Earnings Transcript for ETL.PA - Q3 Fiscal Year 2018

Executives: Rodolphe Belmer - CEO Michel Azibert - Deputy CEO Sandrine Teran - CFO

Analysts: Sami Kassab - Exane Alexander Peterc - Societe Generale Paul Sidney - Credit Suisse Michael Bishop - Goldman Sachs Wilton Fry - Royal Bank of Canada Nick Dempsey - Barclays Patrick Wellington - Morgan Stanley Laurie Davison - Deutsche Bank Giles Thorne - Jefferies

Operator: Good day, and welcome to the Eutelsat Communications Third Quarter 2017-'18 Revenues Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Rodolphe Belmer. Please go ahead, sir.

Rodolphe Belmer: Good evening, ladies and gentlemen, and thank you for joining us on this call where we will present our third quarter 2017-2018 revenues. I am Rodolphe Belmer, CEO, and I'm joined by Michel Azibert, Deputy CEO; and Sandrine Teran, CFO. First, a word on key events since the beginning of 2018; third quarter revenues of €337 million were down by 1% like-for-like excluding other revenues, i.e., revenues not directly linked to the commercialization of satellite capacity. I will come back to that later. Since the start of 2018, we have continued to make headway on our strategic roadmap. The procurement of KONNECT VHTS represents a major milestone in our growth strategy in connectivity, and comes with significant multiyear distribution commitments with Orange and Thales. I will also come back to that later on. After much efforts, the sale of our Hispasat stage has been finalized for the original agreed consideration of €302 million, an important step in the rationalization of the asset portfolio and towards maximizing cash generation and accelerating de-leveraging. As well, as we signed a landmark MoU with China Unicom and that's addressing the satellite communication market in the framework of the best and Belt and Road initiative. And more broadly, we delivered a solid performance notably with DoD Spring renewals standing at above 95%. A quick word on total third quarter revenues, which stood at €337.4 million; on a reported basis they were down 7.4%, reflecting a negative currency effect of five points, barely offset by a positive perimeter effect of one point reflecting the acquisition of Noorsat consolidated from October 2017. At constant currency and perimeter, they were down 3.3% year-on-year. And as highlighted above, excluding other revenues, the performance of the five operating verticals declined by just one percent at constant currency and perimeter. This represents a marked improvement versus on December when the decline was 1.8%. Quarter-on-quarter, revenues were down 2.9% on a reported basis, and by 1.8% on a like-for-like basis. Excluding other revenues they would have been broadly stable. Before handing over to Michel Azibert, a reminder of the commercial highlights, in government services, the outcome of the spring renewal campaign was the U.S. administration was favorable at a rate comfortably above 95% in value terms. Further contracts were secured in government services at the 174° East orbital position. The majority of the 17 Ku of operational transponders available at this orbital slot are now contracted, paving the way for a further ramp up of revenues from the beginning of next fiscal year. We secured the reservation of a significant portion of the capacity on EUTELSAT QUANTUM by the DoD service provider, Peraton, meaning this satellite is now largely reserved. In Video, at HOTBIRD, we secured a multiyear capacity agreement with Mediaset to accelerate its transition to HD, as well as a multi-transponder renewal with TVN of Poland at favorable conditions. And in the framework of the MoU with China Unicom, it's unit called UnicomAirNet, UAN, purchased the remaining HTS capacity on EUTELSAT 172B, representing a total backlog of over $100 million. Now, over to Michel Azibert to take a closer look at the Q3 performance by application.

Michel Azibert: Thank you, Rodolphe. As usual, all comments are on a on like-for-like basis. Starting with the core businesses, Video, 67% of total revenues recorded Q3 revenues of €225 million, down 0.2% versus last year, and up by 0.2% on a quarter-on-quarter basis. Government services, 11% of revenues, saw revenues of $38 million, down 2.3% on a yearly basis, and down 1.5% quarter-on-quarter. Fixed Data, now 10% of group total, saw revenues of €35 million, down 9% year-on-year, and by 1.6% quarter-on-quarter. Turning to Connectivity, Fixed Broadband, 7% of revenues through the €22 million, a decline of 7.7% year-on-year, and 0.7% quarter-on-quarter. Mobility, 5% of revenues, saw revenues of €18 million, up 17.9% versus a year ago, and down by just under 1% sequentially. Finally, in this quarter, there were no other revenues compared with €7.5 million a year earlier, and €5.4 million in pervious quarter. This demonstrates that this line can be quite variable. Let's look at each vertical in more detail. First, Video Applications, third quarter revenues amounted to €225 million, down 0.2% year-on-year. Broadcast revenues are now stable reflecting, notably, improving trends at HOTBIRD. Professional Video continued to decline due to ongoing pressure on contribution services. On a quarter-on-quarter basis, Video returned to slight growth of 0.2% with Broadcast revenues up 0.5%. At end March 2018, the total number of channels broadcast on our satellite stood at 6,880, up 8.2% year-on-year. HD penetration continued to rise, representing 19.7% of channels compared to 16.6% a year earlier or 1,358 channels, up 28%. On the commercial front, as stated earlier by Rodolphe, we secured a multiyear capacity agreement with Mediaset as well as the renewal of transponders with TVN Poland at favorable conditions. Let's take a closer look at trends on HOTBIRD. Channel count remained resilient. On a year-on-year basis, it grew by eight channels or around 1%. Year-on-year, the number of MPEG-4 channels rose by 9% to 567. This growth rate like the first three quarters was slower than the ramp up in HD channels at +19% to 312 confirming the inflection identified during the course of the first year. Yet, MPEG-4 remains considerably more advanced than HD with a penetration rate of 56% versus 31% for HD channels. As a result, the fill rate in the backlog of HOTBIRD slightly improved. Government services revenues stood at €38 million, down 2.3% year-on-year, reflecting the carryover effect of previous renewals with the U.S. Department of Defense. Quarter-on-quarter revenues were down by 1.5%. Commercial activity is encouraging. The latest round of contract renewals with the U.S. Department of Defense, i.e., Spring 2018, resulted in an estimate renewal rate of above 95% in value. Elsewhere, further contracts were secured in government services at the 174 degrees East position. The majority of the 17 operational transponders currently available at this orbital position are now contracted paving the way for a further ramp up of revenues from the beginning of next fiscal year. Looking ahead, Q4 will reflect a negative base effect of a positive one-off recorded in Q4 of 2017. Beyond this, revenues will include the positive effect of the commercial momentum. Fixed Data third quarter revenues stood at €34.9 million, down 9% year-on-year. As in previous quarters, they continue to reflect ongoing pricing pressure in all geographies not only in Latin America in the absence of significant incremental volumes at this stage. Quarter-on-quarter revenues were down by 1.6%. Third quarter revenues in Fixed Broadband stood at €21.5 million, down 7.7% year-on-year and broadly stable quarter-on-quarter. This reflected lower revenues at European broadband in the context of scarcity of capacity in Western Europe and slower than hoped for progress by the retail joint venture with ViaSat. In this context, we are refocusing our efforts on the wholesale strategy. In addition, the recently completed management lineup of experienced professionals is working to optimize conditions for the arrival of significant incremental capacity in the next couple of years starting with AL-Yah 3 capacity for the launch of the African broadband service in August to be followed by the KONNECT and KONNECT VHTS satellites in 2020 and 2021 respectively. Turning to mobile connectivity, third quarter revenue stood at €17.9 million, up 17.9% year-on-year reflecting on the one hand the full quarter effect of EUTELSAT 172B with capacity pre-sold to Panasonic which entered into service at the end of November 17. And on the other hand, continued growth on wide beam capacity notably over the Americas. Quarter-on-quarter, revenues were broadly stable. Let's turn to the backlog and fill rate. The order backlog stood at €4.6 billion at the end of March '18 versus €4.7 billion at the end of December '17 reflecting natural backlog consumption and in the absence of significant renewals during the third quarter. Year-on-year, it reflects mainly the impact of the integration of Noorsat which is an impact of € minus 0.4 billion. The backlog was equivalent to 3.1 x the revenues of 2016-2017. Video Applications represented 83% of the backlog. The number of operational transponders stood at 1,424 at the end of March, up by 50 units compared with end of March of last year, reflecting mainly the entry into service of EUTELSAT 117 B and the subsequent relocation of EUTELSAT 117 A at 174 degrees East. As a result the fill rate stood at 66.8% at the end of March 2018 versus 68.2% a year ago, net two incremental transformed as well during the third quarter reflecting notably new business in government services at under 74 degrees east and the incremental volumes list at HOTBIRD. I will now hand back to Rodolphe.

Rodolphe Belmer: Before turning to the outlook, the quick word on KONNECT VHTS; we recently ordered the next generation VHTS satellite system to support the development of the European fixed broadband and in-flight connectivity businesses. This satellite is due to service in 2021 and will be built by Thales Alenia Space. It will be launched recently multi-year multi-million Euro distribution commitment on launch and from Thales. It replaces the 33 projects and is fully covered by our CapEx envelope. So we're behind this decision. After conferences analysis of the different options, this deal emerged as the best from commercial, technical, financial and operatable perspective offering the optimum balance between cost, de-risking and availability. Commercial first, the partnership with two Bluechip companies both leaders in their respective fields, Orange for retail in European countries where it has retail presence and Thales in particular for government services. Technical the satellite will provide highest usable capacity over Europe with 500 gigabits per second with unmatched procurement terms for total cost of ownership both in terms of CapEx and OpEx per gigabytes per second. It will embark the powerful onboard digital processor for maximum flexibility in terms of bad risk allocation and ground segment rollout. Financial now, the project enables de-risking through multiyear capacity per commitments representing several €100 million. Operational finally turn to market is favorable compared to ViaSat in particular given the availability of KONNECT from 2020. In addition KONNECT VHTS is compatible with multiple grown technologies. Finally, the project should be simpler to manage that under joint venture framework allowing to maximize synergies with the rest of our broadband operations. As a reminder, the potential for connectivity of our satellite is significant. The core market for fixed broadband satellite is estimated at some five million homes in Europe in 2030. Demand for in-flight connectivity capacity is expected to exceed for the whole sell path only €1 billion globally in 2025. KONNECT VHTS will be a game changer in addressing these markets thanks to production cost in line with our CapEx per gigabit target of €1 million space and ground CapEx included. This enabling the provision of fibre-like service at fibre-like price and also paving the way for the transition from niche to more mass markets, by temporally redirecting some of the KONNECT capacity to Europe, KONNECT that's the African satellite, African broadband satellite we will sized the early mover advantage to prepare for the arrival of the far bigger KONNECT VHTS satellite. The KONNECT VHTS investments can be management within our current CapEx envelope and it means that either effects returns its infrastructure business model to protect high EBITDA margin. Before turning to the outlook, a quick reminder of our top priorities for the current year within the framework of our strategic plans; step one our medium term cash flow generation strategy is based around stabilizing revenues and maximizing financial efficiency. On the first element, our target is a return to stability about 100, and we are seeing an improvement in France, notably in revenues, fill rates, backlog and HD penetration. As we're on video, we are delivering on our HD stimulation measures with total HD channels on the fleet up by 28% year-on-year. And we have streamlined distribution in MENA with the integration of Noorsat, which is progressing smoothly. On data, we can say that the decline remains broadly in line with our assumptions. On connectivity, we have been successful in leveraging new resources notably at EUTELSAT 172B HTS payload which is now fully sold, just 3 months after its entry into service. In terms of other efficiencies other than revenues, the LEAP cost-saving plan is fully on track and will contribute to an EBITDA margin at least next year. On CapEx, we are making strong progress notably with our design to cost strategy and we already know our 2018 CapEx will be below our estimated 3-year average. And we are also continuing to de-lever, which will be accelerated with this proceeds. Turning to stage two, preparing the ground for a return to growt; the vast majority of the capacity of EUTELSAT QUANTUM is now reserved. The deployment of Konnect Africa was delayed due to the late availability of Al Yah 3, but it is now on track to be launched in August 2018. And finally, on connectivity, one disappointment, which is the performance of the retail joint venture with ViaSat and one significant milestone with the procurement of KONNECT VHTS. Turning now to the financial outlook; during the first nine months, the revenue performance of the group's five operating verticals continued to improve with a run rate of minus 1% in the third quarter. On the other hand, other revenues which means the revenues which are not related to the ongoing commercialization of capacity and are less predictable by nature, those revenues are running behind expectations following the outcome of the first quarter. We have a handful of active other revenue opportunities in the pipeline, which would enable us to land at the low end of our full year total revenues objective of minus 1% to minus 2%. However, in the event that none of these other revenues opportunities materialize in the fourth quarter, the decline of revenues could be up to around minus 3.5%. This has no impact on our other objectives for the current and following 2 years, which are fully confirmed. Organic revenues are expected to return to slight growth from 2018-'19 onwards. The EBITDA margin at constant currency is expected above 76% for fiscal year '18 and above 77% from fiscal year '19 onwards. Cash CapEx is maintained at an average of €420 million per annum for the period July 2017 to June 2020. For the current year it is expected below this level. Discretionary free cash flow is expected to deliver mid single-digit CAGR in the period July '17 to June 2020 at constant currency and of course, our leverage objective and commitment to stable or progressive dividend are also confirmed. Thank you for your attention. And we are now ready for your questions.

Operator: [Operator Instructions] We will first hear from Sami Kassab with Exane. Go ahead, sir.

Sami Kassab: Thank you. Good evening, Rodolphe, good evening everyone, Sami here. A few questions to start with, please. Can you give us some initial thought on how you see the top line growing in fiscal '19? Is the slight revenue growth like a 0% plus, or do you believe you can get to something between say 1% and 2% next year? Secondly, can you elaborate on the year's slower-than-expected take up or take-off of the RetailCo [Ph] with ViaSat? To what extent is it effective of lower market demand or is it more effective of operation issues in implementing the daily? And lastly, it looks like revenues from EUTELSAT 16A are under pressure. Can you confirm that and discuss what's driving that please on 16A? Thank you.

Rodolphe Belmer: Sorry, Sami, I didn't get your last question.

Sami Kassab: The last question was on the EUTELSAT 16A, it looks to me like there are negative trends there. And I was wondering whether there was something particular at play on EUTELSAT 16A in Eastern Europe that would explain what I see on my tracking data.

Rodolphe Belmer: Oh, on your tool, okay. Well, thank you for your questions. On the top line evolution for fiscal year '19, we said and we reiterate that we expect a slight growth, which will be a very slight growth actually and what are the basis for those projections. At first, as you can see, the revenues of our five operational verticals are improving and actually quarter-on-quarter, they are stabilizing. They are stable. Second element, there are some positive elements that we expect as of next fiscal year, which is first the entry into service of our African broadband initiative. It has been delayed as you know, due to the late launch, let's say to keep it simple, of Al Yah 3 satellite. The satellite will enter into service during the course of the month of June, meaning that our commercial operations will be able to start up as of beginning of August. Second point, we have sold most of the available capacity on the 174 satellite, which is a new satellite for us. It's a new orbital slot. And again, most of this capacity will start being exploited from July and lastly, there is the big contract we have been able to sign with China Unicom at the 172B position, and which will start by the month of January, meaning at the middle of next fiscal year for us. And for all those elements, very robust underlying trend of our recurring revenues on all our five verticals plus the positive elements that I mentioned. We are able to reiterate that fiscal year '19 should be slightly growing. On question two, on the RetailCo that we've had with ViaSat, the joint venture that we had with ViaSat in Europe to distribute this service to subscribers in Europe, the main reason why we think that the revenues from this joint venture has been disappointing is twofold. First, we think that it took time to establish this joint venture and to merge the teams and to find a common ground of working in common with ViaSat. And second element, we think that the best strategy for Europe is to work through experience and powerful distributors like Orange, for instance. And that it's much more difficult to go for a direct distribution approach, direct-to-consumer given that the diversity of the situation of the market conditions in the different European countries, and that's also what we have learnt during our time of working together with ViaSat. And on the question on 16A, that's a satellite which covers mostly Africa. Maybe I will turn to Michel Azibert who will be able to give more color on that question.

Michel Azibert: Yes, Sami, so as you know, 16A has [indiscernible] DTH mostly for West Africa and for Central Europe. In West Africa, it's safe to say that on a year-on-year basis we saw the revenues at 16A decrease mostly because we terminated contracts with some certain African DTH customers which were, let's say, not being successful commercially. But this is behind us. If you take the last quarter the revenue on the one end and the fill rate of 16A is starting to increase again slightly. And also on -- we, for instance, signed a contract, we have a new platform in Togo and in different free-to-air channels. And in Central Europe it has been sort of stable, but we hope to announce a good news in the next few weeks regarding 16A for Central Europe. So there is no reason to worry.

Sami Kassab: Thank you, Michel.

Operator: We'll now move to our next question that will come from Alexander Peterc with Societe Generale. Go ahead, please.

Alexander Peterc: Yes, hi. Thanks for taking the question. Just a few, if I may. First of all, on mobility, I was wondering if you had the addition of the full quarter of 172B, and you had some widebeam capacity growth over Latam [ph]. Why are we just flat quarter-on-quarter in the reported quarter? The second one is just kind of maintenance. Can you just quantify for us the one-off in government last year that will come in your final quarter of the fiscal year in the comp so that we can have the correct figures?

Rodolphe Belmer: Okay, Alexander. Why is mobility sort of flattish quarter-on-quarter even though I will remind that took -- if you take a year-to-date perspective the growth rate is quite impressive at around 18% in value terms year-on-year at end March, which is quite substantial growth. Still it's true that quarter-on-quarter growth is stable. Why? That's because the big contracts that we have been able to sign were at full pace already during due course of this quarter, and that we were not able to add new significant contract during the course of this quarter. We're expecting new contracts which are very important to enter into exploitation and commercialization. Later, during the course of this civil year we said that we will be able to register the revenues coming from Unicom as of next January. This is a very big contract. We have given sort of order of magnitude of the size of the contract when we said that the backlog associated with this contract was above $100 million. But it's true that this specific quarter didn't come with new big contracts to report that would have added to the growth, which is already quite impressive of this segment during the course of the quarter. Now, on your -- what you called your maintenance question on the government business line, it's true that we have sort of drag on this business line which comes under the form of a one-off that we had on a contract we had with a non-DoD customer contract that we signed a year ago, and which was not -- whose revenues were not recognized in linear way. It was fully anticipated impact. And we highlighted this item in last fiscal year result presentation where we said that we were recognizing revenues which were not completely linearized.

Operator: Anything further, Alexander?

Alexander Peterc: Yes, just -- I don't if I was disconnected while I was asking my question. So I just have a final question on the RetailCo situation, whether that can be fixed in your view? It would seem to me that ViaSat had the strategy of going direct rather than going through resellers. So how long will it take for this situation to be fixed, if it can be fixed at all? Thanks.

Rodolphe Belmer: Well, I don't know how to answer your question. We have two joint ventures ViaSat, one is called infrastructure JV that we control 51%, and the other is the retail JV that ViaSat is controlling. Those two JVs are exploiting the capacity of KSAT satellites and distributes services for broadband to consumers in Europe. Those two JVs will continue to exist. And ViaSat is going to continue to operate the retail joint venture. And we are going to continue to operate the infrastructure joint venture. It means that we have realized that going direct in Europe is very difficult and does not bear the fruit that we had anticipated, that we had expected, meaning that when you look at revenue's trajectory KSAT with the previous approach that we had and the revenue trajectory of KSAT this year, obviously you see a valuable inflection. And we think that this valuable inflection relates partly to the change in commercialization strategy meaning going more direct, that's what we have learned during the course of this year. And notably so that the joint venture we have with ViaSat. We have decided ourselves to change strategy, meaning to adopt the HTS satellite because we think it's a better technology core and financial proposition. And also we have decided to change commercial strategy in broadband, and to come back to our historical strategy, which is a wholesale strategy leveraging distributors which we believe are better than our self to push this service to the end-users, to the consumers. And what we have decided is to join forces with very powerful high-profile distributors. And that's why we have decided to work with Orange which is, as you know, very well quite prominent telecom company in Europe with a very large pan European footprint, and with the ability and commercial strength to push telecommunication services, including satellite-based services, obviously, to homes in Europe. And we think that's a far better strategy to maximize our chance to get an optimum penetration in Europe.

Alexander Peterc: Okay, thanks. So this is one of the main reasons for your change of heart with respect to the CapEx plans as well then, I suppose?

Rodolphe Belmer: Well, our main reason to finally decide on the VHTS strategy is because it makes sense technically speaking, that's a very good satellite which will bring the highest possible -- the highest capacity over Europe. Second, we think that financially it's a very good solution since we have been able to reach our target in terms of CapEx per gigabit. We said that we wanted to reach the target of €1 million of CapEx per gigabit of capacity. And have sort of reached this level. And it's a better proposition than the alternative propositions that we had on the table. We think it's also a better proposition in terms of de-risking because we have been able not only to embark with those blue chip distributors like Orange or Thales which will undoubtedly serve as a reference to attract distributors in this initiative with us. But also, they have -- those two distributors, they have accepted to give to us quite significant minimum guaranteed which are in the order of magnitude of hundreds of millions of euros. That's what, we said several hundred million euros, which means that they are brining not only commercial expertise and know-how and power, but also they are -- de-risking this initiative. And lastly, in terms of operational cost, this option is very good, this VHTS option. Why? Because it's technology agnostic, meaning that with this VHTS satellite you can work with all the terminals and all the kinds of ground equipments, which means that we can take advantage of the competition between providers and manufactures of terminals and ground equipments, and make sure that we can grasp all the technical iterations related to ground segment. And second point, the operational costs associated with running this VHTS satellite is very, very competitive, meaning that the delivery of operational cost is relatively contained. And will enable us to generate a quite substantial EBITDA margin out of that initiative.

Alexander Peterc: Thank you. Thank you so much.

Operator: And now next we will hear from Paul Sidney with Credit Suisse.

Paul Sidney: Yes, thank you very much, and good evening everyone. Just the first question on the June '18 guidance, we've got three growth rates out there now, we've got minus one to minus two, and then you've now given us the minus 3.5, and depending on what happens in Q4. I was just wondering if you could help us just -- what do these growth rates actually deliver in terms of an absolute number in terms of revenues for full-year June '18. We're obviously stripping out various things, and we're pro formoring [ph] numbers with these growth rates. But could you just help us just to get an idea of the absolute revenues for June '18 that these growth rate equate to. And second, just bigger picture. We've seen some more solid results from these allied operators in the quarter just gone. And you mentioned stable many times in your release, in your presentation when referring to revenue growth trends. I was just wondering, in your opinion, big picture, do you think we're getting to the end of the drag from these transitional headwinds? And then just lastly, on then HOTBIRD, again you mentioned in a capacity deal that you signed recently. But just how much of this is sort of re-contracting existing capacity, and how much is incremental? Where are we in terms of the re-contracting of the capacity that you brought back in house in 2016? Thanks.

Rodolphe Belmer: Thank you, Paul, for your questions. On the guidance for this fiscal year, what we said is that -- we'll our objectives in terms of revenues for this fiscal year is to land in the bracket from minus 1% to minus 2%. What we said today is that when we look at the operating verticals of our business, meaning all the business consisting of video, government, fixed data, broadband, and mobile connectivity, if you take all that together we will reach within the scope of this bracket that I have just mentioned. Since those revenues -- well, the revenues out of these five verticals, of the five verticals of our business are at minus 1.5% at end March. And as you've seen, the revenue trend from this five business verticals is improving, and we're at minus 1% at the third quarter. The fact is that part of our revenues, there is a line which is more difficult to predict by nature, which we call, "Other Revenues." That's revenues which are not related to capacity sale, which is not recurring, they consist typically of termination fees, engineering fees that we are able to get. And for this year -- and those revenues they are more lumpy than our additional revenues and they are more difficult to predict by nature, because they are not part of our, I would say, core business of our regular recurring revenues out of our five business verticals. On this year, for reasons that are difficult to predict, this other revenues are significantly lower than usual, and even though we are working on quite substantial pipeline of initiatives to generate other revenues in line with our objectives in line with our guidance, it's still uncertain at this point in time that we will make it. We wanted to make sure that we give as much transparency as possible, as much visibility as possible to the financial market. We just wanted to point the element that -- I would like to point out that even if we don't make those other revenues, we should not land below minus 3.5%. It doesn't mean that we estimate that we will land that low because we the still working on other revenues initiative, and we hope that we will be able to get those initiatives to obtain those contracts before the add of the fiscal year, but it's true that we are never certain by definition given the nature of those other revenues that we will make those. And second, we look certain that we will make those during the course of the fiscal year, and that's why we wanted to give the visibility. As I said before, those other revenues have nothing to do with the fiver verticals of our business. And even though we are not making the revenues we would have expected on this other revenue lines, there is no impact on the following years. And that's why we are able to reiterate in this fiscal year we will have a slight growth because of five verticals, which are the recurring part our business and the vast majority of our business, obviously they're are more than 90% of our business. Those verticals are doing relatively well. It doesn't mean that we are seeing add of the sort of the add-drop of our industry. It sounds like actually the industry is going through better times, better weather conditions, I would say. The fact is that video segment as always remained very robust for us. And we are looking to deliver best for the foreseeable future. It's a very, very resilient business with very predictable underpinning factors, and solid elements of growth embarked. The factor that fixed data remains difficult, our sales in this segment has been declining by 9% year-over-year driven mostly by lower price for this segment, but we see in the future that the other verticals will be in better position. The government services vertical will remain for ourselves and for the rest of the industry stable, slightly growing after of course a few years of substantial and successive decline. And the broadband and mobility segments will enjoy a quite significant growth in the future and will more than compensate the drag growth by the fixed data application. And that's why we think that we are probably -- even though some negative elements remain at place, in our industry, like fixed data, the good news is having to compensate for the bad news going forward. On HOTBIRD, we will stabilize HOTBIRD revenues, and we are achieving that. All the underpinning factors are well-oriented on HOTBIRD, including the fees rates. We have not mentioned that in our presentation, but the fee rate of HOTBIRD is returning to slight growth, which means that we have been able to sell more capacity, and meaning that most of the contracts that we've had has been renewals, but we've been able to sign new contracts, which have build more capacity on HOTBIRD. And that's the underpinning element for the slight growth in the fee rate of HOTBIRD.

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

Operator: [Operator Instructions] We will now move to the next question, will come from Michael Bishop with Goldman Sachs.

Michael Bishop: Yes, thank you. Good evening everyone. Just a couple of questions from me; just picking back up on the Orange and Thales commitments, clearly you have mentioned that that's roughly in the magnitude of the several hundred million in terms of total order book. I mean, if I was to think about that in terms of the total capacity, those two operators have effectively committed for, would I be right in thinking it's in the region of 10% to 20%? Was it widely different from that? And then second, just asking the usual question on video with regards to the TV, just could you give us a bit color on what favorable conditions actually means? And then my final question is, if you were to assume that the other revenues don't materialize, do you think the lower CapEx below 420 will offset the impact of lower other revenues from a free cash flow perspective? Thanks very much.

Rodolphe Belmer: Thank you, Michael. On the Orange and Thales commitments, it's minimum guaranteed, it doesn't mean that they are not going to grow beyond what they are committed, above nobody can guarantee that they have taken. First of all, with respect to your question which was quite precise, I would say that the order -- that the range that you quoted is a good range. On your second question on favorable conditions, on the renewal on some newer contracts, favorable conditions means that the revenues that we generate -- that we extract for those contracts are stable, all growing. Typically it means that we have been able to maintain volume and price. Sometimes there is a slight erosion of volume, but an increase in -- compensated by pricing increases, but you know, favorable conditions means that we have been able to maintain the revenues that we generated from this specific clients. And actually we have been able to sign very important contracts on HOTBIRD lately with TVN in Poland with Mediaset in Italy, with Polstat in Poland, with very important volume of renewals and with the typically HOTBIRD price -- with our typical price list on HOTBIRD, meaning that those very important blue chip renewals came with favorable conditions, and we mentioned that because they --- that had been some doubts or questions around our pricing power on HOTBIRD, our ability to maintain price or to grow price on HOTBIRD. And the reason why we push forward those examples was very big sophisticated clients that we have been able in those cases to maintain price and to sell at the list price of HOTBIRD is to give them some control that we are able to have a decent pricing power and that to value HOTBIRD for our customers, which is absolutely normal when you rely that the penetration of HOTBIRD among the open population is slightly growing. On the last point, on cash flow, I maintain and I want to reiterate it clearly that our cash flow objective, our cash flow guidance is untouched, and we are committed to deliver mid single-digit CAGR on our cash flow KPI, cash flow metrics, which more than largely -- more than largely covers the dividend that we serve to our shareholders. Our dividend is covered around 1.5 times, which gives lot of headroom to execute our dividend policy, which I reminded stable to growing dividend policy, and that's why we are so focused on cash flow generation. It's one of our key priority. It's the key objective of the Manager of the Group, and everybody is not only focused but also remunerated against that objective.

Michael Bishop: Thanks very much.

Operator: And next we will hear from Wilton Fry with Royal Bank of Canada.

Wilton Fry: Yes. Hi, there. By the virtue of running the business with the focus on free cash flow, when I'm looking at your balance sheet, in December 36% of your debt in balance sheet is mature and more than three months old, and that's not the scene in five years ago. That's more than 10% of your revenues. Is there any increase delivered in your part or is it just your clients all paying on time? Thanks.

Rodolphe Belmer: I am very sorry that I'm not sure I got your questions fully, so San, did you get…

Sandrine Teran: Not completely. Your question was on the deliver of working capital on the balance sheet at the end of December, is that right?

Wilton Fry: It's on the age profile of your trade deficits. So, actually you gave us obviously until December, 148 million of more than three months old trade receivables, and that's up from 36 [ph] million back in 2012. You are running very high age profile. I'm just wondering why. On one hand, you said you are running the business for cash flow, yet I don't see why you are not collecting on those days, or is the underlying clients paying on time, some of these not in financial difficulty? Thanks.

Sandrine Teran: Yes, thank you. So, as you remember we did a huge work last year in '17 on the working capital and the collection of receivables. So significant resources, discretionary free cash flow from the changing working capital. It is true that this year is more difficult than the previous year. So it's so normal I would say, because we did a lot of work last year on this. So it's clearly an area of focus. We have some old receivable on the balance sheet that we carry, that's true, but it's not a new thing, and we are working on it. So it's only for what we are doing on the cash collection and working capital.

Wilton Fry: Okay. But it's increasing year-over-year for some time; do you think it will improve by the time you get to the year-end?

Sandrine Teran: I would not say so for the end of this fiscal year.

Wilton Fry: Okay, thank you.

Rodolphe Belmer: But we don't count on a significant improvement on this aspect to meet our objective in terms of cash flow generation.

Operator: Nick Dempsey with Barclays will have the next question.

Nick Dempsey: Hi. Thanks, guys. First of all, I assume you would be in competition in 2020-21 onwards, can you tell us whether they have all of the KA band spectrum lines that they need across Europe? In other words, is the pinnacle playing field level between the two of you? Second question, given the operational win in August, are you still happy with that €15 million of contribution from African broadband? And are we now thinking about offsetting kind of underlying decline in rest of state's broadband in F1'19? And then just a final question on HOTBIRD and pricing, I think you showed us the HD penetration versus MPEG-4 penetration is favorable for you, and you pointed the channel counts going up in HOTBIRD, and I think you were saying the revenues is kind of on a stable basis there, but isn't the last part that formula price that you were talking quite positively about price?

Rodolphe Belmer: Well, thank you for those questions on the competition with ViaSat and on the availability for ViaSat of KA-band section to enable to position the ViaSat's three satellites to locate it over Europe, I have nothing to comment on that, maybe that's a question that probably you might directly to them. What I can say on the competition with ViaSat is that first we believe that we will benefit from first mover, first comer advantage to Europe, because we will launch our KONNECT Africa satellite in 2020, and part of the capacity of the satellite could be directed to Europe, which means that we would be able to ramp or to accelerate our broadband business in Europe as of 2020 with capacity and with forward pricing, which will enable us to establish our value proposition for Europe in the first place. That's the first element. Second element we think that European market, the European market potential for consumer broadband is quite large. We had said and I think we have reminded that today that we estimate that the market size for Europe is five million homes that will not be served by third-party structure by 2030 which leaves more than enough room for two large operators in Europe, will be the first one, doesn't mean that there is not enough for second player in Europe, and for both players to generate very significant revenues and seats profitability. That's the second element I wanted to convey on competition. We are not afraid of competition because market is large enough to feed two players or more, I would say. On the broadband revenue trajectory for next fiscal year, it's true that we expect significant revenues in the order of magnitude of the figure you have quoted coming from our African broadband initiative next fiscal year and fiscal year 2018, and it will more than compensate the difficulties in the European broadband initiative, it doesn't mean that European broadband business will shrink next year. We hope that the revenue trend in Europe for broadband -- for European broadband business will be better oriented than this year because we will have return to our wholesale commercial strategy, which has proven better for us in the past, but it true that the European broadband business will not be brilliant next fiscal year, but the growth of our total broadband business will be fulfilled by the African broadband initiative. And HOTBIRD, we stood at most of the KPI the underpinning factors of the revenues of 100 are well-oriented; HDs growing quite fast, and we have now reached 31% HD transition on HOTBIRD. And it's growing faster than MPEG-4. That's what we have said for quite a few quarters. And I mentioned it today. Channel companies are stable, very slightly growing what about price. Price is stable also specifically in Western Europe price is absolutely stable at given some color which -- price we have been able to reach with some blue chip renewals that we signed over the past few months, but overall our Western Europe -- HOTBIRD business has a stable price per transponder.

Nick Dempsey: Okay, thank you.

Operator: Now we will move to the next question and that will come from Patrick Wellington, Morgan Stanley.

Patrick Wellington: Yes, afternoon everybody. I would like to ask some questions about HOTBIRD. The first one is the guidance basis, you're seeing to switch seamlessly to talking about the minus 1 to minus 2 on a verticals basis rather than all-in basis. And can I check that next year's slight growth is for the whole company, or is it for the verticals? And so are we moving basis of guidance to next year or we staying for the whole company? Secondly, other was I think about $55 million last year, I think the beginning of the year you said it'd be about 30 million headwind, so down to about 25 million. We've down 12 million after nine months, so we kind of missing 13 million at the movement. Can you give us some sort of statement we're in the middle of May as to how much you might get back, and can we assume that 100% of missing other revenue drops is the bottom line that it's a 100% profit? So I'm kind of looking for a profit impact there as well. And then the third thing, as you just speaking up from what you just said about Western European video being -- the pricing being stable on HOTBIRD that may think that the pricing in Eastern Europe was not stable. Would that be a correct decision?

Rodolphe Belmer: Thank you for those three questions. Well, we are trying to -- well, I don't remember the words that you have used, but you modified our guidance so smoothly, that's the word that you said. We said that you should take our verticals of five applications; they're today -- what their revenue gross rate is at minus 1.5%, which is exactly in the middle of the scope of the guidance that we have given. It doesn't mean that guidance was that all-in, it's all-in as you said, but we wanted to give some color on the fact that our key -- our five verticals -- our five applications, they are doing quite well, because we think that it gives you the better visibility on what's going to happen next fiscal year, because obviously the recurring part of our business is the five applications, the five operational verticals, the recurring, the other revenues by definition that and they don't been able to forecast for the future. For next fiscal year, the guidance that we've given for fiscal year '19 onwards, the slight growth, the return to slight growth, and we said a very slight growth; it's for the whole company and not for the five verticals only. And I want to make that very clear. For the [indiscernible] that you've made on the magnitude of the order revenues and the drag that they bring on our total top line revenues it's true that the other revenues the consensus estimate that we should have other revenues around €30 million, it's not totally wrong, it's not totally but not totally wrong meaning that part of the gap we had between our run rate of today and the objective significant part of it comes from the other revenues, some part of it comes from the broadband segment as you know because we have said that in the past and not due to the late launch of Idea 3, it has bring an unfavorable elements to our revenue this year and in the other things of around €15 million. And that's probably the €10 million to €12 million that you were missing and that you were looking for in your analyses. Other revenues, typically they're very profitable and they will drop for the very, very vast majority into profit directly. I am not sure 100% but they are -- well, typically they are very, very, very profitable. And they come with very little operational cost -- operational expenditures. On the pricing of HOTBIRD, it's true that I said because I think that's what matters the most that the pricing in Western Europe is stable because that's where we are supposed - "Supposed" to suffer from the biggest competition from OTT. And what I was trying to reinforce is the notion that channels count is growing, HD is coming, and pricing is stable. Meaning that the value of HOTBIRD even in Western Europe, which is supposed to be - "supposed" again supposed to be our pain point, is untouched. When you look at pricing in the other regions where we sell HOTBIRD, if you look at that on an aggregate basis, there is a slight erosion because we have considered some promotional price to develop HOTBIRD in new languages. For instance, we have been able to develop HOTBIRD in Farsi language. And to achieve that, we have been conceded -- conceding sorry promotional pricing to attract in a sort of initial phase customers -- all channels of this language. And obviously, it has an impact on the cost of transponder -- on the price per transponder of HOTBIRD outside of Western Europe.

Patrick Wellington: And Rodolphe -- that's very helpful. And I can just come back on other? You have done €12 million after three quarters. Let's say you do €4 million again next quarter that will get you to €16 million. You said that the original number that people were looking for was €30 million. The difference between the two is €14 million. €14 million is 1% of growth. If you turn that to 2019, you said that you would do very slight growth, let's day slight growth was 1%. It could be that your slight growth next year is produced simply by having missed on other this year, if you like. Would that be a reasonable interpretation? Shouldn't your very slight growth be higher if your base of other is lower in 2018?

Rodolphe Belmer: Yes. Well, it's a good question because it's true that we give guidance in terms of growth and obviously the point of reference that you take matters. But the fact is that we will have slight growth for next fiscal year with the kind of objectives of revenues that we have for this year -- we are not trying to push artificially other revenues from this year to next year in order to artificially inflate the total revenue in new lines for next fiscal year. And thus, achieving sort of artificially our revenues for next fiscal year and meet our guidance of slight growth. Our slight growth will be -- objective will be met, also if you take the five applications.

Patrick Wellington: Okay, thank you.

Rodolphe Belmer: Okay. I am not sure I am clear. But, even if you take the five applications to five verticals of the business of the operational verticals they will have slight growth, meaning that even if we don't take into consideration the other revenue if we take the only current part of the business, it will be slightly growing. Again it's not a sort of buoyant growth, but it will be a slight growth.

Patrick Wellington: Okay. That's great. Thank you.

Operator: And now we will hear from Laurie Davison with Deutsche Bank.

Laurie Davison: Thanks, guys. Can you just remind us exactly how you determine whether revenue should fall into other versus the five verticals? How do we know that there hasn't been the definition that you provide in your annual report is sufficient of age that there could be some element of moving revenues between verticals. How can we be confident you are not covering up for underlying weakness by blaming other? Thank you.

Rodolphe Belmer: If they were elements, I would say it's not good, but I am trying to answer seriously to that question. Our definition of other revenue we think is very clear, transparent, and very rigid. We record in the other revenue lines the termination fees, the fees that we get from litigations, the engineering fees when we sell the time and efforts and expertise of our engineer to third party operators, when we do some coordination work for frequencies for third party operators because we have expert engineers on that front also. And I think that's the exhaustive list of elements that may be included in the other revenue lines. And we are -- and I think it's very clear and very transparent. Let me have a look at the definition that we do provide you to make sure that I have not forgotten anything. Yes, I have forgotten an element which is the impact of the currency hedging which is also recorded into this other revenue lines, meaning that it's only element which are not related to capacity sell or to sale of service coming with capacity that all the elements that we consider outside of our core business that is video, fixed data, broadband, government and mobile connectivity. And there is nothing else in our account. And we are not trying to cover for any as you call that underlying weaknesses given the fact that we think that most of our business line they prove pretty robust starting with video which is stabilizing. And the broadcast segments within the video which is the most import part of our business that's the vast majority of the valuation as you know very well of our company, this broadcast segment is slightly growing. It's positive. We have said that it's -- Q-on-Q it's plus 4.5%. Year-on-year plus 4.2%, meaning that the most important of our business is slightly growing, is returning to growth. And for us, that's the most important signal of the robustness of our business and of the valuation of our company going forward.

Laurie Davison: Rodolphe, you've never registered zero other revenues in the past 10 years of this business. So, I am just wondering it does seem exceptional that you've registered zero other revenues. What in particular has -- didn't materialize which you expected to?

Rodolphe Belmer: Well, actually there are two elements. As you know very well, last year in this revenue line there were two elements that didn't perpetrate. There is the proceed of the litigation that we had with SES at 28 degrees. That's the first element. And the second element and I will comment more on that the termination fees associated with the so-called part of HOTBIRD. And this is important because one of the reason why there was no other revenues this quarter is because we didn't really have significant termination fees with clients which is per se a good news, but it came also to sort of determinant of the revenues -- of the level of revenues in this line. And other than termination fees, the revenues that we get and that come in this line are engineering fees, and those type of revenues are lumpy, and we don't have those every quarter, we had one very important last year in AGIP, and we disclosed that. It as a high single-digit engineering fee, but those kinds of elements, they don't happen regularly, and we don't have those every quarter. What we had quite regularly was the litigation, the proceed of the litigation with SCS, and the termination fees with other clients after adding to it -- those termination fees that constantly sort of fueled this revenue line, good news that we don't have termination fee for this quarter, bad news it has an impact on our revenue trajectory. But the fact is that we are counting on some engineering revenues, and that takes time to materialize. We still hope that we will be able to get those at end of the year. They're quite substantial, but we are not certain yet.

Laurie Davison: Okay. And just to go back to Paul's question, I mean we seemed to have so many one-offs now on currency impacts; can you just define exactly what the absolute revenue number will be for this year, minus 1, minus 2, and minus 3.5?

Rodolphe Belmer: Sorry, I didn't get your question. The absolute - the addition, you mean of the revenues by application?

Laurie Davison: No. There is a question asked earlier on by Paul Sidney, and you didn't really answer it, which was we have so many definitions of one-offs and what currency impact could be, can you now give us a figure for what your -- if your revenue decline minus 1%, what would that would mean in absolute revenues for this year, so we have a base to work off, what it would be at minus 2, and what it would be at minus 3.5?

Rodolphe Belmer: Well, I would turn to -- normally we don't communicate on that, but I will turn to Sandrine.

Sandrine Teran: I mean, just to make clear, I mean of course I'm not going to answer that question, just to make the financial outlook for current year revenue is absolutely clear. The outlook that we gave at the beginning of this year was a decline in total revenues of between 1% and 2% of constant currency. So we are not going to change the way that we guide on, so there is absolutely no confusion, we are not giving free levels of guidance. We are simply saying that the original top line guidance is between minus 1% and minus 2% constant currency. It's still achievable, depending on the level of other revenues that we generate in the fourth quarter. The reason we have given the number of minus 3.5 is to give you a flow. I think that if we absolutely don't materialize any other revenues in the fourth quarter, then the maximum decline in revenues for this year will be 3.5. Okay, so there is no change in the way we're guiding. We are not guiding stripping out other revenues. We are simply giving you a clarification based on what we know at this stage on the materialization of other revenues.

Operator: I'm sorry, go ahead…

Rodolphe Belmer: I was saying that again, the policy that we have to materialize some of the revenue, some initiatives that we are pursuing, and which will drop in the other revenue line, the probability is not zero. We have a pipeline of opportunities that we are working. And some of them might materialize before the end of fiscal year, which means that we will be above the minus 3.5% that we have mentioned today. The only element that we said that if we materialize, all the elements which are in our pipeline, we will reach in the guidance at minus 2%, but since there is a level of uncertainty on the maturization of these other revenues' initiatives which are by nature more difficult for us to predict, that's why we're giving this visibility today.

Operator: Now we'll hear from Giles Thorne with Jefferies.

Giles Thorne: Hi, everyone. Rather apologetically, I've still got some questions. Two [indiscernible] on, and one's maybe a bit more expensive, but they're all on fixed broadband. First wondered, with the decision not to participate in the ViaSat-3 Europe procurement, it feels like we might see some of divorce proceedings unwind around the existing joint venture vehicles. So my question is that the moment ViaSat-3 Europe gets launched does ViaSat have the right to migrate the legacy KA-SAT subscribers you put into the JV off KA-SAT and on to ViaSat-3 Europe. So basically who gets the economic rights to those subscribers in the event of an unwind? Secondly, a similar type question, Infraco [ph] is providing the capacity to ViaSat as a prime contractor in aviation mobility. And we have SAS and ThinAir as end customers looming. What happens to that revenue once ViaSat-3 Europe gets launched because presumably ViaSat, as prime contractor, gets to migrate off KA-SAT onto their satellite? And then lastly, I wanted to challenge this whole idea right off that going direct in Europe is difficult, and hence why you've announced the change in strategy. What doesn't ring true for me about that is ViaSat has used a direct strategy very, very successfully in U.S. for many years, and has delivered a five-fold the number of subscribers that Eutelsat did in Europe under the legacy broadband strategy that you had. And it was for this reason that you partnering with ViaSat made so much sense, to bring all their distribution expertise, and in particular their proprietary marketing tool that they famously tout. But we are where we are today with another change in strategy, and now you're going back to being wholesale with a partner's approach. I'm wondering in this second major change in approach, why will this finally be the winning strategy for Eutelsat and consumer broadband in Europe?

Rodolphe Belmer: Well, thank you, Giles. On the KA-SAT subscribers, who do they belong to? The vast majority of KA-SAT subscribers of today, they belong to third-party distributors which have a contract, a contractual relationship with Infraco, meaning with us with Eutelsat. Meaning that those subscribers, they cannot be migrated by ViaSat because they are not their subscribers. The subscribers are the property of RetailCo. They come in a very limited number; very, very limited. And those subscribers can be migrated by ViaSat when ViaSat is coming, but again, we are speaking of a very, very small number of people, of households. On mobility, we have long-term contracts with ViaSat, and actually use KA-SAT capacity for the aviation business in Europe. And also we have some rooming arrangement with them for the transatlantic routes. And for the moment we don't have any plan to change that when ViaSat-3 is coming into service, notably because the terminals installed on the aircraft, they will be compatible with KA-SAT. On the distribution strategy, we have been impressed. And I think I said that in the past, by the distribution strategy and the knowhow of ViaSat of going direct in the U.S. The fact is that we think, now, having the experience of more than a year of work with our partners, we think that this approach doesn't make as much sense in Europe as it makes in the U.S. because the market situations, the competitive landscape, the consumer behaviors are very different from one country to another in Europe. And what we think is that it makes more sense to join forces with strong, powerful, experienced distributors in each European country. And those distributors typically they are either telecos or pay TV operators. Telecos, that's what we do in Western Europe -- Western and Eastern Europe with Orange. But pay TV, that's what we do in Russia, for instance with Tricolor. And why does it makes sense, because those distributors, they have the understanding of the market. They have the commercial power, the commercial networks, the salesmen, the call centers to push the service to take care of the subscribers. And also, they have a good understanding of the specific market situation and regulation which matters a lot when it comes to telecommunication services. It's different. It's a wholesale strategy, true. But it's different from the wholesale strategy that we had in the past with KA-SAT. With KA-SAT we used to work with small-sized distributors specializing in distributing satellite-based services only. It was very small companies with no capital, with -- no commercial power to push that technology, satellite-based broadband. But why did we do that in the past, that's because KA-SAT didn't really have capacity enough in large countries -- in the large European countries to attract big distributors like the big telecos. Now, with our new VHTS strategy we have the ability, and we have proven that with the signature of our contract with Orange toward us large skillful, powerful commercial companies like Orange. I would think it's a game changer to have the ability to get distributed by people whose core business is to distribute telecommunication services to people in Europe, and to be able to leverage their commercial network, call centers, salesmen to our own advantage. We think it's a very, very strong advantage. It's a very compelling proposition that we have now on the marketplace.

Giles Thorne: Thank you very much, and a clarification very, very quickly, and legacy KA-SAT subscribers, how many of them are through Satellite Solutions Worldwide? And the reason I ask is because obviously SSW is now intimately partnered with ViaSat. Thanks.

Rodolphe Belmer: I'm not sure I have this figure on the top of my mind. And maybe, if you agree, we will answer offline to this question because I don't want to give the wrong approximation.

Giles Thorne: Sure. Thank you very much.

Rodolphe Belmer: You're welcome.

Operator: And now we will take our final question which will be a follow-up question from Alexander Peterc with Societe Generale.

Alexander Peterc: Hi. Thanks for taking this follow-up. And I apologize in advance to be a bit of a pain with this one. It's again about guidance and other. Unfortunately there's something that I don't quite manage to tally. You said previously minus one to minus two, and if only other is to be blamed in H2, that's 0.9% negative, so you're minus one to minus two, it should then move to minus two to minus three, yet you're not guiding at minus 3.5% as the zero other scenario. So I was wondering what else is not quite where you thought it would be three months ago when you reported H1. Thanks a lot.

Rodolphe Belmer: Well, our five verticals are more or less where we sought they would be. Actually they are slightly below in the sense that what we said in the conversation of today -- in today's call is that in total those five verticals which make the operational of our business, they're at minus 1.5%. Our guidance was in between of minus 1 and minus 2, meaning that we would have expected those verticals to land around minus 1. That would have been our hope and target. And the rest of the gap that you are referring to comes from the other revenues. And I think that if you take those two elements into consideration that will add it.

Alexander Peterc: Thanks a lot. And with that, ladies and gentlemen, this does conclude the question-and-answer session. I will turn the call back to your host for any additional or closing remarks.

Rodolphe Belmer: Okay, thank you very much. Thank you for your attention. Thank you for all the cool questions and for the new burn head questions.

Operator: With that, ladies and gentlemen, this will conclude your call for today. We do thank you for your participation, and you may now disconnect.