Eutelsat Communications S.A.

Rodolphe Belmer – Chief Executive Officer Michel Azibert – Deputy Chief Executive Officer, Chief Commercial and Development Officer Sandrine Teran – Chief Financial Officer

Giles Thorne – Jefferies Nick Dempsey – Barclays Alexander Peterc – SG Michael Bishop – Goldman Sachs Wilton Fry – Royal Bank of Canada Eric Beaudet – Natixis Sami Kassab – Exane Laurie Davison – Deutsche Bank Andrew DeGasperi – Macquarie Ben Heelan – Bank of America Patrick Wellington – Morgan Stanley Vincent Maulay – ODDO Robert Berg – Berenberg Constantin Wolf – JP Morgan

Well, thank you very much, and sorry again for this interlude. Welcome again to everyone and thank you for staying with us on this presentation of our first-half result.

I'm with Michel Azibert, the Deputy CEO, and with Sandrine Teran, our new CFO, who joined us at the beginning of January. To start off, let's take a quick look at the highlights for the period, starting with the main business highlights.

On the commercial front, the fall campaign renewal rate with the U.S. DoD was above expectations at over 90%.

We have seen progress on HD and ultra-HD take-up on HOTBIRD, of which we'll tell more later. On KA-SAT, we won contracts with SAS and Finnair for inflight connectivity.

And we have resold the entire HTS payload on EUTELSAT 3B, mainly for inflight connectivity for Saudi Arabian airlines. We achieved a high level of profitability in the first half, with a strong EBITDA margin.

And we have launched what we call the LEAP cost-savings plan, aimed at saving €30 million by 2019 and enabling us to raise our EBITDA margin target. And we'll come back to that later on.

We are also delivering on our commitments to reduce CapEx and to grow discretionary free cash flow. Notably, we successfully applied the design-to-cost policy to the procurement of the E 5 West B satellite, generating CapEx savings in the region of 30%.

And finally, and importantly, we have taken significant steps in preparing the future growth of the Company. In the connectivity vertical we secured capacity, which will enable us to assure the launch in the second half of our African broadband initiative, or Konnect Africa as it is now called, with only a limited delay compared to the original schedule.

We will close the planned joint venture with ViaSat in the coming days, with a wider scope and now covering both broadband and mobility in Europe. And we are expecting to add ViaSat's VHTS satellite to accelerate growth in the connectivity vertical in the EMEA region from the early 2020s with, and I'm underling that, with no change to our CapEx framework.

Let's now take a quick look to the first-half financial highlights. Total revenues stood at €755 million, down 2.5% on a reported basis and by 0.9% like for like, in line with our expectations and meaning that we are on track relative to the outlook for the full year.

Group EBITDA stood at €588 million, implying a high level of EBITDA margin, at 77.9%, similar to the first half of last year. Group share of net income amounted of €192 million, giving a net margin of 25%.

Discretionary free cash flow, a formal metric introduced this year, stood at €325 million, up strongly by 27%. The net-debt-to-EBITDA ratio was 3.37 times at the end of December 2016, representing a slight improvement on end June 2016.

Finally, a dividend per share of €1.10 was approved at the Annual General Meeting and fully paid in cash in November. Before going into the details of the first half, a word on the new segmental reporting for revenues.

In line with our revised strategy, we have amended our reporting to enable a clearer identification between the core businesses and the new connectivity applications, which will be the strongest source of growth for the future. From now on, we will report our revenues on the basis of five applications, video, fixed data and government services, which are our core business; and fixed broadband and mobile connectivity, under the banner of connectivity, our strong growth leaders.

The main changes related to the previous reporting around the four applications of video, data services, value-added services and government services are as follows. Video is broadly unchanged, with the exception of a modest reclassification of some professional video revenues towards fixed data to better reflect the final usage of capacity.

Data services is renamed fixed data and some of its revenues have been reclassified under fixed broadband and, for example, the ka payload on EUTELSAT 65 West A and also on mobile connectivity. Government services will incorporate only military and security revenues from now on.

Revenues related to civil applications are reclassified under fixed data. Finally, value-added services is split between fixed broadband and mobile connectivity.

And the definition of other revenues remains unchanged. And you can find all the details relating to these changes, including the reconciliation table, in the appendices to the first-half results press release.

Now over to Mr. Azibert for a look at the first-half operational performance based on these new reporting segments.

Thank you, Rodolphe. You can see on this slide what the new classifications look like in terms of contribution to overall revenues.

Among the core businesses, video remains almost unchanged, at 64%. Fixed data, ex-data services, represents 12%, versus 16% previously.

And government services also represents 12%, versus 13% previously, while in connectivity, the new applications of fixed broadband and mobile connectivity now represent 7% and 5% respectively. So as Rodolphe said, in the first half, total Group revenue stood at €755 million, down 0.9% at constant currency and perimeter.

This includes the contribution from the applications detailed here, as well as other revenues of €42 million. I remind you that the perimeter effect relates to the disposal of Alterna TV, Wins/DHI and DSAT Cinema.

You can find all the details of the pro forma in the press release. Revenues declined year-on-year in all the core or legacy businesses, particularly in fixed data.

But on the other hand, in the connectivity segment, both fixed broadband and mobile connectivity saw strong growth, with rises of almost 20% each. If we look at Q2, the trend is positive on a sequential basis.

Data is still declining by 5%, but all other applications were stable or growing. In particular, video recorded a rise of 0.9% and government services of 2.7%.

Mobility saw a strong 21.5% increase. Fixed broadband revenues were down 4.9%, but would have been stable excluding a one-off element in Q1.

Let's now look at each application in detail, starting with video. Revenues in the first half were down 2% like for like to €455 million.

Broadcast revenues were stable on the back of the contribution from incremental capacity launched during the course of last year, EUTELSAT 8 West B MENA and EUTELSAT 36C in Sub-Saharan Africa, which more than offset the negative impact of the rationalization of capacity at the HOTBIRD position and of lower revenues from Fransat following the completion of the transition to HD in France. Broadcast revenues would have been up 4% excluding the HOTBIRD impact.

The H1 year-on-year decline in video was therefore fully attributable to lower revenues in professional video. Second quarter video revenues stood at €229 million, down 3.5% on a year-on-year basis, but up by 0.9% quarter-on-quarter.

Professional video also experienced a quarter-on-quarter improvement. At the end of December 2016, the total number of channels broadcast by Eutelsat satellites stood at 6,339, up 5.6% year-on-year.

HD penetration continued to increase, standing at 997 channels, versus 757 a year earlier, i.e. plus 32%, and representing a penetration rate of 15.7%, compared to 12.6% a year earlier.

We will speak more in detail about specific trends at the HOTBIRD position later in this presentation. Turning to fixed data, in the first half, revenues stood at €85 million, down 15.9% like for like.

This is partly due to the fact that fast-growing broadband and mobility revenues have been transferred to new applications. But it clearly also reflects the anticipated ongoing pricing pressure in all geographies, which has not been offset by volume.

Second-quarter revenues stood at €41 million, down 16% on a year-on-year basis and by 5.3% quarter-on-quarter. In the first half, government services revenue stood at €86 million, down 9.1% like for like, reflecting the carryover effect of lower renewals with U.S.

DoD in the spring 2016 campaign. Second-quarter revenue stood at €44 million, down 7.7% on a year-on-year basis, but up by 2.7% quarter-on-quarter, reflecting the positive outcome of the fall 2016 campaign, with a renewal rate for existing contracts of above 90% in value and new contracts representing an additional four 36-megahertz equivalent transponders.

First-half fixed broadband revenues stood at €49 million, up 18.3% like for like. This reflected the positive effect of the entry into service in May 2016 over Latin America of EUTELSAT 65 West A, on which the ka payload is fully sold, and the resilience of European revenues on KA-SAT.

This more than offset the negative impact of the termination in the previous fiscal year of the contract for the ka payload on EUTELSAT 3B, which has in the meantime been fully resold. Second-quarter revenues stood at €24 million, up 20% year-on-year, but down by 5% quarter-on-quarter.

However, excluding a positive one-off in the first quarter relating to the phasing of payments by a specific customer, revenues would have been flat quarter on quarter. The Russian consumer broadband service launched in the first quarter on EUTELSAT 36C is contributing modestly to revenues and is expected to ramp up progressively, while, as mentioned earlier, the launch of the African broadband service, Konnect Africa, is on track for the second half of this fiscal year.

Finally, in mobile connectivity, first-half revenue stood at €39 million, up 19.3% like for like, reflecting, notably, new capacity leases or volume increases at several orbital positions, like 10 East, 21 East, 70 degrees East and 170 degrees East. Customers having increased their volumes include key inflight connectivity service providers, such as Gogo and Panasonic.

Second-quarter revenue stood at €18 million, up 17.9% on a year-on-year basis and by 21.5% quarter-on-quarter at constant perimeter, excluding the impact of Wins/DHI. Looking ahead, we have signed contracts with ViaSat for capacity on KA-SAT for inflight connectivity for Finnair and SAS, which will ramp up progressively.

And we have signed a contract with Taqnia for Saudi Arabian Airlines on EUTELSAT 3B, with a contribution to revenues already in Q2. A quick word on this contract with Taqnia, which is the technology development arm of the Saudi Public Investment Fund.

We have signed a multiyear lease for four of the five HTS Ka-band spotbeams on EUTELSAT 3B. Incidentally, the other spotbeam has been leased to another customer in the same region, so this payload is now entirely resold.

Taqnia will use the capacity for inflight connectivity services on 130 medium-haul and long-haul aircraft of the carrier Saudia, covering flight paths from Middle East to Europe. This is the first contract we have signed with Taqnia and we hope there will be scope to develop our partnership in the future.

Let's now turn to the backlog and fill rates. The order backlog stood at €5.3 billion at the end of December 2016, down by 5% on end June.

It was equivalent to 3.5 times 2015, 2016 revenues. Video applications represented 84% of the backlog.

The evolution of the backlog over the last six months reflects, on the one hand, its natural consumption, and on the other, contracts signed, including Taqnia. The number of operational transponders at the end of December 2016 rose by 58 year-on-year to 1,326, mainly due to the entry into service of EUTELSAT 36C, EUTELSAT 9B and EUTELSAT 65 West A.

The fill rate stood at 70.9%, compared to 73.9% a year earlier, reflecting mainly the impact of this new capacity. Since June 2016, the number of operational and leased transponders was virtually unchanged and so the fill rate was also stable.

Now over to Sandrine for the financial performance.

Thank you, Michel. Starting with a look at profitability, Group EBITDA amounted to €588 million, down 2%, against a reported 2.5% decline in revenues.

The EBITDA margin stood at 77.9%, slightly up, but broadly comparable to the 77.5% last year. This mainly reflected the current favorable phasing of operating costs, a high level of other revenues mostly with no associated cost, and the deconsolidation of the lower-margin business of Wins/DHI.

Group share of net income stood at €192 million, versus €188 million a year earlier, a 2.2% increase, and represented a margin of 25%. This reflected a higher depreciation and amortization, up €36 million, principally due to the entry into service of new capacity.

Other operating income of €23 million, reflecting mainly the capital gain on the disposal of Wins/DHI. A broadly stable net financial result of minus €60 million.

And a tax rate of 28.2%, substantially below last year's level of 37.7%, reflecting the recognition of a positive non-cash one-off related to deferred tax liabilities in anticipation of the reduction of the French corporate tax rate in 2020 and a partial tax exemption on the capital gain on Wins/DHI. The full-year tax rate will continue to reflect these elements and is expected in the same range.

This should not be extrapolated for subsequent years, which are expected to return to a level consistent with the prevailing rate in France. However, the good news is that, all things being equal, the French tax rate will drop by 5 points in 2020, from 33% to 28%, which is very positive for us as the bulk of our taxable income is today in France.

Net cash flow from operating activities amounted to €482 million, up from €447 million in H1 2015, 2016 despite the lower EBITDA. This reflected mainly a more favorable impact of, from working capital requirement, with, notably, a €24 million inflow related to customers' receivables, versus a €43 million outflow last year.

This reflected, in particular, an improvement in DSO. A lower tax bill thanks to the evolution of the pre-tax profit and the timing of tax payments with a positive impact of €70 million.

Cash CapEx amounted to €130 million, down from €171 million a year earlier, reflecting the success of measures to reduce investments through a design-to-cost approach for capacity procurement, the rationalization of ground CapEx and the phasing of various satellite programs. However, H1 CapEx should not be extrapolated for the year as a whole and our guidance of average annual CapEx of €420 million prevails.

Net interest amounted to €27 million, up from €19 million last year, reflecting the interest related to the financial lease on EUTELSAT 36C, which entered service in February 2016. I remind you that, as usual, this slide is highly seasonal since most of the coupons on the bonds are payable in the second half.

As a result, discretionary free cash flow amounted to €325 million, a strong rise of 27% on last year, as highlighted by Rodolphe earlier. Net debt at December 31 stood at €3.885 billion, slightly down on end June.

Discretionary free cash flow largely covered the dividend payment of €266 million. And asset disposals, notably of Wins/DHI and the minority stake in Konnect Africa, generated total proceeds of €54 million.

The net-debt-to-EBITDA ratio stood at 3.37 times, a slight improvement on 3.44 times at end June 2016. The weighted-average maturity of the Group debt stood at 2.9 years, compared to 3.6 at end of December 2015.

The average cost of debt after hedging improved to 3.1%, compared to 3.6% in H1 2015, 2016. During the first half, Eutelsat was rated for the first time by Fitch with a BBB stable rating, further strengthening its investment grade status.

As a reminder, the refinancing of the €850 million bond maturing in March is expected to generate €30 million in annualized savings from fiscal year 2018. Now I will hand you back to Rodolphe to speak on the outlook.

Thank you, Sandrine. A quick reminder of our strategic roadmap, which has two steps.

Step one, between now and 2019, with a clear focus on optimizing our existing assets in order to maximize the free cash flow generation of our core businesses and guarantee a healthy return to shareholders while preparing for step two, from 2019 onwards, a return to growth in the medium term by building on our core video business and, in the longer term, paving the way to capture the connectivity opportunity. So, how did we do in the first half within the framework of this strategic roadmap?

In terms of maximizing free cash flow, we launched the cost-savings plan called LEAP aimed at reducing our OpEx. The satellite E 5 West B was procured with savings of over 30%, a great example of how we can achieve our CapEx reduction target.

Asset disposals generated proceeds of over €50 million. In terms of revenue optimization now, measures to stimulate HD and ultra-HD ramp-up at HOTBIRD are starting to bear fruit, while we saw better-than-expected fall renewals in the government vertical.

In terms of preparing for future growth, in video, Tricolor TV selected our Smartbeam Multiscreen Delivery service. In broadband, the Russian service has been launched and capacity secured to start up in Africa in the second half of this year.

In mobile connectivity, we have seen – we have signed contracts recently with SAS, Finnair and, last week, a very significant contract with Saudi Airlines. And finally, and very importantly, the ViaSat joint venture will be closed in the coming days, with expanded scope.

And we are considering ViaSat as our partner for a joint investment in VHTS technology for EMEA. Let's take a look in more detail at the cost-saving plan.

We are typically regarded as a CapEx-heavy, OpEx-light industry, and indeed our EBITDA margin of 75% is high by most standards. Nevertheless, we believe we can do even better and our aim is to be best in class in terms of profitability.

Consistent with our objective of maximizing cash flow generation, we have therefore implemented LEAP program, the wide-ranging cost-saving plan, at the beginning of January. Out of a total OpEx base of around €340 million per year, we have identified around €140 million in compressible that can be compressed, costs.

Based on granular internal analysis and best practice benchmarking, we estimate that we can reduce those costs by more than 20%. The plan has been fully scoped and targets attributed to each manager of the Company with attendant incentivization.

We believe there are quick wins to be captured as early as this year, amounting to €15 million in savings in fiscal year 2018 and €30 million at least at full run rate in 2019. As a result, we are increasing our EBITDA margin targets to above 76% for current and following year and heading towards 77% in fiscal year 2019.

This compares with our previous objective of above 75% for each of those three years. A quick word now on HOTBIRD.

As we said in October, the rationalization of distribution is now completed, is behind us. And we are rolling out differentiating pricing and stimulating HD migration.

Migration of FTA channels to high definition include Euronews HD, the transition of five Rai channels and three channels on China Central Television, CCTV. We have also launched two additional ultra-HD channels, Fashion TV Ultra HD and Travelxp 4K, bringing to five the number of ultra-HD channels on HOTBIRD.

All in all, this has led to a slight improvement in fill rate on HOTBIRD, slight improvement in fill rate on HOTBIRD. At end December, the number of channels on HOTBIRD was at 1,055 channels, a slight increase on June.

The number of MPEG-4 channels was up 15%, representing a penetration of 52%, still well ahead of HD penetration, which stood at 24%. However, the number of HD channels during this period grew faster, up 18% to 251.

Turning now to ViaSat. We will shortly close, in a matter of days, the joint venture with ViaSat, which has been under discussion for several months.

As a quick reminder, this JV aims at combining Eutelsat's European broadband business with ViaSat's technical and distribution expertise. The JV will comprise two entities, infrastructure, 51% owned by Eutelsat, meaning that we will continue to consolidate the revenues of KA-SAT; and retail, 51% owned by ViaSat.

ViaSat will pay €132.5 million for 49% of our European broadband business. So what's changed since the discussions were first initiated?

First, the perimeter of the initial discussions has been extended to include both fixed broadband and now inflight mobility. Second, with a view to broadening our partnership with ViaSat in the longer term, we have undertaken an initial technical assessment of the ViaSat 3 VHTS technology, which has been successfully completed.

As a result, we now expect to select ViaSat as our future partner for joint investment in VHTS capacity, not just in Europe, but also in the entire EMEA region. What has led us to this course of action?

First, the potential for connectivity via satellite is significant. As an example, the core market for fixed broadband via satellite is estimated at some 5 million households in Europe in 2030, while demand for inflight connectivity capacity is expected to exceed €1 billion globally in 2025.

Second argument, we believe VHTS technology will be a game-changer in addressing these markets thanks to the provision of fiber-like service, with speeds above 30 megabytes per second and up to 100 megabytes per second, and production cost enabling transition from niche to mass market, with CapEx per megabyte below €1 million. Why would ViaSat be a good partner for us?

ViaSat 3 would be available in early 2020s, giving us a very strong early mover advantage. ViaSat is a proven technological partner.

And it would combine ViaSat distribution know-how with our own established position in Europe. Furthermore, the required investment could be managed, and this is a very important point, within our current CapEx framework thanks to the shared investment with ViaSat and the KA-SAT funds, which are earmarked for VHTS investment.

And finally, the last argument admits that Eutelsat retains its infrastructure business model with no impact, no dilutive impact on margins. Turning to the outlook of the Group, based on the performance of the first half, we confirm our revenue objectives.

Revenues for fiscal year 2017, like for like, are expected in the range of minus 3% to minus 1%. In fiscal 2018, they are expected broadly flat, with a return to modest growth in fiscal year 2019.

Following the implementation of the LEAP cost-saving program, the EBITDA margin is now expected above 76%, both in fiscal year 2017 and fiscal year 2018, and heading towards 77% in fiscal year 2019. This is compared to our above 75% previously for each of those three financial years.

Cash CapEx will remain at an average of €420 million per year for the period July 2016 to June 2019. As mentioned earlier, this takes into account our future investments in VHTS capacity.

Discretionary free cash flow is expected to grow at the compound annual rate in excess of 10% for the same period. We remain committed to a sound financial structure to support our investment rate credit rating and aim at a net-debt-to-EBITDA ratio below 3.3 times.

We also undertake to serve a stable to progressive dividend to shareholders. To sum up now, we are on track to deliver on revenue objectives and this is underpinned by a very solid commercial performance.

We are raising our EBITDA margin outlook following the launch of the LEAP cost-saving plan. We are confident we can deliver strong growth in discretionary free cash flow, with these initial OpEx savings coming on top of reduced CapEx and financial cost.

At the same time, we are paving the way for a return to revenue growth post 2020, notably through our joint venture with ViaSat, with no increase in the current CapEx framework. And we do reiterate our commitment to deliver a stable to progressing dividend.

Thank you for your attention and we are now ready to take questions.

Thank you. Thank you very much.

I had three questions, please. It seems sensible to start with the elephant in the room, and I’m thinking here about the Sky Q over-the-top news from a couple of weeks ago, which has so effectively dragged the video debate back into the spotlight.

I won’t actually ask a leading question. I’ll just leave it as an open opportunity for you to provide your perspective and then others can drill down into that.

Secondly, in a recent interview the CEO of Yahsat has suggested that the – that you won’t cancel your lease for capacity on Yahsat 3 once the Africa broadband satellite gets launched. He argues that the underlying demand potential in that region can accommodate both sources of capacity.

It’d be, again, interesting to hear your perspective on that. And you touched on it in your prepared comments and I wanted to pick up on the recent news flow that suggests the re-commercialization of the purged HOTBIRD capacity is progressing well, and in particular you’re getting some traction around international foreign-language content coming into Europe.

It’d be interesting to get a bit more color on how deep that opportunity is, so yes, the opportunity for bringing foreign-language content into Europe. And then I have another question on balance sheet, but I’ll get back in the queue.

Okay. Thank you, Giles.

And I’m starting with your first question regarding Sky Q and to give you our perspective on that announcement by Sky. First, I’d like to say that the launch of full-OTT boxes by pay TV operators is no news to – in this market.

It was done in the past by Sky in Italy, by Canal in France, by Canal in Poland. It’s something which is not new.

As announced very well by Sky, the objective of those new boxes, those new set-top boxes, is to reach the very dense urban areas where satellite dishes have not been able to penetrate in the past because it’s very difficult to install dishes in very big buildings, meaning that it doesn’t target the satellite market, but rather the high-density population areas, which are typically covered by cable and fiber, which means that we see absolutely no impact on us of this announcement by Sky. And it’s just been proven in geographies where those boxes were launched a few years ago, where full-OTT boxes have not taken any market share, any points of penetration to satellite development, which means that in our view we are absolutely positive there won’t be any negative effect on us of Sky Q development.

It’s a way for them, I believe, to accelerate their penetration in the big cities, in the center of the big cities in the UK. And by the way, that’s exactly what they have said in their press release.

Second question on Yahsat. We have a multiyear contract with them and there is no reason to interrupt this contract.

And on HOTBIRD, maybe I will turn to Michel Azibert. But as I said in my initial talk, we see positive signs on HOTBIRD.

And notably, I’d like to reiterate that the fill rate on HOTBIRD is growing. HD penetration is accelerating on the back of our new plan to accelerate HD and ultra-HD.

And we leveraged the capacity we got back from the purge to accelerate HD and ultra-HD, and it works, which is very positive because it’s a sign that demand in volume will remain growing on this position, which is very important for us in the future. Turning to…

Yes. Maybe to offer you additional points on the growth on HOTBIRD, first on the international channel specifically on top of what has been achieved with three completely new in fact CCTV Chinese channels in HD.

We are in negotiations with a number of other players from outside Europe, in particular in the Arab world, in particular with public television. And this is in a general context where we have more news channels now turning to HD overall, and in particular on HOTBIRD, where, as you have seen, the number of channels is now picking up, where it was slightly decreasing.

We have had a good quarter, in fact a couple of good quarters on the number of total channels. And as Rodolphe just said, the acceleration of the HD penetration, which has again more than 5 points in percentage year on year, where the previous year-on-year comparison was 2.6%.

So it’s definitely accelerating, thanks to the scheme that we have put in place with the new distribution and the new tariff schemes.

Very good. Thank you.

Cheers.

Yes. Good morning, guys.

I’ve got three questions. Just, firstly, on ViaSat, am I right in thinking that ViaSat themselves have said, well, each of their ViaSat 3 satellites will cost about $650 million to $700 million?

So should we be thinking of roughly half of that amount within your CapEx over a few years as a ball park? Second question, for most businesses, taking 10% of total OpEx out over a couple of years would present pretty significant disruption risks.

How can you give us confidence that doing that won’t have any impact on your planned revenue growth? And the third question, just on your slide 26 on the HOTBIRD update, you mention there the TV d’Orange bouquet ceased in January 2017.

Now that that has gone, would that have any impact on the MPEG-4 growth being less than the HD growth, if that makes sense?

Thank you, Nick. Well, as you said, ViaSat has communicated that ViaSat 3 satellite cost would be around $650 million.

And it’s perfectly accurate to say that we would pay around half of that, 51% of that to be very precise. You should also add that we will receive €132 million, €132.5 million to be correct, for our – for 49% of KA-SAT.

And this amount is earmarked to also pay for the ViaSat 3 investment, meaning that the net investment for us to acquire, through the infrastructure JV, this ViaSat 3 satellite is very low. On the OpEx, the 10% cost saving, we are very confident we can achieve that.

And this is really a minimum we are setting. As you know, when we benchmark with the most profitable operators in the industry, which work very well with no disruption, as you said, while some of them, they are posting EBITDA margin which is around 78% or even above that level, meaning that we believe that we can work very well with this kind of profitability.

Second, we have conducted very granular analysis of our OpEx cost and we believe that we can cut 10% of our cost without any negative impact on our topline development. There is – and this analysis doesn’t come only from benchmarking the best players, but also, from the bottom up, a very, very granular work that we have conducted, which gives us the confidence today to commit to this level of cost savings and to include that with the – and to commit also to an elevation of our EBITDA margin consistent with this cost-saving program.

On your last question regarding HOTBIRD and Orange, the – well, Orange actually announced that they would give up HOTBIRD, but it was almost a year ago. And it is now completely included in our guidance.

It’s no news to us. It’s included in our revenue, EBITDA, all of the metric of our guidance.

And regarding the MPEG-4 penetration and HD penetration, we are now at a very interesting moment because we are at an inflection point, where HD penetration accelerates much more than MPEG-4 deployment, meaning that in terms of demanded volume, we think that the future will be better for us than the past years. All the bad news generated by the adoption of MPEG-4, which means less demanded volume, most of that is behind us.

Okay, thanks.

Yes. Hi.

Thanks for taking my question. I have two actually on your long-term connectivity potential.

So first, on fixed broadband, where do you expect the ARPU to go in the long run to get to your five million households by 2030? And what’s your assumption for end user terminal cost levels as well, particularly relevant in some regions, such as Eastern Europe?

That I suppose is in your – in that five million count. And then secondly, on inflight connectivity, what’s your assumption of penetration of IFC within the global civil aviation fleet by 2025 or 2030 that would underpin this €1 billion in connected revenue prediction that you have?

Thanks a lot.

Thank you, Alexander. The today ARPU in the residential segment is around €26.

And our ARPU in this segment is growing, meaning that we find the price pressure in this segment far lower than in other segments of this industry. And we believe that on the long run, most probably the ARPU which will be achieved by satellite ISP [ph] will be comparable to the ARPU achieved by terrestrial telecom operators on fiber.

That’s what we have in our long-term plan. In terms of tech – of the cost of terminals, you are perfectly right to say that it’s a key factor to unlock demand on the consumer side and to reach mass market penetration.

Today, the cost of terminals in the residential market is around $350 per unit, but we have a target to reduce significantly those costs. And on the long run, they should reach – well, that’s a long-range target of the industry, not – it’s not an element of guidance that we are revealing today.

But the long-term target and the long-term discussion we have with manufacturers is around $150 to $100 per unit. That’s the point we would like to reach on the long run.

And there was a question on the penetration on – of inflight connectivity. As you know, well, the U.S.

are quite in advance on this deployment and today a vast majority of the fleet of aircraft is equipped with Wi-Fi on board in the U.S. And we expect the same tendency to occur also in Europe in the next few years.

Thanks a lot.

Yes. Thanks very much.

Just a couple of questions, please. Firstly, two small questions on video.

Firstly, you mentioned that professional video improved sequentially but clearly is still declining. So I was just wondering when you believe that drag should start to ease and that revenue stream can get back to stability.

And then secondly, we’ve spoken a lot about the volume debate around HOTBIRD and that stabilizing and growing, but how should we think about the associated evolution of revenues on HOTBIRD? I mean do the current contracts assume stable pricing or are there any big renewals coming up?

And then just quickly on ViaSat 3, clearly you mentioned potentially having to spend half of the CapEx for the ViaSat 3 satellites as part of the joint venture, but is there any possibility that you might contribute other items like orbital slots or spectrum licenses that could potentially net off against that CapEx within the JV? Thanks very much.

Thank you Michael. I’ll respond – for your question on the video – on the professional video evolution I will turn to Michel Azibert, but before I would like to say a few words on video.

The broadcast segments is stable and – at the moment, and this is despite the negative effect of the purge. You remember that we have communicated last year that the purge would have an effect, a negative effect on our revenues this year, in between €25 million and €30 million.

It means that if you accept that the negative impact of this very [indiscernible] element of the purge, our broadcast revenues are up, and what we forecast in the future is that it will continue to be up. It will be slight growth, but it will continue to be up.

Why? Because we see an increasing demand in volume because HD is coming now.

Second, the number of channels is continuing to grow slightly but continuing to grow steadily in the world and that's what our discussions with most of our clients in the world show very well. Thirdly, pricing are very solid in video.

There is no downward pressure in video, which is much more resilient in terms of pricing as some other applications and namely fixed data as you know very well. That's why we are very confident that in the next few years, our broadcast revenues will show a slight increase year-on-year.

Maybe some elements on the professional video?

Well on professional video which is a little bit less than 10% of our total video business, the trend follows a little bit the same pattern as the data, meaning that there is pressure on pricing. Our business is mostly in Europe and there is a negative trend in volume, but which might slightly get better as you can see on these quarter-on-quarter results.

The reason why it would be better, the trend in volume, is that we have signed relatively long-term contracts with some of the key players. We have lost some.

We have not renewed part of it because of substitution to fiber in particular for connectivity between stadiums, but we have now a better backlog in particularly with EBU and some of our resellers. So although the trend will probably continue to be negative on the basis of the structural effects, we hope it will be – it will get to a better, say, evolution year-on-year than the one we have seen on this year which was particularly let's say negative.

Thank you, Michel. On the revenues on HOTBIRD, if you exclude the effect on the purge, as we said, we expect the volume to be up and we see today that the volume is up because as we said previously, the fill rate on HOTBIRD is slightly increasing, which is very good news and which translates to the success of our HD acceleration promotional plan.

In terms of revenues, what we have in the medium term is that this growth in revenue will translate – the growth in volume, sorry, will translate into a growth in revenue. It's true that today, we have a promotional plan to accelerate, to stimulate the deployment of a HD meaning that the growth in volume – that's not immediately translated into a growth in revenue, but after a while – it was our typical promotional plan is lasting 18 months.

After that, revenues will be growing, meaning that in the medium run, meaning as of fiscal year 2019, we see a growth in volume – in revenues, sorry, on HOTBIRD. On ViaSat 3, we are going to find half of the investment in the space segment as you said and also half of the investment in the ground segments, which is coming on top of the figure which we talked about previously, but all this is included within the scope of our CapEx envelope guidance.

And as we said, we are mentioning this envelope and this – it does include the investment in the space segment and in the ground segment related to the VHTS investment. It means that we have made first step in our return to growth strategy in broadband, to accelerate our investments in broadband, without any increase in our CapEx guidance which stays at €420 million.

You mentioned the orbital slots – we will bring orbital slots to this situation but as you know very well, we don't pay for orbital slots. In fact there is no CapEx implied into this element.

Thanks, that's very clear.

Yes hi, it's Wilton Fry from RBC. A couple of questions, please.

Just picking up again on this CapEx point and for clarification, does the €420 million of CapEx you're outlining in fiscal 2019 include part of the proceeds from selling KA-SAT. Is that a net number or a gross number?

Should we be doing €420 million plus some of that reinvestment? Secondly, a more fundamental question, you seem very clear that there will be absolutely – to use your words, there will be absolutely no effect from the announcements from Sky but given that GBP150 that saving they'll save per gross addition and given the millions of gross additions they put on each year in territories, why are you so confident that Sky will pass up the opportunity to save the best part of GBP0.5 billion a year in OpEx over the long-term?

Thank you.

Well on the question on Sky, why are we so confident? OTT is growing everywhere in the world at a very fast pace.

There is Sky Q, there is Netflix, there is lots of initiatives everywhere in the world. Still, satellite penetration is growing everywhere in the world, even in the regions where OTT is progressing.

Second element, the distribution of content through OTT is more expensive than distributing content through satellite. They are both 50,000 viewers for a content distribution of video by satellite is much more cost effective than through OTT.

Through OTT distribution of content is a variable cost, through satellite it's a fixed cost and it would be very detrimental to pay TV operators like Sky to switch from DTH to OTT because the cost of transmission would be multiplied by a significant factor and that's why we are pretty confident that the bulk of the distribution of content by pay TV operators will remain satellite. They have direct access to their customers without being intermediated by telecom operators and the cost per – the cost of transmission per user is clearly the lowest they can get, and not mentioning the quality of the transmission.

Because as you know very well the quality of the transmission in OTT – I'm not talking IPTV there, I'm talking OTT – is not guaranteed, meaning that there is no way you can transmit ultra HD or live events with massive audience through OTT. You had a question regarding CapEx.

Maybe I will turn to Sandrine.

Yes, so your question related to the €132 million proceeds that we would cash in from ViaSat, so yes, it's included in our CapEx in the year – in the current year as a reduction to our CapEx.

So you will be – that is a gross figure. The €420 million will be for a gross, not net?

It's net.

The €420 million is net.

It's net, yes.

Thanks.

Yes hello guys. Two questions if I may.

The first one is regarding your fixed data business. I actually love the fact that you've taken out mobile connectivity and fixed broadband out of it, so we're left with only fixed data which is basically revenues that compete against new HTS capacity.

So my question is this – of your fixed data business currently, which faces HTS competition, when you project yourself five or 10 years down the road, do you expect all of that business to disappear or how much of it is points to multi-points which is guaranteed to remain on wide beam satellites? So basically what I'm trying to understand is how much of that fixed data can you continue to have revenues or is all of that at risk of moving on HTS?

My second question is easier, it's just on you mentioned that Eutelsat 3B, you've resold the K capacity to Taqnia and Saudi Airlines. I was wondering if we've seen some of that revenues in Q2.

Thank you.

Thank you, Eric. On fixed data, we have now the smaller perimeter which is actually restricted to the data transmission in large quantity for big corporations mostly.

It's true that this segment is submitted to a very significant price competition due to over-capacity. It's a limited portion of our revenues, 12% only, but under pressure.

What we – and where it does, the pressure comes from? It's actually coming from over-capacity and most of the over-capacity being HTS capacity which drags price down.

Still, as you said, point to multi-point applications which are a sub-segment of this fixed data application are much more resilient because they can be served only by regular capacity satellites, for which the over-capacity is by far lower. What we have in our business plans, as you know, is that the price pressure will be continuing for the next five years and we estimate that price will be cut by two in this segment and it will be only partially compensated by an uplift in volume.

Net, on this specific segment, on this new barometer, we estimate that our revenues in the next five years are going to drop by around a bit less than that 30%, which corresponds actually to the proportion of multi-point revenues, multi-point application revenues that we have in our business since multi-point to multi-point applications represent more than 50% -- more than 60% of the revenues of this sub-segment today and that's where we will add the most resilience. You had another question.

Who is that…

Which was on Taqnia.

Yes so the answer is yes, there is a little bit of revenue in Q2 of this fiscal year. In fact there are two contracts, one with an undisclosed customer but in fact which was signed earlier in the calendar year 2016 which we will ramp up, and so very little revenue in calendar year 2016 and the second one is the one with Taqnia, yes which includes some revenue in the last quarter of the calendar year 2016, although the service actually has started as of January 1 of this year, so of course it will be now more on a sort of stable basis quarter-on-quarter.

Thank you.

Good morning, everyone. I have two questions left please.

The first one, your government business looks to be performing ahead of expectations. Video perhaps could see better comes in H2.

I think you said on the last call that you had not included any reselling benefits of the Eutelsat 3B HTS payload in your guidance. So what are the headwinds that are preventing you from raising the revenue guidance for the current year in that context?

The second question is on any update on the Hispasat disposal process, where do you stand there? Thank you Rodolphe.

Thank you Sami. The reason why we are not raising our revenue guidance even though we have commented on some good news and some strong underpinning factors for the next few years is because while there are also some headwinds and on the fixed data segments, we are more prudent than we used to be.

Actually the price evolution is exactly in line with our expectations and exactly in line with what we said in our – over the past 12 months. Still we find out that the revenue uplift, the revenue gains that should partially compensate for the decline in prices takes longer than expected and to be prudent and to remain cautious, we want to take that into consideration and to – and what we have in our guidance today is that the data segment evolution, the fixed data segment as we call it now, the revenue evolution will be slightly lower, worse than expected, compensated by the good news in the government business, by the good news in connectivity and with the – compensated by the very solid evolution in the video segment.

On Hispasat, the process is progressing and we have now entered an arbitration phase to define the value of our stake in Hispasat.

Thank you.

Hi guys. It's Laurie here from Deutsche.

So the first question is just over the impact of 8WB and 36C on the revs this year and I'm thinking that presumably that was mostly in video. Second question, just to follow up on the earlier point about HOTBIRD revenue.

So you haven't achieved any price increases from your efforts to optimize pricing so far. Is that correct?

Then the third question, given the renewals and the capacity sale in government, what are you expecting for next year for government revenues? Thanks.

On the question on the 8 West B and 36C, well we don't give revenues by orbital position. As you know, what those two satellites – they were launched last year, 8 West B in October of last year and 36C in January, meaning that while they had a full impact on the second half of last fiscal year, meaning that while there is no double bringing incremental revenues compared to a year ago on the second half of fiscal year.

I don’t if it answers your question. On HOTBIRD on pricing, our focus now on HOTBIRD is to accelerate the HD penetration, is the key underpinning factor of our trajectory on HOTBIRD, accelerated HD and ultra HD.

What we think is that if we stimulate the demand in volume, we will be able to grow the revenues on HOTBIRD and to grow ultimately prices. We want to achieve 50% penetration of HD on HOTBIRD and to have 20 ultra HD channels, that’s the underpinning factors – elements of our business plan on HOTBIRD and we are right on track to deliver on that very important KPIs.

That’s the reason why we are confident on the revenue trajectory on HOTBIRD after the effect of the purge, which his happening this year with a very small carryover effect next fiscal year. After that, based on the volume growth we are seeing at the moment, and based on the contacts we have with our clients in Europe, we are positive on the evolution of HOTBIRD after that.

In terms of government revenues, we think that after a few consecutive years of decline, we are now reaching the bottom in terms of demand in the government services. Our old term renewal campaign has been very good.

It has been positive to us as we said. The spring renewal campaign is under way.

That means that it’s very difficult for us to comment. Still, we just want to say that we are positive in this vertical and it’s the first time in years that we can say that.

Okay, just to follow up, it was really a question about the year-on-year revenue growth, that west B and 36C delivered in the first half. How much incremental did they deliver in the first half just very roughly?

Well, I don’t know if we comment on that. I’m asking my supervisor.

I’m asking Joanna.

We can give a rough amount.

Well, do you want…

Capacity of…

There is obviously a carry forward effect which is positive and which will fade out partly at least or significantly when we do H2 versus H2 and this is let’s say in the range for each satellite, it’s a high single digit number of millions that were brought as a differential one year versus another one. So of course we would have to make up for that and of course mechanically the growth of the video on this specific item will be obviously reduced by the different comparison.

Okay. So it’s high single digit for the half year for each satellite.

Yes, in terms of million euros, yes.

Great.

Yes, hi.

Thank you. Just my first question, I’m not sure if I missed it but did you – can you quantify to remind us how much Eutelsat 3B could benefit from going forward?

Secondly on the ViaSat agreement or upcoming agreement, I know it’s still early but have you discussed with them if you could partner in other regions where you have the strong real estate, for example like Latin America or in other verticals? I think I missed the amount of not participating in the US DoD business.

Thanks.

On the E 3B capacity, we have been able to resell all the capacity that was available and we resold it at the same price as we had in the past with our present client which are – which fell, meaning that it’s the same order of revenues and 100% of the capacity has been resold. For ViaSat, we – and I can give you to precision that it’s around one or four E 3B, coming back to that question, you will remind that we said in the past that the order of magnitude of revenues was around $1 million per month.

On ViaSat, the partnership we are closing with ViaSat concerns the European and Middle East and African region and that’s the only region which is concerned by this partnership at the moment. In terms of application it goes beyond – beyond sorry – the residential market to cover also the mobile connectivity and possibly other applications.

Actually it will cover all the applications for the entire footprint that I have mentioned, the entire geographical footprint that I have mentioned.

Great, thank you.

Great thanks. So I just had a couple of quick questions.

On the JV with ViaSat, could be – looks like one of the first financial consolidation happening in the market and over-capacity is clearly still a concern. I mean do you see potential for other consolidation in there in the data or HTS space and is there any potential for consolidation further down the line in video in different geographies?

Then on the European in-flight connectivity, I mean how competitive do you feel with KA-SAT versus the Inmarsat air-to-ground network that’s due to be up and running in the second half of this year? Thank you.

I’m sorry Ben, I didn’t catch your last question. Do you mind repeating it?

Yes sure. I mean on the in-flight connectivity in Europe, how competitive do you feel with KA-SAT versus the air-to-ground network of Inmarsat’s?

Thank you. On your first question regarding consolidation, our view on that is that most probably, many elements, many forces are – could be at work at the moment to trigger a consolidation in this industry.

Because in some applications, there is over-capacity. We are a little exposed to those applications as you know because it’s only 12% of our revenues.

But some of our competitors are quite exposed to those segments meaning that they would probably be encouraged to find consolidation to get some market reap on those segments. But for the moment we have nothing specific to comment.

There is no situation that we know and as you know, and as we said in the past, we are not chasing consolidation opportunity. Our strategy is to generate cash flow in the forefront to increase the return on capital employed of this Company and to invest organically in a ribbon of growth through video and more importantly in broadband.

We think that this strategy that we are following is very well designed to develop a strong cash flow and strong dividend in the forefront and to find some growth and to give a very strong return to our shareholders as of 2020. We don’t feel like on an eventual consolidation of this sector to create value.

On KA-SAT, today it’s a very unique asset to really deliver inflight productivity in Europe. It’s true that we are the competitor which is network of Inmarsat but today it has not be launched.

It has not been authorized and there are some questions around the licenses on the ground segment, meaning that we are an asset which is very competitive, which is very unique and which is the only one to really deliver the service today. That is why we have been able to sign those three important contracts in the past few months with, notably, Finnair and SAS

Brilliant, thank you.

Hello. Hello.

Hello.

Hello.

Go ahead – a couple of questions. Sorry about that.

First of all, how do measure best in class margins? You seem to peg it at 78% but I think we’ve seen examples of satellite operators with margins higher than that.

So are you truly going for best in class margins? Secondly, on the dividend, I mean things seem to be developing quite well at this stage, ahead of target on free cash flow.

So what’s your view on the stable or progressive dividend at this stage? Do you think it is more likely to be dividend growth this year rather than just stable?

Thirdly, very quickly on the sort of pricing question in videos. Still got falling backlog at Eutelsat.

You’ve obviously had excess capacity at HOTBIRD. We saw SES and Canal+ reach some sort of agreement over pricing of the SES services which implied, at least from the Canal+ end, that their prices have dropped a bit.

So is there truly no pricing pressure in the core video business?

Thank you Patrick. Well it’s true that while some satellite operators – I’m commenting on your first question – are delivering ABG modelling in excess of 80%.

It is true that we – and that’s why we believe there is significant room for improvement for us. We are committing today to deliver €30 million cost saving.

We will try to do better. We will but we’re not ready to comment on any incremental cost saving beyond the €30 million we have just announced.

It doesn’t mean that we’re not trying to work on that but if we have something to say in that direction, it will come later.

So you’re saying that at the moment it’s a small step but there could be a giant leap in the future.

Not giant because it’s obviously – we don’t want to be disruptive. We want to be on a sort of progressive continuous progress path.

We think that the journey is long but that is significant, even though our OpEx line appears to be small. And today we are able to commit on €30 million which is at each and every of our commitment, which is a minimum.

On the dividend policy, while we are mentioning our stable to progressing dividend policy, since – still, as you’ve pointed out, our cash flow generation strategy works pretty well and we are maintaining our 10% growth that we are – as you’ve seen we are well above this target at the moment. And the reason why we want to grow our cash flow is, in the first instance, to continue to serve – have say a dividend to our shareholders.

We are, and I want to underline this point, we are covering today 100% of our dividend with our discretionary free cash flow. I’m underlying that because it’s quite a unique situation in this industry and our cash flow position, our cash flow situation, will improve over time which will give us room to serve very good dividends to the Company and to finance for organic growth if needed.

That’s the objective behind this cash flow generation strategy in the first phase of our strategy and which gives us a very, very different situation from most of the players in this industry. On pricing in video, it’s true that we have negotiations with our clients and that they always try to get a better price to better – but it’s part of our day to day business.

It sometimes works, sometimes it doesn’t, but what we see when you look at the average price per transponder in Europe on HOTBIRD – that it’s stable. We don’t have any drop to communicate or to post and we expect in the future this evolution to remain in this direction.

That’s great, thank you.

Yes, morning. Another follow up on the directory or cannibalization.

So beyond the Sky Q, it’s more a question on the impact in the mid-term of the non-linear OTT territory or the technology. But really the sales with tier one pay TV platform like Sky and Canal.

So let’s say it’s fair enough to flag that you do not have any impact in volume terms but at which stage Eutelsat will stick with a big premium, so typically that’s oddball. Even if you have the neighborhood effect, if you turn to be a less key partner with this kind of TV platform.

And the second follow up it’s on the ground terminal. And as long as OneWeb could use a $250 ground terminal, do you see a deep downside on the total cost of ownership with a VHTS or ViaSat 3 typically, to reach south of $1 ground terminal?

Do you think it’s a way to reignite the place of the satellite in the hybrid phone plan in France?

Okay, thank you Vincent for your questions. As we said and as we see in the marketplace, the pure OTT set top box penetration has no effect on us and has no effect on the development of our neighborhood.

HOTBIRD neighborhood is progressing and the penetration of HOTBIRD in Europe is progressing as well as the penetration of this satellite overhaul in the world for distributing video. There are two platforms which are progressing in the world.

Two platforms of – two technical platforms of distribution of video content which are IPTV mostly and satellite. It’s the situation which is true.

Even in the country which are the most – I would say, affected by the deployment of OTT. Now when we look at Eutelsat you should also realize that we are present and we extract most of our revenues in Europe for specific countries.

We are market leader in Italy where as you know fiber penetration is below 5%. It’s around 3% actually.

We are market leader by far in Poland and we are market leader by far in Greece. In those three countries the impact of OTT is completely negligible today and is forcing us to remain negligible in the foreseeable future.

Even though there would be an impact of OTT, which is not the case, most probably it wouldn’t occur in the foreseeable future and before I will have retired, and I understand that I’m not that old, in those three countries. That’s why we can displace so much confidence in the future of the satellite technology in video distribution.

Not only the emerging markets, which is a core focus today, but also in Europe. I’m not saying that we are going to experience a tremendous growth in video in Europe, but we are going to experience a very slight one digit revenue growth in the next few years because penetration satellite is remaining very solid.

It’s slightly growing and the demand in volume will be growing on the back of the adoption of HD. You asked a question on ViaSat.

OneWeb.

On ViaSat and OneWeb. Today what we – our strategy is to include satellite in the broadband ecosystem and to bring high-speed internet to those who are unserved by the territorial networks.

The name of the game is that the segment is the capacity per user. What people want in the world is high-speed internet with speeds above 30 megabits per second and that’s the name of the game.

You should judge the efficiency and the efficacy of the technology under these criterion. People, they want high-speed internet.

Why? Because they want to access Facebook, YouTube, Netflix, all the video OTT players, and for that latency is clearly not a benefit our people and consumers are expecting.

What they want is high-speed internet, high bandwidth. And only geostationary satellites, which are big factories to produce megabits, are capable to do that at a cost which is affordable by consumers.

With VHTS satellite we would be able to deliver what we call a fiber like benefit at the fiber like price. This is very new and this is what is going to unlock the mass market.

As I said, we have the roadmap on terminals to achieve price points that would be acceptable by the mass market. I’m not commenting on OneWeb because I don’t want to comment on competitors.

But when you look at the capacity of megabits developed by OneWeb and how it’s spread all over the planet you would realize that OneWeb is probably not designed to serve that kind of residential market.

Next question.

Hi, thank you. My question has been answered.

Just a couple of follow ups. The first one on pricing again, I’m sorry.

Rodolphe, in your first few weeks and months you were keen to stress from your previous role, you believed Eutelsat had a potential for strong pricing power at key neighborhoods. You said that pricing so far has been stable.

Having been at the Company a little longer now do you still see the potential for strong pricing power or has this subsided? Or have there been any examples where you’ve seen this?

Secondly on ViaSat, obviously it’s very early days for the industry and business models are evolving. How are you thinking about the risk of what others are calling success based CapEx?

Are you hoping for predominantly wholesale deals if you were to agree to a joint venture? Or do you see the JV adopting some more CapEx intensive contracts?

Thank you Robert. On pricing – on our key positions which we call our hot spots, it’s true that we have a situation which gives us some price flexibility.

Since I said in the past, and I reiterate that, it’s a long journey. It’s a long journey because today we have a distributions team which goes mostly through third parties.

It’s not easy to implement the pricing strategy, a new pricing strategy, with this kind of distributions team. We eventually evolved that and it was one of the intentions behind the purge – to reduce also the number of distributors in Europe but it’s a long journey.

Second, we believe today that the key priority of the Group should be to accelerate the HD and ultra HD penetration. Why?

Because the key elements for us to stimulate the demand in the long run, to maximize the fill rate of our satellites and to optimize our pricing power, because obviously if there is a new capacity on a satellite it’s difficult to implement such a pricing policy. As we have said previously we see very positive early signs of this strategy to accelerate demand in volume on the back of HD acceleration since the fill rate HOTBIRD has increased, which is a very positive element.

On the latter question that you asked on ViaSat, we are controlling and consolidating the infrastructure part of the JV and not the distribution part. Why?

Because we want to remain in the infrastructure – on infrastructure drawn in this industry, meaning that we are not going to bear the net or the subscription acquisition cost which comes in OpEx or the terminal cost which comes in CapEx, which will be generated by the distribution to the residential market of those services. It means that we are confident that even though we accelerate in the broadband segment, and if we accelerate in the residential market, it will not have any detrimental impacts neither on our net ABG margin nor on our CapEx line, because we stay on the level of the infrastructure in this respect which is very good because it’s very predictable.

We don’t do the financial metrics of the Company and we can do that at a very low – with a very low CapEx envelope and that’s why we are so excited by this opportunity with ViaSat because we believe it creates lots of value for shareholders. We have growth with no incremental CapEx and with maintaining our ABG model.

Thank you, that’s great.

Thank you. Coming back to that balance sheet question that I was thinking about and it’s kind of follow on question from Patrick earlier.

But if you’ve now confirmed that the wholesale co-proceeds from ViaSat are going to be used to fund what sounds like will be the majority of the reinvestment in the ViaSat 3 satellite, does that mean that the Hispasat option proceeds, if and when they turn up, will mostly be available to deliver or improve financial headroom? If that’s the case, then given the confident tone and the performance and results today and your covered dividend and general leverage trajectory, would you ever think about pulling the trigger on a buyback?

Let me ask the question blatantly, but everyone can see what’s happened to your share price over the past weeks and months and wondering if that’s anywhere in your thinking. Thank you.

Just before we answer the question, just to clarify, you mean the proceeds from the sale of the 49% in KA-SAT to be reinvested in ViaSat 3?

So your – yes, that’s right and then you’re getting money from Abertis probably, hopefully, and one of those two pools of cash, does it need to be used? So my question is would you ever use it for enhanced shareholder returns?

Thanks.

Thank you guys for this follow up question. What I can say today is that the proceeds of the sale of our stake in Hispasat are not included anyhow in our guidance.

Neither in terms of CapEx envelope, nor in terms of the leveraging. We are going to meet all the objectives of our guidance, all the targets of our guidance, without the proceeds of Hispasat.

At this time being we don’t have anything to say regarding what we’re going to do with those proceeds, but it will be anyway good news because it’s not included in the framework of our guidance.

Very good, thank you.

Yes, hi, good morning. Thank you for this.

Sort of just a follow up on the Sky and OTT question one more time. It’s just that I mean when you spoke about transmission costs earlier I mean it’s quite clear that marginal cost of satellite on a point to multi-point is effectively zero.

I was just wondering if you could quantify for us or help us in terms of how we should think about the alternative transmission costs for your customers were they to use a fixed alternative. Thank you very much.

Well we don’t have any quantification to bring in this. What we can say is that above 50 viewers the cost of OTT is at the same level as it cost off satellite in that the – sorry at 50,000 viewers at the level – at this number of viewers the cost to distribute the video content by satellite is exactly the same as OTT dividend.

For OTT it’s a viable cost in that the more viewers you have – the more viewers you have the more costly it is. Meaning that above this threshold cost to deliver content by OTT is higher than by satellite and grows with the number of subscribers.

Meaning that – and while there is this notion of cost but there is also the notion of quality. Today you are – it’s impossible by definition because it’s the way it’s conceived to guarantee, to monitor the quality on OTT.

Meaning that it’s impossible to serve a large number of viewers for live events with a high quality of image through this kind of technology.

Thank you for that and I guess just in terms of the cost do you think it’s more? I mean when you try and think about quantifying this, I mean do you think it’s sort of a few cents per month per user or is it more several dollars?

I mean how meaningful is it in the context of this pay TV ARPU for example? Or is that not a good way to think about it?

It depends on the number of services which are at stake. For big players with millions of subscribers well you are talking of a price which are more around Euros with an s, than cents.

Thank you.

Thank you. Thank you to everybody.

Thank you for attending this presentation and I hope to see you soon for even better results.