Eutelsat Communications Delivers Strong Results in 2005-2006 and Raises Profitability Guidance for 2006-2007

Eutelsat Communications Delivers Strong Results in 2005-2006 and Raises Profitability Guidance for 2006-2007

PARIS, September 4/PRNewswire-FirstCall/ --

- 5.4% revenue growth, above objectives

- Backlog up 29% to 4 billion euros, representing more than five times
2005-2006 revenue

- EBITDA[1] margin at 77.9%, maintained at the highest level among
leading Fixed Satellite Service operators[2]

- Substantial operating free cash flow of 269 million euros or 34.5% of
2005-2006 revenue

- Consolidated net result of 40.2 million euros, in spite of 61.7 million
euros of debt restructuring costs and satellite impairment charges

- Proposed distribution of 0.54 euro per share, yielding an attractive
4.5% on the Initial Public Offering price

- 2006-2007 EBITDA margin target raised to 77%

Eutelsat Communications (ISIN: FR0010221234 - Euronext Paris: ETL), one
of the world's leading satellite operators, today reported results for the
fiscal year ended June 30, 2006.

Twelve months ended June 30
In millions of euros 2005 (pro 2006 % change
forma[3])
Key elements of the consolidated income statement
Revenue MEUR 750.4 791.1 +5.4%
EBITDA MEUR 578.5 616.5 +6.5%
EBITDA margin % 77.1 77.9 +0.8pt
Consolidated net result MEUR (44.9) 40.2 NA
Earnings per share NA 0.14 NA
Key elements of the cash flow statement
Net cash flow from operating MEUR NA 501 NA
activities
Capital expenditure MEUR NA 231 NA
Operating free cash flow MEUR NA 269 NA
Key elements of the financial structure
Net debt MEUR 3,157 2,228 -29.4%
Net debt reduction MEUR NA 929 NA
Net debt/EBITDA x 5.5 3.6 NA
Key operational metrics
Backlog EURbn 3.1 4.0 +29%
Leased transponders Units 343 373 +30

Commenting on the results, Giuliano Berretta, Chairman and CEO of
Eutelsat Communications said: "In 2005/2006, Eutelsat outperformed objectives
for growth while maintaining profitability at the highest level in the Fixed
Satellite Services sector, achieving an EBITDA margin of 77.9 per cent. Our
sales dynamic, notably for video and Value Added Services, led to a 900
million euro increase in our backlog, which at four billion euros, exceeds
the equivalent of more than five years of revenues.

Over 80 per cent of our Group's revenue is derived from digital video,
data and broadband markets, which are today the most powerful growth engines
in the global telecommunications and media industries. We are therefore in a
privileged position to benefit from the emerging dynamic of High Definition
Television in Europe, and the rapid deployment of digital video and broadband
services in central and Eastern Europe, Africa and the Middle East.

To increase our competitive strengths, we have continued to expand our
in-orbit resource with the launches of HOT BIRD(TM) 7A and HOT BIRD(TM) 8,
which fortify our premium video neighbourhood at 13 degrees East and release
satellites to provide capacity at other orbital positions. Contracts have
also been awarded for HOT BIRD(TM) 9, W2M and W2A, while negotiations for the
procurement of W7 are advancing. In parallel, the opening of the new teleport
in Turin operated by our Skylogic subsidiary has supported growth of Value
Added Services, which is driven by provision of broadband solutions in
regions not served by terrestrial infrastructure and access to GSM networks,
notably for maritime markets.

Our performance in 2005-2006 demonstrates the continued efficiency of our
business model and the quality of our strategic vision: to consolidate our
leading positions in Europe, and to optimise use of in-orbit resources
through major new video positions in emerging markets and through the
expansion of Value Added Services. With the ongoing implementation of this
strategy we expect revenue above 800 million euros in 2006-2007 and more
than 4.5% compound annual growth rate for 2007-2008 and 2008-2009. We revise
upwards to 77 per cent our guidance for an EBITDA margin for 2006-2007. For
2007-2008 and 2008-2009 the EBITDA margin objective is maintained above 76%.
Together with a net debt to EBITDA ratio down to 3.6x, which is in line with
our objective of 3x to 4x, our Group is fully equipped to pursue its
development, while providing an attractive return to our shareholders".

BUSINESS HIGHLIGHTS

- Solid revenue growth supported by commercial expansion across all
activities[4]

- Video Applications: +3.4% to 528.6 million euros, driven by
consolidation of leading premium orbital positions in European Union
countries and by the development of major orbital positions in emerging
markets (Eastern and Central Europe, the Middle East, North Africa and
Sub-Saharan Africa).

In European Union countries served by the HOT BIRD(TM) (13degreesE) and
EUROBIRD(TM) 1 (28.5degreesE) positions, the number of channels grew by 16.7%
year-over-year, from 1,051 channels to 1,227. In addition, the entry into
service of the HOT BIRD(TM) 7A broadcast satellite in April 2006 increased
capacity at 13 degrees East and marked the last major phase in the switchover
from analogue to digital at the HOT BIRD(TM) position, with only four
analogue channels broadcast at this orbital position. Across its fleet
Eutelsat has now almost completed this switch-over with only eleven analogue
TV channels.

Reflecting the dynamics of emerging markets, the number of channels
broadcast from Eutelsat's video positions to serve these regions (Eastern and
Central Europe, the Middle East, North Africa and Sub-Saharan Africa) grew by
37.9%, from 544 as of June 30, 2005 to 750.

In the course of 2005-2006, ATLANTIC BIRD(TM) 3 also supported the
deployment and expansion of Digital Terrestrial Television (DTT) networks in
France and Italy. In France, the 28 DTT channels (of which ten are pay-TV)
are now distributed through ATLANTIC BIRD(TM) 3 to digital terrestrial
retransmitters, up from eight channels a year ago.

2005-2006 also marked the launch on Eutelsat's fleet of the first
commercial High Definition Television (HDTV) channels. As of June 30, 2006
Eutelsat's satellites were broadcasting 12 HDTV channels.

- Data and Value-Added Services: +4.6% to 169.1 million euros, fuelled by
robust sales in Value Added Services. While Data was impacted by the
conversion of certain high-yield short-term contracts to lower-priced
long-term deals, which procure more visibility on revenues and by the
technical incident that affected the W1 satellite on August 10, 2005,
Value-Added Services benefited from the ongoing deployment of D-STAR
terminals worldwide[5]: up 29% year-over-year, they totaled 5,300 by June 30,
2006. Maritime services providing Internet access and GSM extension also
began ramping up during the business year.

- Multi-Usage applications: +14.5% to 69.7 million euros, primarily
supported by high renewal rate of one-year contracts for government services.

- Successful launch in March 2006 of HOT BIRD(TM) 7A, which increased
capacity at 13 degrees East from 100 to 102 Ku-band transponders. It enabled
the Group to strengthen its premium video neighbourhood at 13 degrees East,
and to release satellites to provide capacity at other orbital positions.
Eutelsat has also leveraged its on-ground investments, notably its new
teleport in Turin operated by its Skylogic subsidiary: these are aimed at
expanding Value-Added Services and at developing video services, following
the success of the video network provided during the XX Winter Olympic Games
to the Olympic organising committee.

- 29% increase in backlog: at 4 billion euros, representing more than
five times the year's revenue, of which 92% are related to Video Services.
Furthermore, 85% of the backlog is made of satellite lifetime contracts, thus
increasing the weighted average residual life of the contracts to 7.7 years
as of June 30, 2006. This provides long term visibility on revenues and
operating cash flows.

- Group fill rate stood at 80.7% as of June 30, 2006. The number of
leased transponders represents a total of 373 as of June 30, 2006, out of a
total of 462[6] operational transponders across the fleet, compared to 343
leased transponders as of June 30, 2005, out of a total of 474 operational
transponders. This increase reflects the development of Video Services and
Value-Added Services in emerging markets, as well as the consolidation of the
Group's premium orbital positions serving European Union countries.

INCOME STATEMENT HIGHLIGHTS

SIGNIFICANT INCREASE OF ALL PERFORMANCE INDICATORS

- Above-target revenue growth of 5.4%, primarily driven by strong
performance in European Union countries and in emerging markets

- Operating profitability maintained at the highest level of the Fixed
Satellite Services industry: EBITDA[7] margin at 77.9%

- Consolidated net result of 40.2 million euros, showing year-over-year
improvement of 85.1 million euros, in spite of 61.7 million euros of debt
restructuring costs and satellite impairment charges

Extract from the consolidated Profit and Loss Statement[8]

Twelve months ended June 30 FY 2004/2005 (pro FY 2005/2006
forma[9])
In millions In % of In In % of
of euros revenue millions revenue
of euros
Revenue 750.4 791.1
Operating expenses[10] (171.9) 22.9% (174.6) 22.1%
EBITDA 578.5 77.1% 616.5 77.9%
Depreciation and (306.8) 40.9% (285.8) 36.1%
Amortisation
Other operating (84.0) 11.3% (27.0) 3.4%
expenses[11]
Operating income 187.7 25.0% 303.7 38.4%

Revenue for fiscal year 2005-2006 was up 5.4%[12] year-over-year,
including late delivery penalties and service interruption penalties of 17.4
million euros related to the ATLANTIC BIRD(TM) 1 satellite. Excluding
non-recurring revenue, growth was 4.6% compared with pro forma consolidated
revenue for fiscal year 2004-2005, reflecting good execution of the Group's
strategy. At constant exchange rates and excluding non-recurring revenue,
revenue was up 3.9% year-over-year.

Operating expenses were up only 1.6%, as the Group continued to exert
tight control over its cost structure. This limited increase also takes into
account a net provision reversal of accounts receivable and reduction of the
in-orbit insurance costs following implementation of a new in orbit insurance
scheme as from November 2005, which offset the professional tax reversal
booked in 2004-2005.

As a result, consolidated EBITDA increased 6.6% to 616.5 million euros,
increasing the EBITDA margin at 77.9%.

Depreciation and Amortisation are down 6.9%, resulting from the
accounting end of life of HOT BIRDTM 1 and from the extension of accounting
lifetime of certain satellites. Amortisation expense of 44.5 million euros
notably corresponds to the intangible asset "Customer Contracts and
Associated Relationships" identified during the acquisition of Eutelsat S.A.
by Eutelsat Communications.

Other operating expenses reflect impairment of 24.9 million euros in the
value of the W1 satellite following the technical incident on August 10,
2005. This amount was reduced from the 31.4 million euros booked in the first
half to take into account the pay-back of in orbit incentives from the
manufacturer.

Consequently, operating income increased by 116 million euros to 303.7
million euros, taking the operating margin up to 38.4%.

Twelve months ended June 30
In millions of euros 2005 (pro 2006
forma[13])
Operating income 187.7 303.7
Financial result (198.4) (179.6)
Income from equity investments 0.3 5.8
Income tax (34.5) (89.7)
Consolidated net result (44.9) 40.2
Minority interests 7.4 9.8
Net result, Group share (52.3) 30.4

Financial result reflects the Group's pre-IPO financial structure and
includes one-off charges of 44.5 million euros, of which 30.3 million euros
are non-cash. Interest expenses for the second half 2005-2006 were down 36.4%
compared with the first half 2005-2006 as a result of the early repayment, on
December 6, 2005, of the PIK loan and of the Second Lien Credit Facility[14].
Thus, interest expenses and others for the full year were 138.1 million
euros, compared to 173.9 million euros for the 12 month pro forma period
ended June 30, 2005. However, interest expenses reflect for less than two
weeks the reduced cost of senior debt following refinancing of the senior
debt implemented on June 19, 2006 (see table below)[15].

In millions of euros H1 2005-2006 H2 2005-2006 FY 2005-2006
Interest expenses & other (84.4) (53.7) (138.1)
Hedging instruments 10.0 0.7 10.7
Foreign exchange gains / (losses) 0.2 0.3 0.5
Amortisation of loan set-up fees (4.6) (3.6) (8.2)
Sub-Total (78.8) (56.3) (135.1)
Prepayment penalties and waiver (14.2) - (14.2)
fee (cash)
Write off of loan set up fees on (25.0) (35.4) (60.4)
PIK, Second Lien and Senior debt
(non cash)
Gain on hedging instruments - 30.1 30.1
subsequent to Senior debt
refinancing (non cash)
Post-IPO debt restructuring costs (39.2) (5.3) (44.5)
and net senior debt refinancing
costs (sub-total)
Financial result (118.0) (61.6) (179.6)

Income from equity investments shows the contribution of Hispasat, the
leading satellite operator in the Spanish and Portuguese-language markets, of
which Eutelsat holds a 27.7% ownership.

The effective income tax rate is negatively impacted by financial
expenses borne by the holding companies. They include one-off financial
expenses (44.5 million euros) and interest expenses related to the PIK loan,
the Second Lien Credit Facility and the Senior debt.

Consequently, consolidated net result was a positive 40.2
million euros, impacted by 61.7 million euros of debt restructuring costs and
satellite impairment charges. Excluding these items, adjusted consolidated
net result would have been a positive 101.9 million euros, as illustrated in
the table below:

Twelve months ended
June 30
In millions of euros 2005 (pro 2006
forma)
Consolidated net result - as reported (44.9) 40.2
Post-IPO debt restructuring costs (after tax) +39.2
Senior debt refinancing costs, net (after tax) +5.3
W1 related impairment charge after deferred tax +17.2
ATLANTIC BIRD(TM)1 related impairment charge +55.1
after deferred tax
Total debt restructuring costs and satellite +55.1 +61.7
impairment charges
Adjusted consolidated net result 10.2 101.9

Minority interests rose 2.4 million euros, driven by improvement in the
net result of Eutelsat S.A., although Eutelsat Communications held 95.2% of
Eutelsat S.A. share capital at June 30, 2006, compared with 93.2% at June 30,
2005.

As a consequence, net result, Group share was 30.4 million euros and
earnings per share was 0.14 euro.

Cash flow and balance sheet highlights: financial flexibility improved

- High net cash flow from operating activities at 501 million euros
resulting in operating free cash flow[16] of 269 million euros

- Capital expenditure below guidance at 231 million euros, reflecting the
delayed launch of the HOT BIRD(TM) 8 satellite to FY 2006-2007 and later
procurement of the W2M, W2A and W7 satellites

- Net debt reduced by 929 million euros down to 2,228 million euros

- Financial flexibility improved: leverage ratio down to 3.6x net debt to
EBITDA, within objective of 3 to 4x

Compared to June 30, 2005, net debt is down 929 million euros, driven by
net IPO proceeds (839 million euros), operating free cash flow (269 million
euros) and settlement of the ATLANTIC BIRD(TM) 1 dispute (96 million euros).
This was partly compensated by net financial cash outlay (187 million euros)
and by further purchases of Eutelsat S.A. minority interests (67 million
euros).

As a result, the Group's net debt to EBITDA ratio was down to 3.6 at June
30, 2006, compared with 5.5 at June 30, 2005.

At 231 million euros, capital expenditure was driven by the launch of
HOT BIRD(TM) 7A and the procurement of the HOT BIRD(TM) 8, HOT BIRD(TM) 9 and
W2M satellites. It is below the amount of 320 million euros initially
estimated, due to the launch of HOT BIRD(TM) 8 and to the ongoing procurement
of new satellites later than initially scheduled.

On June 19, 2006, the Group completed refinancing of its senior debt with
the following benefits:

- To reduce the blended cost of senior debt by 75 basis points, taking
down the senior debt margin to 100 basis points

- To extend maturity of the senior debt to June 2013

- To soften restrictive covenants thresholds.

The refinancing marks the first milestone in the Group's corporate
structure simplification process which aims at resulting in direct ownership
of Eutelsat SA by Eutelsat Communications by fiscal year 2007-2008.

Recent key events

Following the successful launch of HOT BIRD(TM) 7A in March
2006, HOT BIRD(TM) 4 was redeployed to the 7degreesW/8degreesW orbital
position to serve Middle East markets as of July 1, 2006, under the name
ATLANTIC BIRD(TM) 4. This brought the total number of operational
transponders of the fleet to 477 as of September 1, 2006.

HOT BIRD(TM) 8 was launched on August 5, 2006. Equipped with a
payload of 64 Ku-band transponders which spans the entire range of
frequencies at the HOT BIRD(TM) 13 degrees East position, HOT BIRD(TM) 8
takes the inter-satellite back-up at Eutelsat's prime video neighbourhood to
a new level of security. Scheduled to enter commercial service in October,
HOT BIRD(TM) 8 will assume all broadcast traffic currently carried by the
20-transponder HOT BIRD(TM) 3, which will subsequently continue commercial
service at an alternative location (9.8 degrees East).

The Group has signed a pre-contract with Alcatel Alenia Space
for the procurement of the W2A satellite. Eutelsat has until October 15, 2006
to decide whether to exercise an option to add to this Ku and C-band
satellite an S-band payload to broadcast TV content to mobiles.

Strategic directions, outlook and dividend

Eutelsat Communications conducts an annual review of its strategic plan
which was completed in June 2006. The results achieved in 2005-2006 are
validating its long-term strategy: the Group aims at consolidating its
leading position in European Union countries, and at optimising use of
capacity through the creation and development of major new video positions.
It also targets the continued expansion of Value Added Services, notably in
emerging countries.

The Group provides the following update to the financial objectives
presented on February 17, 2006:

- Revenue objective for 2006-2007 is above 800 million euros.
This objective is consistent with the Group's initial target of more than
4.5% Compound Annual Growth Rate (CAGR) for the next 3 fiscal years
(2006-2007 to 2008-2009), which was based on the initial revenue target of
769 million euros for 2005-2006. The Group expects a CAGR above 4.5% for
fiscal years 2007-2008 and 2008-2009.

- Given the performance achieved to date, the ongoing
efficiency of its strict cost control policy, the Group is raising its
profitability objective to 77% for fiscal 2006-2007, as expressed by the
consolidated EBITDA margin. For 2007-2008 and 2008-2009, the EBITDA margin
objective is maintained above 76%.

- Annual capital expenditure should be 250 million euros on average over
the fiscal years 2006-2009. In fiscal year 2005-2006, only 231 million euros
were spent compared to the originally estimated 320 million euros.

- Beyond 2009, on an annualised basis, the Group considers that
approximately 260 million euros per year should be invested in order to
progressively renew its fleet, which is expected to comprise 572 transponders
in operation by June 30, 2009.

A sum of 0.54 euro per share, taken from "Share Premium", representing a
distribution yield of 4.5% based on the IPO price of 12 euros will be
submitted to the approval of the shareholders. Eutelsat Communications will
convene a General Shareholders' Meeting on November 10, 2006 in Paris.

In the coming years, the Group intends to maintain an
attractive distribution policy.

Conference call

Eutelsat Communications will hold an analyst call to discuss its
financial results for fiscal year 2005-2006 on September 4, 2006. The call
will begin at 2:30 pm CET (New York: 8:30 am, London: 1:30 pm). The call-in
numbers are 01 71 23 04 18 from France, and +44 20 7138 0835 from outside
France.

The presentation will be available on the Group's website
www.eutelsat.com from 7:30 am CET on September 4, 2006.

The conference call will be replayed at the same web address until
September 23, 2006.

Financial calendar

- November 8, 2006 : revenues for the first quarter ended
September 30, 2006

- November 10, 2006 : annual General Meeting of Shareholders

- February 15, 2007 : revenues and earnings for the first half
ended December 31, 2006

- May 4, 2007 : revenues for the third quarter ended March 31,
2007

- July 2007 : revenues for the full year ended June 30, 2007

- September 2007 : earnings for the full year ended June 30,
2007

The above financial calendar is provided for information
purposes only. It is subject to change and will be regularly updated.

About Eutelsat Communications

Eutelsat Communications (Euronext Paris: ETL, ISIN code: FR0010221234) is
the holding company of Eutelsat S.A. The Group is a leading satellite
operator with capacity commercialised on 23 satellites providing coverage
over the entire European continent, as well as the Middle East, Africa, India
and significant parts of Asia and the Americas. The Group is one of the
world's three leading satellite operators in terms of revenues. Its
satellites are used for broadcasting more than 2,100 TV and 970 radio
stations to more than 120 million cable and satellite homes. The Group also
provides TV contribution services, corporate networks, mobile positioning and
communications, Internet backbone connectivity and broadband access for
terrestrial, maritime and inflight applications. Eutelsat Communications is
headquartered in Paris, and the Group's workforce comprises over 490
employees from 27 countries.

www.eutelsat.com

For further
information
Press
Vanessa O'Connor Tel: +33-1-53-98-38-88
voconnor@eutelsat.fr
Frederique Gautier Tel: +33-1-53-98-38-88
fgautier@eutelsat.fr
Investors
Gilles Janvier Tel: +33-1-53-98-35-35
investors@eutelsat-communications.com

Appendices

Revenues by business application

Twelve months ended June 30
In millions of euros 2005 2006 % change
(pro forma)
Video Applications 511.3 528.6 +3.4%
Data & Value Added Services 161.7 169.1 +4.6%
Multi-usage 60.8 69.7 +14.5%
Other 5.9 6.3 -
Sub-total 739.7 773.7 +4.6%
One-off revenues 10.7 17.4 NM
Total 750.4 791.1 +5.4%

Revenues by quarter

Three months ended
In millions of euros September December March 31, June 30,
30, 2005 31, 2005 2006 2006
Video Applications 129.0 126.5 132.1 141.0
Data & Value Added Services 42.2 44.4 42.4 40.2
Multi-usage 16.2 17.2 17.9 18.3
Other 0.9 1.2 2.7 1.6
Sub-total 188.3 189.3 195.1 201.1
One-off revenues - 17.4 - -
Total 188.3 206.6 195.1 201.1

As from July 1, 2006 and following a technical review of used
capacity, Eutelsat has re allocated a total of 6.7 millions (equally split
over the first nine months of activities), representing less than 1% of Group
revenues, from Data to Video applications.

[1] EBITDA is defined as operating income before depreciation and
amortisation, excluding impairment charges

[2] SES Global, Eutelsat Communications and Intelsat Panamsat

[3] Pro forma figures for 12 months ending June 30, 2005 are non audited

[4] For more details on 2005-2006 revenues, see the July 20, 2006 press
release available on www.eutelsat-communications.com. A table in the
appendices provides the breakdown of revenues by application.

[5] D- STAR services provide Internet access and Virtual Private Networks
to enterprises and institutions in regions with inexistent or unreliable
terrestrial broadband infrastructure

[6] The number of operational transponders decreased from 474 as of June
30, 2005, to 462 as of June 30, 2006, due to the technical incident on W1
(-14 transponders). The launch of HOT BIRD(TM) 7A added two transponders.

[7] EBITDA is defined as operating income before depreciation and
amortisation, excluding impairment charges

[8] For further details, please refer to the consolidated accounts of the
Group

[9] Pro forma financial information includes the most significant
adjustments in Eutelsat Communications' consolidated income statement and the
consolidated balance sheet for the period ending June 30, 2005 (see note 29
of the consolidated financial statements for the three-month period ending
June 30, 2005).

[10] Operating expenses are defined as cost of operations plus sales &
administrative expenses.

[11] In 2004-2005, this was primarily due to an 84 million euro
impairment of the value of the ATLANTIC BIRD(TM) 1 satellite

[12] See press release dated July 20, 2006, available on the Group's
website.

[13] Pro forma figures are non audited

[14] See international offering memorandum dated November 29, 2005 for
more details on the Group's debt structure.

[15] See Eutelsat Communications press release dated June 8, 2006.

[16] Operating free cash flow is defined as net cash flow from operating
activities less acquisition of satellites and other property, plant and
equipment, net of disposals.

Source: Eutelsat Communications

Vanessa O'Connor, Tel: +33-1-53-98-38-88, voconnor@eutelsat.fr, Frederique Gautier, Tel: +33-1-53-98-38-88, fgautier@eutelsat.fr

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