Eutelsat Communications SA

PAR:ETL

Earnings Call Transcript 2019-Q1

[Operator]

Good day, ladies and gentlemen, and welcome to today's Eutelsat Q1 2018-'19 Revenue Conference Call. For your information, today's call is being recorded.At this time, I'd like to hand the call over to Mr. Rodolphe Belmer, CEO. Please go ahead, sir.

[Rodolphe Belmer, CEO & Director]

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

[Michel Azibert]

Thank you, Rodolphe. Let's take a look at Q1 performance by application. As usual, all comments are on a like-for-like basis, i.e. at constant currency, perimeter and accounting standards. Starting with the core businesses, Video, 65% of total revenues, recorded Q1 revenues of EUR 217 million, down 1.7% versus last year. Government Services, 13% of revenues, saw revenues of EUR 42 million, up 4%. Fixed Data, now 10% of group total, saw revenues of EUR 33 million, down 12%. Turning to connectivity, Fixed Broadband, 6% of our revenues, EUR 2.20 million, a decline of 7% year-on-year. Mobility, 6% of revenues as well, saw revenues of EUR 21 million, up 11%. Finally, other revenues stood at EUR 1 million. There is no extrapolation to derive from this figure given the lumpy nature of this line of revenues.Let's look at each vertical in more detail. First, Video. The 1.7% decline in revenues reflected, one, a high single-digit decline in Professional Video; and two, a lower contribution from FRANSAT. As a reminder, FRANSAT is our French DTT platform. Its activity was marked by a peak in card sales related to the HD transition in France 2 years ago and is facing the decline of attendant license revenues. Excluding these 2 factors, core broadcast revenues were stable. At the end of September 2018, the total number of channels broadcast by Eutelsat satellite stood at 6,999, up 3.6% year-on-year. Excluding the impact of the disposal of Eutelsat 25B, they would have been up by 4.9%. The number of HD channels stood at 1,419 versus 1,210 a year ago, up by 17%. It represented a penetration of 20.3% of channels, up from 17.9% 1 year ago.During the quarter, a multi-year contract was signed with Orange Slovensko in Slovakia for a capacity on EUTELSAT 16A to broadcast a new platform. This contract is a further illustration of the role of satellite for telecom operators seeking to extend the reach of their offers beyond that of terrestrial networks. Thanks to this contract as well as other business opportunities in the pipeline. Trends in broadcast are expected to improve in the coming quarters.Let's take a look at trends on HOTBIRD. Channel count was broadly stable at 998 channels at the end of September. Over the quarter, the number of MPEG-4 channels rose by 1% to 578. This growth rate was slower than the ramp-up in HD channels at plus 4% to 341 channels. Yet, MPEG-4 remains considerably more advanced than HD, with a penetration rate of 58% versus 34% for HD channels. As a result, the consumption of megabits per second at HOTBIRD was up 1% in the quarter. Government Services revenues stood at EUR 42 million, up 4.2% year-on-year. This performance reflects the carryforward effects of the renewal campaigns of fiscal year '17, '18 with the U.S. Department of Defense and incremental business secured at the 174° East orbital position last year. However, the latest round of contract renewals with the U.S. government, autumn 2018, resulted in a low renewal rate of circa 70% in value. This outcome is principally due for the nonrenewal of a single sizable contract with a specific service provider, that it does not reflect the underlying market trend, which has seen an improvement in recent quarters.On Fixed Data, first quarter revenues stood at EUR 33 million, down 12% year-on-year. They continue to reflect the ongoing pricing pressure and the highly competitive environment in this application, in particular, in Latin America.Fixed Broadband revenues were down 7.3% year-on-year. It is partially due to the expiry of a contract with a Middle Eastern customer for 1 spotbeam on EUTELSAT 3B, which has been recontracted to Taqnia in the mobile connectivity vertical. And it also continues to reflect lower revenues in European broadband in a context of scarcity of available capacity in Western Europe. This quarter has seen the launch and progressive rollout of the commercial service of the Konnect Africa broadband service. The contribution to revenues will start to be visible in the second half of the current financial year.Turning to Mobile Connectivity. First quarter revenues were up strongly at almost 11% year-on-year, reflecting the new contract with Taqnia at 3° East and 70° East secured in July. The entry into service of EUTELSAT 172B at the end of November of last year and the ongoing ramp-up of capacity contracts on KA-SAT. In the second half of the year, this vertical will benefit from the start of the UnicomAirNet contract on Eutelsat 172B in January 2019.Turning to the fill rate and backlog. The number of operational 36 megahertz equivalent transponders stood at 1,416 at the end of September '18, down by 11 units versus the end of June '18, reflecting the disposal of Eutelsat 25B. The number of utilized transponders was up by 5 units quarter-on-quarter. The main contributor to quarterly growth being the ramp-up of EUTELSAT 174A. As a result, the fill rate stood at 69% at the end of September versus 61. -- 68.1% at the end of June. The backlog stood at EUR 4.7 billion at the end of September 2018 versus EUR 5.2 billion a year earlier and EUR 4.6 billion at the end of June '18. The year-on-year decrease is due to the impact of the integration of Noorsat, representing a negative delta of EUR 400 million. The quarter-on-quarter increase reflects the inclusion in the backlog of the commitments from Orange and Thales on KONNECT VHTS. This more than offsets the perimeter effect related to the disposal of Eutelsat 25B, the slightly negative effect of change in accounting standards as well as backlog consumption. The backlog was equivalent to 3.4x 2017-'18 revenues with Video representing now 77%.

[Rodolphe Belmer, CEO & Director]

Thank you, Michel. Let's turn now to the outlook. Starting with a quick reminder of our key priorities for fiscal year '19 and the progress we have made so far. On cash generation, LEAP is fully on track to deliver its targeted EUR 30 million in savings by the end of this year. We have secured EUR 24 million in pretax interest savings from fiscal year '20 onwards through the recent bond. The disposal of our interest in Eutelsat 25B was transacted at a high single-digit EBITDA multiple. We are continuing our CapEx optimization strategy with the replacement of the HOTBIRD constellation at highly compelling terms, and the signature of a long-term service agreement with Arianespace covering 5 launches until 2027, providing cost-effective, a short access to space with schedule flexibility. At the same time, we continue to lay the foundations for future growth in Video with the launch of Eutelsat CIRRUS and the continued rise in HD penetration, leading to a 4.5% rise in megabits per second consumption at key Video positions. In Fixed Broadband, with the commercial launch of Konnect Africa and the ongoing buildup of our VHTS strategy in Europe.A quick reminder on our asset disposal program of the past couple of years and that's been streamlining our business portfolio with the disposal of noncore assets at attractive terms. They include, the maritime service business with DHI, 49% of KA-SAT to ViaSat, our 34% stake in Hispasat and, a couple of months ago, our minority interest in the Eutelsat 25B satellite. Collectively, these operations have generated over EUR 600 million, contributing to our accelerated deleveraging.A quick reminder now on Eutelsat CIRRUS. CIRRUS is a greenfield platform aimed at providing technical solutions to the evolving needs of our customers, in particular, the rapid deployment of Video content through DTH and OTT, a consistent end-user experience on all screens and an enriched range of services. As such, it is designed to deliver a turnkey end-to-end video distribution solution, including cloud-based service management and a mutualized platform among clients; a seamless multiscreen end-user experience enabling straightforward combined DTH/OTT offers, thanks to a native hybrid platform; a flexible and evolving feature set, including best practice security solutions, EPG service and catch up, start over and 7-days, VOD, recommendations and targeted advertising.Its business model is fully scalable with modest upfront CapEx and OpEx. It means that our customers can access simplified delivery logistics, mutualized costs, allowing economies of scale; an off-the-shelf solution and a portfolio of optional services to enhance the viewer experience. The rollout of CIRRUS is an important element in leveraging the value creation potential of our Video vertical by deepening our customer knowledge and enhancing customer loyalty. It also opens up the potential for incremental revenue opportunities with new platforms or projects to launch a mobile app to complement DTH distribution by upselling with the existing customers and monetizing a share of the additional value provided by the new services.Turning to Konnect Africa. As a reminder, Yahsat's Al Yah 3 capacity began operations at the end of the first quarter, finally enabling the commercial service of the Konnect Africa broadband service to be progressively rolled out. The service is currently available in 8 countries and will gradually be extended to 19 countries in Sub-Saharan Africa. The initial market response is very positive with keen interest from both traditional telecom service providers and more capillary local retail partners. At this stage, more than 10 distribution agreements have been signed, notably with China Telecom in South Africa, Bentley Walker in several countries, ISOCEL in Benin and Coollink in Nigeria. And we're working on a pipeline of some 20 potential additional distributors with which we are in advanced discussions. Revenues are expected to ramp up in the second half of the current fiscal year.Turning to the outlook. The underlying trend of the 5 operating verticals is broadly in line with our expectations at this stage of the year, with growth set to resume in the second half. I remind you, the revenue profile of this year is back-end loaded, due notably to the timing of the ramp-up Konnect Africa and the contract with China Unicom. However, the unexpectedly low out-turn of the full renewal campaign in Government services makes the objective of a return to slight growth for the year, as a rule, challenging. And in consequence, we are adjusting our revenues expectation to broadly stable with the return to slight growth now expected from fiscal year '20 onwards. All our financial objectives, notably the EBITDA margin and discretionary free cash flow, are confirmed.A few words to conclude. The global performance of the operating verticals in Q1 was broadly in line with our expectations at this stage of the year. In particular, core broadcast revenues were stable. We took concrete measures to optimize cash generation with the bond refinancing and the disposal of Eutelsat 25B as well as the HOTBIRD procurement and the multi-launch agreement with Ariane paving the way for future CapEx efficiency. Our current year top line objective is adjusted to take account of the one-off contract loss in Government Services by one of our distributors, which is not representative of the overall trend in this vertical.This slight adjustment has no impact on our ability to attain our other financial objectives, which are all confirmed for the current and coming year, and in particular, our ability to serve a stable to growing dividend.In sum, as expected, our top line performance remains modest in the years running up to the return to growth driven by connectivity. And during this time, we will continue to successfully apply our strategy, focused on cash flow maximization, deleveraging and generous shareholder remuneration.I thank you for your attention. And we are now ready to take your questions.

[Operator]

[Operator Instructions] We'll go first to Aleksander Peterc of Societe Generale.

[Aleksander Peterc, Equity Analyst]

So just first, at a general level, can you just confirm for the first quarter, we're down, for your operating verticals, 1.8%, and that, to me, looks a little bit weak. Can you confirm that it's truly in line with what you would have expected anyway? Then secondly, I'm not sure I fully understood the headwind from FRANSAT, if you could you explain. Is that a new element? And is this going to weigh, going forward, on Video? Third question would be on HD. Why is it going backwards in this quarter sequentially in terms of HD channel count. This is the first decline in 17 quarters. So basically 4 years of continuous growth. Why has this reversed, while your overall channel count is actually up? And then finally, on the crucial question on government. The low renewal rate. Is that going to start impacting revenues as of the next quarter? Or is it already visible now? If you'd just quantify a little bit this contract loss to us?

[Rodolphe Belmer, CEO & Director]

Thank you Aleksander for all these questions. On your last one, which is an easy answer, the renewal rate to contract that we lost at -- in the Government Services vertical will start materializing and have an impact as of next quarter. It was not included in this -- in Q1. Second, on high-definition, we continue to do extremely well and to progress very rapidly. It's true that if you look in absolute terms, you see, on a sequential basis, a slight erosion, which is due to the fact that, as we said, we have sold one of our satellites, which is Eutelsat 25B, which had some HD channels on board. And if you look, all things equal and excluding this perimeter effect, obviously, our HD count would have grown substantially. FRANSAT, it's our French DTT platform. As a reminder, 2 years ago, with -- there was a peak in the card sales related to the HD transition in France. We sell smart cards. That's the business model of this DTT platform, which is free to air. Cards, they generate license revenues for a couple of years. That's our revenues. And this revenue stream has now rolled off, which explains the drop in revenues. And revenues, as you can see probably is -- as you cannot see, actually, are stable sequentially and that's why this trend is expected to improve in the second half. Last question, which was your first one. The 5 operating -- from 5 operating verticals, we're in decline of 1.8% in Q1, which is in line with our own budget assumptions. As we have always said, the revenues of this fiscal year was expected to be back-end loaded. Why? Because many elements play in that -- in the direction. First, we have the China Unicom contract, which starts service in January. Second, we have the ramp up of our Konnect Africa initiative, which is also starting now and which will gain traction during the course of the year. And there is the increase of our Video business, which is also expected to be sort of staggered during the course of the year. And for all those reasons, we expected, as we said already last year, the first quarter, which will be weaker than the average of the year.

[Operator]

Up next, we'll go to Crédit Suisse's Paul Sidney.

[Paul Sidney, Research Analyst]

I had 3 questions, please. Just on the lost government contract, can we just dig into a bit on why you lost the contract? Was it the fact that you couldn't deliver on price or capability? Just a bit more detail around that, please. And then secondly, you mentioned that the low recontract rate in the fall campaign was mainly due to this contract one-off. Does that suggest that, actually, excluding that contract one-off then you still would have had a recontract rate lower than the spring, I think, it was 95%? And then just lastly, just trying to pull together the moving parts in the guidance. Broadly stable, is the starting point EUR 1,330 million for the 5 verticals and then we add in other and then we would add in any potential FX benefit, which, I think, is EUR 5 million percent move in the FX rate. Is that the right way to think about the full year?

[Rodolphe Belmer, CEO & Director]

Thank you, Paul. On your first question on the government contract, it's a very specific contract that we lost. A very sort of precise event, which, we think, nothing to do with the price of the capacity or the quality of the capacity. Maybe I will turn to Michel Azibert to give you more color on that event.

[Michel Azibert]

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

[Rodolphe Belmer, CEO & Director]

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

[Sandrine Téran, CFO & IT Officer]

I would just add, Paul, to answer your precise question on figures. That you are right, the basis -- the base -- the pro forma basis, fiscal year '18, that you should look at is the EUR 1,330 million figure that you mentioned and that you can find in the last table of our press release. So this is the reference pro forma for '18 for the 5 operating verticals as Rodolphe just mentioned. And you are also right, considering that you should take that into account, the impact of the ForEx variation. So the average rate for fiscal year '18 was 119, and you know that we have an impact of [ EUR 4 million to EUR 4.5 million percent ] for variation. And you should also add to our fiscal year '19 data 1 quarter of Noorsat, which is due to the pro forma variation. If you need more information on the way we do the pro forma, please call Joanna or [ Cédric ], they will be happy to help you.

[Operator]

Up next from Goldman Sachs, we'll go to Michael Bishop.

[Michael Bishop, Equity Analyst]

Just a couple of questions from me. Just quickly following up on the guidance question. I mean, could you confirm that sort of broadly stable is effectively flat on that EUR 1,330 million basin. It feels like, given Video is a bit weaker than expectations and government weaker than expectations and the response to the earlier question that you're running at some minus 1.7% in the first quarter, I'm just struggling to quite get back to flat based on the new guidance. And then secondly, could you just give us an indication of whether we should explicitly expect Video to be stable at any point in the year because, I think, you'd said that you would expect Video to stabilize, but it seems like versus consensus at least the FRANSAT impact is incrementally negative.

[Rodolphe Belmer, CEO & Director]

Thank you, Michael. Maybe I should start answering to your second question regarding Video. First, I would like to say that the broadcast segment, which is the core of our Video segment, the vast majority of it by far is stable. And I'd like to underline it because in that respect we behave quite differently to the rest of the market for too many reasons. First, we have a quite different geographic exposure. And second, we are mostly, which is very important, DTH. And when I say mostly, it's 90% DTH, which creates a completely different context for Video business. Second, our Video business is expected to stabilize, ideally slightly grow. Why? Because it's true that we have some headwinds with the Professional Video, which is shrinking, and FRANSAT which has a -- also a headwind on us. But the broadcast segment is expected to grow. First, we have new contracts that we expect and that will materialize during the course of the year. First of those being the contracts that we have signed with Orange Slovensko, which we have signed already, we have communicated on and which will bring incremental revenues during the [ contract basis ] and also some of contracts of the same kind that we expect in the next few weeks and that we cannot comment on at the moment. And second, we have some areas when there is growth embarked in our business at 2 orbital positions. One orbital position is 28° East, it's how our position over the Great Britain, which is doing very well for us. We said -- we communicated in public last year that we actually renewed a contract on very favorable terms in this region, which is true, and it's materializing this year with enhanced revenues. And second, there is our hotspot at 78° West for the MENA, for the Middle East and Africa, which is also growing. For -- on the back, majority of increase, and I underline that, increased price. And that's what -- that's one of the major reasons why we can state that our revenues for the 5 operating verticals for this year will be broadly stable because Video is expected to be well, as I said. And second, we have some element of growth which will materialize in other verticals during the second half of the year. Mobility, the Mobility segment will continue to grow quite significantly on the back, notably, of the China Unicom contract, which is around bringing WiFi for plants in China. And second, on the development of our broadband segment with the progressive ramp of our African broadband initiative, which is in early phase only now and which is growing from this base.

[Michael Bishop, Equity Analyst]

So if I could just follow up. It sounds like you're saying that Video, all-in, including the professional broadcast headwinds and including the FRANSAT headwinds, can stabilize in FY '19?

[Rodolphe Belmer, CEO & Director]

Yes, that's why I said exactly. That's what I tried to articulate exactly.

[Operator]

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

[Patrick Thomas Wellington]

Rodolphe, I have a couple of questions. I think this is 3 guidance downgrades now out of 5 quarters and they're all for very specific reasons. But does that not give you the impression that the business is a bit fragile. You're very exposed to what is really quite a small contract loss at this stage. Your guidance seems very accurate. So you might want to talk around that a little bit. Secondly, the loss of the government contract. You say this is circumscribed and an unusual event. Is that actually true, because if you look at your HOTBIRD business, for instance, your problems with the HOTBIRD purge was because you were over-reliant on distributors because of the nature of the company. And you said at the time that you'd unwind that and that's why you bought Noorsat. And then on the government side, you're not a main contractor, you haven't got the special clearances, so you're reliant on distributors. So aren't these things generic to the nature of the business? And then my third question was just on Fixed Broadband. Your original target for African broadband in the first year was EUR 15 million. I know you said that might not be possible. Can you give us some sort of scale how much that might contribute this year? And staying in the same business but the other side of it, on KA-SAT, you were getting a shift, I think, from retail to more wholesale sales this year after the issues with ViaSat, how is that process going?

[Rodolphe Belmer, CEO & Director]

Thank you, Patrick. On your first comments regarding our guidance, well, I don't want to be picky or to be -- or to contradict you for the sake of contradicting. But I wouldn't say that it's 3 miss out of 5. Because during the last quarter of last year, we said we might miss it, but actually, we made it, which, incidentally, we didn't miss it. But it's true that in broader terms, it's true that our business relies on a relatively small number, it's a discrete number of contracts, which can create some bumps in the revenue lines, especially in moments where the demand is not that strong than it just to be for our industry overall. But what we try to do and I think we do that quite effectively is that during the time when our revenue line -- our revenue growth remains modest, we are concentrated on the below the lines KPIs, EBITDA, cash flow, and we are pretty effective at guiding on those metrics, which are fully in our control and delivering on the very ambitious objective. It's not very humble to say that, but the very ambitious objectives that we have set to ourselves. And we think we -- in that sense, we deliver quite effectively on the objectives and strategy we have communicated to the outside and to the financial community. And I would say that our company, in that sense, is extremely robust at the time being and given the circumstance of the context of the market that we are going through. In the Government segment, the renewal rate that we had if we accept the circumscribed situation that we have described. The renewal rate is very good. Again, it's coming at a 95%, which means that our strategy works, and we are doing relatively well in that segment. Our Q1 has been good also. It's in progress of 4%. And in terms of -- when you look at our distribution strategy, on broader terms, when you look at our performance, I would say that our distribution strategy, in general, delivers very well. We have an EBITDA margin which is one of the records in our industry and it's growing. We are now reaching levels, which are above 78%, which are very good and we are progressing. And second, when you look at the fill rates of our satellites and when you look at the return on capital employed of our company, all these KPIs, which are extremely important in terms of what kind of value we create, they are extremely well oriented. And the reason for that is that we have a business model which is extremely lean and extremely efficient and which is direct -- whose aim is to maximize the fill rate of our satellites by resorting to as many distributors as we can to bring the commercial strength, to bring the efforts that we need to fill the capacity of the satellite, together with minimizing the cost of operations for ourselves, meaning that we think that it's low-risk, high-return policy, and it's fact proven. On the government -- on the, sorry, fixed African broadband initiative, we have never given specific objectives for this initiative. It's true that, 2 years ago, we quoted the [ odd dollar effect ] of EUR 15 million when we had this incident with AMOS-6, which had a launch failure, which we had to give a sense of the kind of business that was at stake and that we lost because of this launch failure. We now have a better understanding of the African market. We have a much deeper understanding of the market demand and our ability to ramp the business. I would say that we stay on the same kind of ballpark figure. Even so, we are bit lower than the EUR 15 million that you have quoted. And lastly, I would say that, even though it takes time because it's a new avenue of growth for us, it's a new geographic area for us and in a new vertical, meaning that it takes time to roll out effectively that business. We remain positive on the business potential, and we had very positive, encouraging and even enthusiastic response for our distributors and from the market -- from the end-market in Africa over the past few months. On KA-SAT, it's true that we are now optimizing our distribution strategy since the unwinding of our ambitions with ViaSat, and we are developing a new set of distribution approaches and notably refocusing our efforts towards building a wholesale distribution strategy in Europe with specialized distributors, but also with big telcos. We mentioned that we signed, for KONNECT VHTS, a very significant wholesale deal with Orange in France. And we have been able, for KA-SAT, to see the -- to sign on to a similar deal with a very large telco that we are not allowed to mention. For confidentiality reasons, they didn't allow us to mention the name. But it's a very big telco that we signed with the same kind of approach for KA-SAT in Europe.

[Operator]

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

[Wilton George Fry, Equity Analyst]

You've said the Video business is stable. But I'm trying to reconcile that statement with the rapidly failing proportion of the backlog that's video. You said 77% of the video is current backlog, that's EUR 3.6 billion. That was EUR 4.5 billion this time last year. That's about 20% of your backlog gone in a year. I guess, a bit of that is going to be Noorsat, but even so, it doesn't sound very stable?

[Rodolphe Belmer, CEO & Director]

Well, I reiterate I cannot say more that the Video business -- the broadcast business is stable. And the Video segment is expected to be stable to slightly growing this fiscal year. And if you like, we can bring even more color on that. And I think it's a very important point, given the context of our industry, we are different on the front. We have a different strategy, and we perform extremely well with very strong positions. Second, our backlog has evolved, actually. And it's true that Video represents a smaller share of our backlog, with 77% only instead of 83% the last quarter, we communicated on that. The fact is because we have signed new contracts which are very important in the Mobility segment. And in the Mobility segment, contracts are also very important in size and of very important durations, which means that, increasingly, the mobility segment will represent an important size, an important portion of our backlog. Now if you look at the backlog in the Video segment, we have the natural consumption as usual. And we have more specifically the effect of Noorsat integration, which represented a significant portion of our backlog in the past. And there is also the divestiture of the satellite Eutelsat 25B, which was a video satellite that we sold out to our co-owner and which has, obviously, an effect at -- on the backlog that we don't provide at a constant perimeter.

[Operator]

[Operator Instructions] We'll go to Sami Kassab of Exane.

[Sami Kassab, Media Research Director, Co]

I have 3 questions as well. Rodolphe, the first one, you may have said it twice on the call, but could you repeat it a third time because I'm still confused. Do you still expect Video to return to slight growth this year? Or are you now guiding for slight growth in the core broadcast, with the whole Video been just broadly stable?

[Rodolphe Belmer, CEO & Director]

That's only one question, Sami.

[Sami Kassab, Media Research Director, Co]

Yes, yes, but it's the most important one. But okay, I should have said...

[Rodolphe Belmer, CEO & Director]

Okay. No, no. Well, Video, well, I can reiterate what I said. What I said is that the broadcast segment is stable, meaning that in our Q1 revenues, our broadcast segment is stable. Now if you look at the entire fiscal year '19, we expect the Video segment, as a whole, broadcast plus the other very small segments, Professional Video, notably 2 in total, be stable to slightly growing. That's what I said. And why are we expecting this profile. First, we are different DTH and different geographical exposure than the rest of the market. Second, we have new revenues coming from new pay-TV platforms that we have been able to sign. The first of those being Orange Slovensko that we have communicated. And we have some of them -- a few of them still in the pipe coming in the next few months. And lastly, we are growing revenues at some orbital positions, MENA, we are going. And why are we growing? Because we have been able to increase price in this region, which is very important for us. It represents roughly 1/4 of our Video revenues. Russia is well oriented also. And Africa, I'd like to underline it also because we might also be different in that geography. Africa is also well oriented. And for all those reasons, we believe, at this point and stage, that the Video segment, in total, will be well oriented for this fiscal year.

[Sami Kassab, Media Research Director, Co]

Very clear. So I can ask my second question now. This afternoon, Intelsat mentioned they saw a stabilization in capacity pricing in the networks division. Are you seeing a similar trend in your Fixed Data and Connectivity business? Can we think of pricing being more stable there for HTS capacity?

[Rodolphe Belmer, CEO & Director]

No. Unfortunately, no. We have communicated on our Fixed Data revenues, which are down 14% year-on-year, if my memory is correct. The vast majority of that -- 12%, sorry. The vast majority of that is price driven, meaning that volumes are stable. But the -- and the negative drag that we have on the revenues of this vertical is majority pricing.

[Sami Kassab, Media Research Director, Co]

And the last one, do you still expect Fixed Broadband to return to revenue growth this fiscal year?

[Rodolphe Belmer, CEO & Director]

I don't think we have communicated on that. It will improve. The business profile will improve substantially, but I don't think we have given any indication on the Fixed Broadband.

[Sami Kassab, Media Research Director, Co]

Do you want to do one now or shall I wait?

[Rodolphe Belmer, CEO & Director]

Well, it will be -- I'd say it would be more or less stable. H2 will be growing high single digit. And well, if you make up the math, you can adapt your yourself with a sort of average for the fiscal year.

[Operator]

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

[Rodolphe Belmer, CEO & Director]

No closing remarks for me. Thank you very much for this meeting. And talk to you in 3 months' time from now at maximum.

[Operator]

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