notably with China Telecom in South Africa, [indiscernible] in Nigeria. And we are working on the pipeline of some 20 potential additional distributors with which we are in advanced discussions. Revenues are expected to ramp up in the second half of the current fiscal year. Turning to the outlook. The underlying trend of the five operating verticals is broadly in line with our expectations at this stage of the year with gross set to resume in the second half. I will remind you the revenue profile of this year is backend loaded June notably to the timing of the wrap up Konnect Africa and the contract with China Unicom. However, the unexpectedly low outstand of the full renewal campaign in government services next the objective of a return to slag rules for the year, as a wall challenging and in sequence we are adjusting our revenues expectation to broadly stable with the return to slight growth now expected from fiscal 2020 onwards. All our financial objectives notably the EBITDA margin and discretionary free cash flow are conserved. There are few words to conclude. The global performance of the operating verticals in Q1 was broadly in line with our expectations at this stage of the year. In particular, Core Broadcast revenues was stable. We took concrete measures to optimize cash generation with the bond refinancing and the disposal of EUTELSAT 25B as well as the HOTBIRD procurement and the multi-launch agreements with Al-Yah heading the way for future CapEx efficiency. Our current year topline objective is adjusted to take account of the one-off contract loss in government services by one of our distributors, which is not representative of the old clients in these vertical. Dislike adjustment has no impact on our ability to obtain our order financial objectives which are all confirmed for the current and coming years and in particular our ability to serve this stable to growing dividend. In sum, as expected, our top line performance remains modest in the years running up to the return to growth driven by connectivity. And during this time, we'll continue to successfully apply our strategy focus on cash flow optimization, deleveraging and de-risk shoulder revenue. I thank you for your attention, and we are now ready to take your questions.

Operator: [Operator Instructions] We go first to Alexander Peterc of Societe Generale.

Alexander Peterc: Yes. Hi. Good afternoon and thanks for taking my question. So just first at the general level, can you just confirm for the first quarter were down for your operating verticals 1.8% and that to me looks a little bit weak, can you confirm that is truly in line what you would expected anyway? Then secondly, I'm not sure I fully understood, we had been confronted, you could explain a step to a new element and step to go into way going forward in video? Third question would be on HD, why did go backwards in this quarter sequentially in terms of HD channel counts, this is the first decline in 17 quarter, so basically full-years a continuous growth, why have this reversed while your overall channel count is actually up? And then finally on the crucial question of governments. The low renewal rates is that going to start impacting revenues as of the next quarter which is really visible now, if you just quantify a little bit this contract loss to us? Thank you so much.

Rodolphe Belmer: Thank you, Alex for all these questions. On your last one which is the renewal rates, the contract that we last in a government service vertical with stock materializing and have an impact as of next quarter, it was not included in this in Q1. Second on the high definition, we continue to do extremely well and to progress very rapidly. It's true if you look in absolute terms, you see on the sequential basis, the slight erosion which is due to the fact that as we said, we have sold one of our satellites which is EUTELSAT 25B which had some HD channels on board. And if you look all things exploiting this perimeter effect obviously our HD count would have grown substantially. Noorsat, it's our French GTG platform. As a reminder to years ago, there was a peak in the card sales related to do HD transition in France, we sell a smartcard, that's the business model of this GTG platform which is free. Cost to generate license revenues for a couple of years that's our revenues. And this revenue stream has no rolled up which explain the drop in revenues. And revenues as you can see probably is - as you cannot see actually are stable sequentially and that's why this trend is expected to improve in the second half. Last question which was your first one, the 5 operating verticals where in decline of 1.8% in Q1 which is exactly - which is in line with our own budgets assumptions. As we always said, the revenues of this fiscal year was expected to be back-end loaded, why because many elements play in the direction. First we have the China Unicom contract which are still service in January. Second, we have to wrap up our Konnect Africa initiative which is also starting now and which we get traction during the course of the year. And there is the increase of our window video business which is also expected to be sort of staggered during the course of the year. And for all those reasons, we expected as we said already year let's hear the first whopper which will be weaker than the average of the year.

Alexander Peterc: Okay. Thanks.

Operator: Up next, we'll go to Credit Suisse, Paul Sidney.

Paul Sidney: Yeah. Thank you very much. I have three questions please. Just on the last government contracts, can we just dig into a bit and why you lost the contract and whether it - the fact that you couldn't deliver on price or capability, just a bit more detail around that please? And then secondly, you mentioned that the low re-contract rate in the fall campaign was mainly due to this contract one-off, does that suggest that actually excluding that contract one-off then you still wouldn't have a re-contract rate lower than me then the spring I think it was 95%? And then just lastly, just trying to pull together the moving parts in the guidance, broadly stabled, is the starting point more than 1330 million to five verticals and then we add in other and then we would add in any potential FX benefit which I think is EUR 5 million per cent move in the FX rate, is that right way to think about for full-year? Thanks.

Rodolphe Belmer: Thank you, Paul. On your first question on the government contract, it's a very specific contract that we lost, very sort of pre-size event which has we seek nothing to do with the price of the capacity or the quality of the capacity. And then maybe I will turn to Michel Azibert to give you a more color on that event.

Michel Azibert: Well the contract was lost by one of our service providers to the benefit of another one. The service providers were using our capacity in different regions of the world for specific services and the new contractor in fact is own capacity. So it has in fact nothing to do with price, it has to do with the package of technology provided by the winner of the U.S. government contract. We should maybe add that, it was a not a recomplete, it was just a renewal. So for us it was extremely difficult of course to anticipate the loss of these renewal and in fact it was in need also was difficult to anticipate from ours.

Rodolphe Belmer: Thank you, Michel. And that's why we say clearly that we think it's a very circumscribed event specific event. On your second question, we should exclude the renewal rates we would have add with U.S. Department of Defense during this full campaign, would have been similar exactly the same activity as the one we had last year which was actually 95% in value terms. On your last question, on our guidance of revenues for this fiscal year, this is of guidance we give for the total of the five operating verticals. And actually we think it will be a broadly stable that's 4 to 5 operating verticals. The other revenue line is not included anymore in the scope of the guidance because it's very lump in nature and more difficult to predict on the quarter-on-quarter basis.

Paul Sidney: Thank you. So just a follow-up…

Sandrine Téran: I would just have thought to answer your first question on figures. That you are right to basis, the base, the pro forma basis fiscal year 2018 that you should look at is the 1330 figure that you mentioned and that you can find you last table of our press release. So this is the difference pro forma for 2018 for the five operating verticals as all those just mentioned. And you are also right considering that you should take into account, the impact of the valuation. So the average rate for fiscal 2018 was 119 and you know that we have an impact of 4 million to 4.5 million of variation. And you should also add of fiscal 2019 data one quarter of no effect which is due to the profile valuation. You should need more information on the way we do the pro forma. Please call, we will be happy to help you.

Paul Sidney: It's great. Thank you very much.

Operator: Up next from Goldman Sachs we go to Michael Bishop.

Michael Bishop: Yes. Thanks. Good evening. Just a couple of questions for me. Just quickly following-up on the guidance question. I mean could you confirm broadly stable as is effectively platform from that 1330 base and it feels like given videos bit weak in the expectations and government weaker than expectations and response to the earlier question, that you're running at some minus 1.7 in the first quarter, I'm just struggling to quite get back to that based on the new guidance? And then secondly, could you just give us an indication of whether we should expect really expect video to be stable at any point in the year because I think you'd said that you'd expect video to stabilized, but it seems it consensus at least the FRANSAT impact is incrementally negative? Thanks so much.

Rodolphe Belmer: Thank you, Michael. Maybe I should start answering to your second question, regarding video. First, I would like to say that the broadcast segment which is the core of our video segments, the vast majority of it by far is stable. And I like to underline it because in that respect we'd be a quite differently to the rest of the markets for two main reasons. First, we have a quite different geographic exposure and second, we are mostly which is very important DTH and when I say mostly, it's 90% DTH, which creates a completely different context for video business. Second our video business is expected to stabilize slightly grow, why, because it's true that we have some headwinds with the professional video which is shrinking and as FRANSAT which has also headwind on us. But the broadcast segment is expected to grow. First, we have new contracts that we expect and that will materialize during the course of the year. First of those being the contacts that website was Orange Slovensko which we have said already, we've communicated on and which will bring incremental revenues during the course of this year. And that also some of contracts of the same kind that we expect in the next few weeks and that we cannot comment on at the moment. And second, we have some areas when there is growth embarked in our business at two orbital positions. One orbital position is 28 degrees East, it's our position of - to Great Britain, which is doing very well for us. We said, we communicated in public, last year that we actually renewed a contract in very favorable terms in this region, which is true and it's materializing this year with enhance revenues. And second, there is hotspot at a 7, 8 degrees West for the MENA for Middle East and Africa which is also growing for the - on the back - in majority of increased, I underline that increased price. And that's what - that's one of the major reason why we can stage that our revenues for the five Operating Verticals for this year will be - would be broadly stable because the video is expected to be well as I said. And second, we have some amount of growth which will materialized in other verticals during the second half of the year. Mobility, the mobility segment will continue to grow quite significantly on the back notably of the China Unicom contract which is around bringing Wi-Fi for planes in China. And second, on the development of our broadband segments with the positive ramp of all African broadband initiative which is in the early phase only know and which is growing from this base.

Michael Bishop: And so if I could just follow-up, it sounds like you're saying the video all in including pressure broadcast headwinds and including the FRANSAT headwinds can stabilize in FY 2019?

Rodolphe Belmer: Yes, that's what I said you, exactly that's why I said you, which I articulate exactly.

Michael Bishop: Yeah. Excellent. Thanks very much.

Operator: [Operator Instructions] We go to Patrick Wellington of Morgan Stanley.

Patrick Wellington: Yeah. Good evening. Rodolphe, a couple questions. I think this is three guidance downgrades now out of five quarters, and they're also very specific reasons but does that not give you the impression of business is a bit fragile, you're very exposed to what is really quite a small contract loss at this stage, your guidance seems very accurate, so you might want to talk around that a little bit. Secondly, the loss of the government contract, you say this is circumscribed an unusual event. It's actually true because if you look at your HOTBIRD business for instance, your problems with the HOTBIRD Purge because you were over reliant on distributors because of the nature of the company and you said at the time you don't mind that that's why people Noorsat. And then on the government side, you are not main contractor, you haven't got the special clearances, so you're reliant on distributors. So on these things generic to the nature of the business. And then my third question was just on six broadband. Your original targets for Africa broadband in the first year was EUR 15 million. I know you said that might not be possible, can you give us some sort of scale how much that might contribute this year? And staying in the same business but the other side of it on KA-SAT you are getting a shift I think from retail to more wholesale sales this year after the issues with FRANSAT, how's that process going? Thanks.

Rodolphe Belmer: Thank you, Patrick. On your first comments regarding our guidance, well I don't want to be a PT or to contract for the sake of consolidating but I wouldn't say that it's three result of five because during the last quarter of last year, we said we might miss it, but actually we made it which, it's true that in broader term, it's true that our business relies on a relatively small number, it's discrete number of contracts which can create some bumps in the revenue lines, especially in moments where the demand that strong that it used to be to for industry overall. But well what we try to do and I think we would do that quite effectively is that during the time when our revenue line - our revenue growth remained noticed, we are concentrated on the - below the line KPIs, EBITDA, cash flow and we are pretty effective at guiding on those metrics which are fully in our control and delivering and a very ambitious objectives It's not very humble to say that but very ambitious objective that we have set to ourselves. And we think in that sense we deliver quite effectively on the objectives and strategy we have communicated to the outside and to the financial community. And I would say our company in the sense it is extremely rubbish at the time being and given the circumstance of the context of the markets that we are going through In the government segments, the renewal rates that we had if we accept circumscribe situation that we have described, the renewal rate is very good. It's coming at 95% which means that our strategy works and we are doing reactively well in that segment. Our Q1 has been good also, it's in progress of 4%. And in terms of when you look at our distribution strategy on broader terms, when you look at our performance, I would say that our distribution strategy in general data is very well. We have am EBITDA margin which is one of the record in our industry and it's growing. We are now reaching levels which are above 78%, which are very good and we are progressing. And second, when you look at the feed rate of our satellite and when you look at the return on capital employed of our company, all this KPIs which are extremely important in terms of what kind of value we create. They are extremely well oriented. And the reason for that is that we have a business model which is extremely lean and extremely efficient and which is directed we are saying is to maximize deferred rates of our satellite by resulting to as many distributors as we can to bring the commercial strength to bring the efforts we need to fill the capacity of the satellite together with minimizing the cost of operations for ourselves meaning that we think that it's low risk, high return policy and it's fact proven. On the government - on the sorry fixed African Broadband initiative, we have never given specific objectives for this initiative. It's true that two years ago, we quoted of EUR 15 million when we had this incident with almost six which are the launch failure which we had to give a sense of the kind of business that was up stake and that we lost because of this launch failure. We now have a better understanding of the African market. We have a much deeper understanding of the markets demand and our ability to ramp the business. I would say that we stay on the same kind of ballpark figure even so we are a bit lower than the 15 million that you have quoted. And lastly, I would say that we even though it takes time because it's a new avenue of growth for us, it's a new geographic areas for us and in a new vertical meaning that takes time to roll out effectively that business. We remain extremely positive on the business potential and we had very positive and coaching and even on statistic response for distributors and from the markets from the ad market in Africa over the past few months. On KA-SAT, it's true that we are now optimizing our distribution strategy since the unwinding of our ambitious with the asset and we are developing a new set of distribution approaches and notably refocusing our efforts towards building to do wholesale distribution strategy in Europe with specialized distributors but also with big telcos. We mentioned that we sized for KONNECT VHTS a very significant wholesale deal with in France and we have been able for KA-SAT to see this to add on deal with a very large telco that we're not allowed to mention for a confidential reason. We didn't allow us to mention the name, but it's a very big telco that we signed with the same kind of approach for KA-SAT in Europe.

Patrick Wellington: That's great. Very comprehensive. Thank you.

Operator: Up next we have Wilton Fry with Royal Bank of Canada.

Wilton Fry: Yes. Good evening. You've said the video business is stable but from a reconcile statement with rapidly fall in proportion of the backlog that's video. You said 77% of video is going to back of that EUR 3.6 billion that was EUR 4.5 billion this time last year, has about 20% of your backlog on in the year, I guess can be NOORSAT but even doesn't sound very stable?

Rodolphe Belmer: Well, I reiterate, I cannot say more that the video business, the broadcast business is stable and the video segment is expected to be stable to slightly growing this fiscal year. And if you like bring even more thought on that and I think it's a very important point given the context of our industry. We are different on that front, we have different strategy and we perform extremely well with very strong positions. Second, our backlog has evolved actually and it's true that video represents a smaller share of our backlog with 77% only instead of 83% the last quarter, we communicated and that. It's because we have signed new contracts which are very important into mobility segments. And in the mobility segment, contractor are also very important in size and are very important directions which means that increasingly the mobility segment will represent an important size, an important portion of our backlog. Now if you look at the backlog in the video segment, we have the natural consumption as usual and we have more specifically the effect of no such integration which represented a significant portion of our backlog into past and there is also the divestiture of the satellite EUTELSAT 25B which was a video satellite that we sold out to our co-owner and which has obviously an effect at - on the backlog that we don't provide at constant perimeter.

Wilton Fry: Okay. Thanks.

Operator: [Operator Instructions] We go to Sami Kassab of Exane. Your line is open.

Sami Kassab: Yes. Good afternoon, good evening, everyone. Have three question as well. The first one, you may have said it twice on the call, but could you repeat it third time because I'm still confused. Do you still expect video to return to slight growth this year? Are you now guiding for slight growth in the core broadcast with the whole video being just rolling stable?

Rodolphe Belmer: That's only one question, Sami.

Sami Kassab: Yes, yes. But it's most important one.

Rodolphe Belmer: Okay. Video, well I can regenerate what I said. What I said is that the broadcast segments is stable meaning that our Q1 revenues, our broadcast segment is stable. Now if you look at the entire fiscal year 2019, we expect the video segment as a whole, broadcast plus the other very small segment propositional video notably two in total be stable to slightly growing, that's what I said. And why are we expecting this profile? First, we are different, DTH and different geographical exposure than the rest of the market. Second, we have new revenues coming from new Pay TV platforms that we have been able to sign. The first of those being Orange Slovensko that we have communicated and we have some of them a few of them still in the pipe coming into next few months. And lastly, we are growing revenues at some orbital position MENA, we are growing and why are we growing, because we have been able to increase price in this region which is very important for us. It represents roughly one quarter of our video revenues. Russia is well oriented also and Africa I'd like to align it also because we might also be different in that geography. Africa is also well oriented. And for all those reasons, we believe at this point in stage that the video segment in total will be well oriented for this fiscal year.

Sami Kassab: Very clear. Thank you, Rodolphe. So I can ask my second question now. This afternoon in KA-SAT mentioned that you saw a stabilization in capacity pricing in the networks division. Are you seeing a similar trend in your fixed data and connectivity business, can we think pricing be more stable there for HTS capacity?

Rodolphe Belmer: No. Unfortunately, no. We have communicated on our fixed data, the revenues which are down 40% year-on-year if my memory is correct. The vast majority of that - the 12% sorry - the vast majority of that is a price driven, meaning that the volume are stable but and the negative drag that we have on the revenues of this vertical is maturity pricing.

Sami Kassab: Thank you. And the last one, do you still expect fixed broadband to return to revenue growth in this fiscal year?

Rodolphe Belmer: I don't think we have communicated in that. It will improve, the business profile will improve substantially but I don't think we have given any indication on the fixed broadband.

Sami Kassab: You want to do one now or shall I, what?

Rodolphe Belmer: Well, it will be - I would say it would be more than stable. H2 will be growing high single-digit and well if you make the math, you can end up yourself with a sort of average for the fiscal year.

Sami Kassab: Many thanks for those.

Rodolphe Belmer: Thank you, Sami.

Operator: And it appears there are no further questions at this time. I would like to turn the conference back over to our presenters for any additional or closing remarks today.

Rodolphe Belmer: No closing remarks for me. Thank you very much for participating and talk to you in three months' time from now at maximum.

Operator: Thank you. And again ladies and gentlemen, that does conclude today's conference. We thank you all for joining.