Eutelsat Communications Reports First Half 2006-2007 Results in Line With Full Year Guidance

Eutelsat Communications Reports First Half 2006-2007 Results in Line With Full Year Guidance

PARIS, February 15/PRNewswire-FirstCall/ --

- 5.2% revenue growth, driven by progress in Video Applications

- Strong development in emerging markets

- EBITDA[1] margin at 79.4%, maintained at the highest level among
leading satellite operators[2] in the Fixed Satellite Services sector

- Sharp increase in consolidated net income at 79.9 million euros

- Confirmation of full-year and medium-term objectives

Eutelsat Communications (ISIN: FR0010221234 - Euronext Paris: ETL), one
of the world's leading satellite operators, today reported results for the
first half ended December 31, 2006.

Six months ended December
31
In millions of euros 2005 2006 % change
Key elements of the consolidated income statement
Revenues MEUR 394.9 415.3 +5.2%
EBITDA MEUR 311.0 329.6 +6.0%
EBITDA margin % 78.7 79.4 +0.7pt
Consolidated net income MEUR (21.2) 79.9 NA
Earnings per share EUR (0.16) 0.33 NA
Key elements of the consolidated cash flow statement
Net cash flow from operating MEUR 228.2 240.3 +5.3%
activities
Capital expenditure MEUR 73.1 138.1 +88.9%
Operating free cash flow MEUR 155.1 102.2 -34.1%
Key elements of the financial structure
Net debt MEUR 2,242 2,302 +2.7%
Net debt/EBITDA[3] x 3.8 3.6 NA
Key operational metrics
Backlog EURbn 4.0 3.8 NA
Leased transponders Units 352 394 +42

Commenting on first half 2006-2007 results, Giuliano Berretta, Chairman
and Chief Executive Officer of Eutelsat Communications said: "This solid
performance for our first half-year shows the dynamic of the full set of
digital markets addressed by our satellites. We have actively pursued growth
of Video Applications within the framework of our objective to maximise
revenue yield per transponder. As a result, this activity has increased
over the last six months from 67% to account for 70% of revenues. The
successful launches in 2006 of two HOT BIRD(TM) satellites have also enabled
us to consolidate our key video neighbourhood, which, at the end of December
2006, passed the tipping point of 1,000 digital channels addressing 121
million satellite and cable homes in Europe, North Africa and the Middle
East. With these launches under our belt, we could also go ahead with
redeploying two existing satellites to other locations to serve broadcast
markets experiencing solid growth.

In parallel, our Group has pursued the development of broadband services
for regions not served by terrestrial infrastructure, while the introduction
of in-flight broadband for business aviation passengers has fuelled further
diversification of our portfolio of value-added services.

This strategy has enabled us to maintain our operational profitability
at the highest level in the Fixed Satellite Services industry.

Furthermore, in order to strengthen our in-orbit resources we have
concluded procurement contracts for the HOT BIRD(TM) 10, W7 and W2A
satellites. As part of our policy of innovation, W2A will embark the
first S-band payload for video broadcasting to mobile devices and vehicles
in Europe.

This performance lends confidence to our strategic directions and our
ability to meet our full-year and medium-term objectives."

INCOME STATEMENT HIGHLIGHTS

- Revenues up 5.2%, driven by Video Applications in emerging markets[4]

- Operating profitability maintained at the highest level of leading
satellite operators in the Fixed Satellite Services sector: EBITDA margin at
79.4%

- Strong increase in consolidated net income to 79.9 million euros,
reflecting excellent operational performance and the impact of restructuring
of Group debt.

REVENUE GROWTH SUSTAINED BY STRONG COMMERCIAL DYNAMIC

Revenues by application

Six months ended
December 31 Change
In millions of euros 2005 2006 (in millions of euros)
Video Applications 255.5 289.8 +34.3
Data & Value-Added 86.6 81.6 -5.0
Services
Multi-usage 33.4 29.5 -3.9
Other 2.1 3.1 +1.0
Sub-total 377.5 403.9 +26.4
One-off revenues 17.4 11.4 -6.0
Total 394.9 415.3 +20.4

First half 2006-2007 revenues include 11.4 million euros of penalties
related to late delivery of the HOT BIRD(TM) 7A satellite. At a constant
exchange rate, revenues were up 6.3% compared with the first half 2005-2006.
Excluding one-off revenues and at a constant exchange rate, revenue growth
was 8.2%.

Strong growth in Video Applications (70% of first half revenues) was driven by:

- Full effect of contracts activated during the second half 2005-2006,
notably following entry into service of the HOT BIRD(TM) 7A satellite on
April 20, 2006.

- Ongoing expansion of pay-TV platforms in the Group's priority areas of
development (central Europe, Russia, Africa, Middle East) with NTV+ and
Tricolor in Russia, MAXTV in Romania, SBB in Serbia and Digiturk in Turkey.

- Strengthening of the HOT BIRD(TM) neighbourhood following entry into
service of HOT BIRD(TM) 8 and the launch of a new pay-TV platform in Poland:
"n", Poland's first platform in MPEG 4 to include High-Definition channels.

- Entry into service on July 1, 2006 of ATLANTIC BIRD(TM) 4 at the
7/8degrees West orbital position, enabling entry into force of contracts
formerly concluded with operators in the Middle East.

- Increase in the number of channels broadcast on the Eutelsat fleet by
36.9% to compared with December 31, 2005 (+655 channels), and by 14.5%
compared with June 30, 2006 (+308 channels). At December 31, 2006 the 2,429
channels broadcast by Eutelsat's satellites were received by 164 million
satellite and cable homes.

- Consolidation of premium orbital positions[5] with 1,339 channels
broadcast (+262 channels compared with December 31, 2005, and +112 channels
compared with June 30, 2006). The HOT BIRD(TM) neighbourhood confirms its
leadership in extended Europe with 1,082 channels broadcast to over 121
million homes (of which 47.5 million are Direct-to-Home) as of December 31,
2006.

- Strengthening of major orbital video positions[6] with 917 channels
broadcast (+336 channels compared with December 31, 2005 and +194 channels
compared with June 30, 2006). This growth notably reflects growth of TV
platforms in the Group's priority areas of development in particular those
broadcasting from ATLANTIC BIRD(TM) 4 (7/8degrees West) for the Middle East
and North Africa, W3A (7degrees East) for Turkey, W2 (16degrees East) for
central Europe and the Balkans, and W4 (36degrees East) for Russia and
Ukraine.

Data and Value Added Services (20% of first half revenues) revenues were
almost stable compared with the second half 2005-2006, down by less than 1
million euros. Compared with the first half 2005-2006, revenues were down
by 5 million euros. This is notably due to the non-renewal of certain
contracts which expired during the previous fiscal year following the
technical incident in August 2005 on the W1 satellite, and to the
transformation last year of certain short-term contracts into long-term
contracts which, in counterpart, offer more visibility on revenues.
Revenues for second quarter 2006-2007 were stable compared with first
quarter 2006-2007.

- Value-Added Services revenues were up 5% compared with the first half
2005-2006 at 14.9 million euros. This was driven by the ongoing deployment of
D-STAR[7] terminals, mainly in Europe (+649 terminals) and in Africa (+617
terminals), increasing the installed base by 29% compared with a year ago, to
5,715 terminals at December 31, 2006. The Group also continued to innovate as
shown by the introduction of a new service developed in partnership with
ViaSat to provide high-speed in-flight communications to business jet
passengers in Europe.

Multi-usage (7% of first half revenues) benefited from the renewal of all
government service contracts which had expired during the period and also
from additional demand from these customers.

- The overall performance of this segment is mainly due to the
reallocation to Video Applications of capacity previously leased to ARABSAT
following expiration of a contract. This capacity, which represented revenues
of slightly more than 5 million euros in the first half 2005-2006, is now
leased for Video applications under medium-term and long-term contracts.

- Multi-usage revenues also reflects unfavourable US$/EUR currency
fluctuations. At a constant exchange rate, revenue decrease would have been
limited to 6.1%.

Backlog[8]: at 3.8 billion euros, of which 79% comprises satellite
lifetime contracts, Group backlog represents 4.8 times last year revenues.
The weighted average residual life of the contracts was 7.4 years at December
31, 2006. The share of Video Applications in the order book remains stable at
91% as of December 31, 2006, compared with 92% as of December 31, 2005. This
provides the Group with long term visibility on revenues and operating cash
flows.

Improvement of fleet fill rate: 82.2% at December 31, 2006

Available capacity in stable orbit and number of leased transponders

In units June 30, December 31, June December
2005 2005 30, 31, 2006
2006
Number of operational 474 460 462 479
transponders
Number of leased 343 352 373 394
transponders
Fill rate (%) 72.4% 76.6% 80.7% 82.2%

Improvement in the fill rate reflects an increase of the number of leased
transponders (up 5.6% compared with June 30, 2006), at a rate slightly above
that of the number of operational transponders (up 3.7% compared with June
30, 2006). Given the stability of the fill rate at premium orbital positions,
this increase is attributable to the development of Video Applications in
emerging markets, in particular at the Group's major video orbital positions,
in line with its development strategy.

OPERATING PROFITABILITY MAINTAINED AT THE HIGHEST LEVEL IN THE
INDUSTRY

Extract from the consolidated income statement[9]

Six months ended December 2005 2006
31
In millions In % of In In % of
of euros revenues millions revenues
of euros
Revenues 394.9 415.3
Operating expenses[10] (83.9) 21.3% (85.7) 20.6%
EBITDA 311.0 78.7% 329.6 79.4%
Depreciation and (146.6) 37.1% (150.2) 36.2%
amortisation[11]
Other operating revenues (31.5) 8.0% 0.1 NS
(costs)[12]
Operating income 132.9 33.7% 179.5 43.2%

Operating expenses grew at a substantially lower pace (+2.1%) than
revenues, highlighting the tight control the Group exerts over its cost
structure.

As a result, EBITDA increased 6.0%, taking the EBITDA margin to 79.4%.
Excluding one-off revenues, EBITDA margin would have been 78.8%.

Depreciation and amortisation were up 2.5% following the launches of HOT
BIRD(TM)7A in April 2006 and HOT BIRD(TM) 8 in August 2006 which fully offset
the decrease in depreciation expenses related to three satellites of which
the estimated lifetime was increased.

Other operating revenues (costs) mainly include:

- a 25.8 million euros income related to a partial insurance compensation
for the damage incurred following the technical incident on the W1 satellite
on August 10, 2005,

- a 25.0 million euros expense corresponding to the depreciation of the
EUROBIRD(TM) 10 satellite following the technical incident on October 4,
2006.

Operating income consequently increased by 46.6 million euros to 179.5
million euros, taking the operating margin up to 43.2%.

STRONG INCREASE IN CONSOLIDATED NET INCOME

Extract from the consolidated income statement

Six months ended December 31
In millions of euros 2005 2006
Operating income 132.9 179.5
Financial result (118.0) (56.5)
Income from equity investments 1.2 2.5
Income tax (37.3) (45.6)
Consolidated net income (loss) (21.2) 79.9
Minority interests 4.5 4.9
Net income (loss), Group share (25.6) 75.0

The improvement of financial result reflects the decrease and the
refinancing of the debt which was completed in the previous fiscal year. As a
result, interest charges were reduced by 29.6 million euros compared with the
first half 2005-2006.

Financial result

Six months ended
In millions of euros 31/12/2005 30/06/2006 31/12/2006
Interest expenses & other (84.4) (53.7) (54.8)
Hedging instruments 10.0 0.7 (0.2)
Foreign exchange gains / (losses) 0.2 0.3 (0.1)
Amortisation of loan set-up fees (4.6) (3.6) (1.5)
Sub-Total (78.8) (56.3) (56.5)
Prepayment penalties and waiver fee (14.2) - -
(cash)
Write off of loan set up fees on (25.0) (35.4) -
PIK, Second Lien and senior debt
(non cash)
Gain on hedging instruments - 30.1 -
subsequent to senior debt
refinancing (non cash)
Post-IPO debt restructuring costs (39.2) (5.3) -
and net senior debt refinancing
costs (sub-total)
Financial result (118.0) (61.6) (56.5)

Following these transactions and the simplification of the corporate
structure, the effective tax rate improved substantially to 37% for the first
half 2006-2007.

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

Consolidated net income therefore increased strongly, driven
by:

- Improvement of operating performance leading to consolidated EBITDA
growth of 6.0%;

- Absence of the non-recurring items which had impacted financial results
of the first half 2005-2006;

- Significant decrease in interest charges resulting from debt reduction
and debt refinancing completed during the previous fiscal year.

Cash flow and balance sheet highlightS

- Substantial operating free cash flow[13] at 102 million euros
(representing 25% of revenues)

- Leverage ratio at 3.6x net debt to EBITDA, stable compared with June
30, 2006

Compared with June 30, 2006, net debt is up 74 million euros, reflecting
the consolidated distribution of 124 million euros in November 2006 and the
investment programme. Capital expenditure (138 million euros) is mainly
related to the launch of the HOT BIRD(TM) 8 satellite and to the procurement
of HOT BIRD(TM) 9, HOT BIRD(TM)10, W2A, W7 and W2M.

Continuation of an active in-orbit investment programme

Following the entry into service in April 2006 of HOT BIRD(TM)
7A, the HOT BIRD(TM) 4 satellite was redeployed to the 7/8degrees West
orbital position. Rebranded ATLANTIC BIRD(TM) 4, the satellite has been used
for video broadcasting for Middle East and North Africa markets since July 1,
2006.

HOT BIRD(TM) 8 went into commercial service in the night of
October 2 to 3, 2006. Equipped with a payload of 64 Ku-band transponders
which spans the entire range of frequencies at the HOT BIRD(TM) 13degrees
East position, it assumed all broadcast traffic previously carried by the
20-transponder HOT BIRD(TM) 3. It also took the inter-satellite redundancy at
Eutelsat's prime video neighbourhood to a new level of security.

HOT BIRD(TM) 8's successful launch also enabled the
redeployment of HOT BIRD(TM) 3 to the 9degrees/10degrees East position to
serve customers in Europe under its new name of EUROBIRD(TM) 10. During
transfer operations, the satellite experienced an anomaly which resulted in
loss of use of a solar array and subsequent significant reduction of
electrical power.

These operations together brought the number of operational
transponders supplied by the fleet to 479 at December 31, 2006, up from 462
at June 30, 2006 and 460 at December 31, 2005.

Satellite procurement activity was also sustained with
contracts signed for three new satellites during the period:

- HOT BIRD(TM) 10 : the Group signed a contract with EADS
Astrium for the delivery of the HOT BIRD(TM) 10 broadcast satellite which
will be equipped with 64 Ku-band transponders. The deployment of HOT BIRD(TM)
10 which is scheduled for launch in the first quarter 2009 underpins
Eutelsat's objectives to continue to renew capacity at its premium HOT
BIRD(TM) neighbourhood, to raise in-orbit redundancy and security for
broadcasting clients, and to increase overall flexibility across the entire
satellite fleet. The entry into commercial service of the HOT BIRD(TM)9 and
HOT BIRD(TM)10 satellites will ultimately enable redeployment of HOT BIRD(TM)
7A (38 transponders) to 9degrees/10degreesEast and possibly HOT BIRD(TM) 6 to
another orbital location.

- W7: the Group also signed a contract with Alcatel Alenia
Space for the procurement of W7 whose mission comprises up to 70 Ku-band
transponders that can be connected to six beams serving Europe, Russia,
Africa, the Middle East and central Asia. To be launched in second quarter
2009, W7 will double the capacity currently available at the 36degrees East
neighbourhood and will allow the redeployment of the SESAT 1 satellite for a
new commercial mission at another location.

- W2A: the Group retained Alcatel Alenia Space for the
delivery of the W2A satellite which will be equipped with Ku-band and C-band
payloads. This satellite which is scheduled for launch in the first quarter
2009 will be located at 10degrees East where it will replace the W1
satellite.

Eutelsat Communications and SES also announced a project to
set-up a joint venture[14] in order to acquire, operate and market an S-band
payload on W2A for broadcasting video, radio and data to mobile devices and
vehicle receivers over Europe.

RECENT EVENTS

Share ownership structure and corporate governance

On January 23, 2007, Abertis Telecom, subsidiary of the Spanish group
Abertis, completed the acquisition of 32% of the share capital of Eutelsat
Communications from private equity investment funds (Cinven, Texas Pacific
Group, Spectrum and Goldman Sachs).

On February 14, 2007, CDC Infrastructure[15] completed the acquisition of
25.5% of Eutelsat Communications' share capital from Eurazeo.

With the completion of these transactions, the new share ownership
structure is:

- Abertis Telecom: 31.96%

- CDC Infrastructure: 26.15%[16]

- Public: 41.89%.

Following these transactions the January 23, 2007, and February 14, 2007,
Board of Directors' meetings coopted five new Directors to replace members
who resigned their posts. These appointments are subject to ratification by
the next ordinary shareholders meeting.

The new coopted Directors are:

- Tobias Martinez (Managing Director, Abertis Telecom),

- Carlos Espinos (Deputy Managing Director and Commercial and Technology
Director, Abertis Telecom)

- Andrea Luminari (Business Development Director, Abertis Telecom)

- Carlos Sagasta (Finance, Planning and Control Director, Abertis
Telecom).

- CDC Infrastructure, represented by Jean Bensaid (Deputy Director,
Finance and Strategy, Caisse des Depots et Consignations)

The total number of Directors remains unchanged at 10.

OUTLOOK

In view of the results of the first half 2006-2007, the Group confirms
its objectives:

- Revenues exceeding 800 million euros for fiscal year 2006-2007, in
line with the initial objective communicated in February 2006 of a 3-year[17]
compound average growth rate of more than 4.5%[18].

- A compound average growth rate of more than 4.5% for fiscal years
2007-2008 and 2008-2009.

- EBITDA margin of at least 77% for fiscal year 2006-2007
taking into account non-recurring revenues of 11.4 million euros in the first
half, and above 76% for fiscal years 2007-2008 and 2008-2009.

- Average annual capital expenditures of 325 million euros, over the
three fiscal years 2006-2007 to 2008-2009.

Analysts and Investors Meeting and Conference call

Eutelsat Communications will hold an analysts and investors meeting on
February 15 to present its financial results for the first half 2006-2007.
The meeting will take place at Group headquarters, 70, rue Balard, 75015
Paris and will start at 9:30 am (Paris time). The call-in numbers for audio
(French and English) are: +33-1-70-99-42-95 (French) and +44-207-806-1957
(English).

A replay will be available by phone at 1:30pm (Paris time) until February
21, 2007, midnight, by dialing +33-1-71-23-02-48 (French), access code:
9906794#, and +44-207-806-1970 (English), access code: 4749999#.

A presentation will be available on the Group's website www.eutelsat.com
from 7:30am (Paris time) on February 15, 2007.

Eutelsat Communications will also hold a conference call in English for
analysts and investors. The call will begin at 3:30pm (Paris time, New York:
9:30am, London: 2:30pm). Call-in numbers are +44-207-138-0816 and
+1-718-3541171.

A replay of the call will be available at 6:30pm (Paris time) until
February 21, 2007, midnight, by dialing +44-207-806-1970 or +1-718-354-1112,
access code: 4425657#.

Financial calendar

- May 10, 2007 : revenues for third quarter ended March 31,
2007

- Week starting July 30, 2007: earnings for 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.. With capacity commercialised on 23
satellites that provide coverage over the entire European continent, as well
as the Middle East, Africa, India and significant parts of Asia and the
Americas, Eutelsat is one of the world's three leading satellite operators in
terms of revenues. At 31 December 2006, Eutelsat's satellites were
broadcasting over 2,400 television channels and 1,000 radio stations. More
than 1,000 channels broadcast via its HOT BIRD(TM) video neighbourhood which
serves over 120 million cable and satellite homes in Europe, the Middle East
and North Africa. The Group's satellites also serve a wide range of fixed and
mobile telecommunications services, TV contribution markets, corporate
networks, and broadband markets for Internet Service Providers and for
transport, maritime and in-flight markets. Eutelsat's broadband subsidiary,
Skylogic, markets and operates services through teleports in France and Italy
that serve enterprises, local communities, government agencies and aid
organisations in Europe, Africa, Asia and the Americas. Headquartered in
Paris, Eutelsat and its subsidiaries employ 490 commercial, technical and
operational experts 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

Quarterly revenues by business application

Three months ended
In millions of euros September December September December
30, 2005 31, 2005 30, 2006 31, 2006
Video Applications 129.0 126.5 142.8 147.0
Data & Value Added Services 42.2 44.4 40.8 40.8
Multi-usage 16.2 17.2 14.7 14.8
Other 0.9 1.2 1.3 1.9
Sub-total 188.3 189.3 199.5 204.4
One-off revenues - 17.4 - 11.4
Total 188.3 206.6 199.5 215.8

---------------------------------

[1] EBITDA is defined as operating income before depreciation and
amortisation, excluding impairment charges, dilution profits (losses) and
insurance proceeds

[2] SES, Eutelsat Communications, Intelsat

[3] Based on last 12 months EBITDA

[4] Central Europe, Russia, Middle East, North Africa and Sub-Saharan
Africa

[5] Orbital positions HOT BIRD(MT) at 13degrees East and EUROBIRD(TM) 1
at 28.5degrees East

[6] Orbital positions 7/8degrees West, 5degrees West, 7degrees East,
9/10degrees East, 16degrees East, 25.5degrees East and 36degrees East

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

[8] Backlog represents future revenues from capacity lease agreements
(including contracts for satellites yet to be delivered). These capacity
lease agreements can be for the entire operational life of the satellites

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

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

[11] Comprises amortisation expense of 22.2 million euros corresponding
to the intangible asset "Customer Contracts and Associated Relationships"
identified during the acquisition of Eutelsat S.A. by Eutelsat Communications

[12] In the first half 2005-2006, other operating costs were primarily
due to a 30.4 million euro impairment of the value of the W1 satellite
following the technical incident on August 10, 2005

[13] 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

[14] A joint venture will be set up by SES ASTRA and Eutelsat following
approval from relevant regulatory agencies

[15] CDC Infrastructure is a subsidiary of Caisse des Depots et
Consignations

[16] Including 0.65% owned by CDC Fonds Propres (subsidiary of Caisse des
Depots et Consignations)

[17] Over the 3 fiscal years 2006-2007 to 2008-2009

[18] Assuming revenues of 769 million euros for fiscal year 2005-2006

Source: Eutelsat Communications

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

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