Eutelsat Communications SA

PAR:ETL

Earnings Call Transcript 2018-Q3

[Operator]

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

[Rodolphe Belmer, CEO & Director]

Good evening, ladies and gentlemen, and thank you for joining us on this call, where we'll present our first quarter 2017-2018 revenues. I'm Rodolphe Belmer, CEO; and I'm joined by Michel Azibert, deputy CEO; and Sandrine Téran, CFO. First, a word on key events since the beginning of 2018. Third quarter revenues of EUR 337 million were down by 1% like-for-like, excluding Other Revenues, i.e., revenues not directly linked to the commercialization of satellite capacity. I will come back to that later. Since the start of 2018, we have continued to make headway on our strategic roadmap. The procurement of KONNECT VHTS represents a major milestone in our growth strategy in connectivity and comes with significant multiyear distribution commitments with Orange and Thales. I will also come back to that later on.After much effort, the sale of our Hispasat stake has been finalized for the original agreed consideration of EUR 302 million, an important step in the rationalization of the asset portfolio and toward maximizing [ cost generation ] and accelerating deleveraging. As well, we signed a landmark MoU with China Unicom and that addressing the satellite communication market in the framework of the Belt and Road initiative. And more broadly, we delivered a solid commercial performance, notably with DoD Spring renewals standing at above 95%.A quick word on total third quarter revenues, which stood at EUR 337.4 million. On a reported basis, they were down 7.4%, reflective -- reflecting a negative currency effect of 5 points, barely offset by a positive perimeter effect of 1 point reflecting the acquisition of Noorsat consolidated from October 2017. At custom currency and perimeter, they were down 3.3% year-on-year. And as highlighted above, excluding Other Revenues, the performance of the 5 operating verticals declined by just 1% at constant currency and at perimeter. This represents a marked improvement versus end December, when the decline was 1.8%. Quarter-on-quarter, revenues were down 2.9% on a reported basis and by 1.8% on a like-for-like basis. Excluding Other Revenues, they would have been broadly stable.Before handing over to Michel Azibert, a reminder of the commercial highlights. In Government Services, the outcome of the Spring renewal campaign with the U.S. administration was favorable at a rate comfortably above 95% in value terms. Further contracts were secured in Government Services at the 174 East orbital position. The majority of the 17 Ku operational transponders available at this orbital slot are now contracted, paving the way for a further ramp up of revenues from the beginning of next fiscal year. We secured the reservation of a significant portion of the capacity on EUTELSAT QUANTUM by the DoD service provider Peraton, meaning, this satellite is now largely reserved. In Video, at HOTBIRD, we secured a multiyear capacity agreement with Mediaset to accelerate its transition to HD as well as a multi-transponder renewal with TVN of Poland at favorable conditions. And in the framework of the MoU with China Unicom, it's unit called UnicomAirNet, UAN, purchased the remaining HTS capacity on Eutelsat 172B, representing a total backlog of over $100 million.Now over to Michel Azibert to take a closer look at the Q3 performance by application.

[Michel Azibert]

Thank you, Rodolphe. As usual, I'll comment on a like-for-like basis. Starting with the core businesses, Video, 67% of total revenues, recorded Q3 revenues of EUR 225 million, down 0.2% versus last year and up by 0.2% on a quarter-on-quarter basis. Government Services, 11% of revenues, saw revenues of EUR 38 million, down 2.3% on a yearly basis and down 1.5% quarter-on-quarter. Fixed Data, now 10% of group total, saw revenues of EUR 35 million, down 9% year-on-year and by 1.6% quarter-on-quarter. Turning to Connectivity, Fixed Broadband, 7% of revenues, stood at EUR 22 million, a decline of 7.7% year-on-year and 0.7% quarter-on-quarter. Mobility, 5% of revenues, saw revenues of EUR 18 million, up 17.9% versus a year ago and down by just under 1% sequentially. Finally, in this quarter, there were no Other Revenues compared with EUR 7.5 million a year earlier and EUR 5.4 million in previous quarter. This demonstrates that this line can be quite variable. Let's look at each vertical in more detail. First, Video Applications. Third quarter revenues amounted to EUR 225 million, down 0.2% year-on-year. Broadcast revenues are now stable, reflecting notably improving trends at HOTBIRD. Professional Video continued to decline due to ongoing pressure on contribution services. On a quarter-on-quarter basis, Video returned to slight growth of 0.2%, with broadcast revenues up 0.5%. At end March 2018, the total number of channels broadcast on our satellite stood at 6,880, up 8.2% year-on-year. HD penetration continued to rise, representing 19.7% of channels compared to 16.6% a year earlier or 1,358 channels, up 28%. On the commercial front, as stated earlier by Rodolphe, we secured a multiyear capacity agreement with Mediaset as well as a renewal of transponders with TVN in Poland at favorable conditions.Let's take a closer look at trends on HOTBIRD. Channel count remain resilient. On a year-on-year basis, it grew by 8 channels or around 1%. Year-on-year, the number of MPEG-4 channels rose by 9% to 567. This growth rate, like the past 3 quarters, was slower than the ramp up in HD channels at plus 19% to 312, confirming the inflection identified during the course of the past year. Yet MPEG-4 remains considerably more advanced than HD, with a penetration rate of 56% versus 31% for HD channels. As a result, the fill rate and the backlog of HOTBIRD slightly improved.Government Services revenues stood at EUR 38 million, down 2.3% year-on-year, reflecting the carryover effect of previous renewals with the U.S. Department of Defense. Quarter-on-quarter revenues were down by 1.5%. Commercial activity is encouraging. The latest round of contract renewals with the U.S. Department of Defense by spring 2018 resulted in an estimated renewal rate of above 95% in value. Elsewhere, further contracts were secured in Government Services at the 174 degrees East position. The majority of the 17 operational transponders currently available at this orbital position are now contracted, paving the way for a further ramp up of revenues from the beginning of next fiscal year. Looking ahead, Q4 will reflect the negative base effect of a positive one-off recorded in Q4 of 2017. Beyond this, revenues will include the positive effect of the commercial momentum.Fixed Data third quarter revenues stood at EUR 34.9 million, down 9% year-on-year. As in previous quarters, they continue to reflect ongoing pricing pressure in all geographies, notably in Latin America, and the absence of significant incremental volumes at this stage. Quarter-on-quarter, revenues were down by 1.6%.Third quarter revenues in Fixed Broadband stood at EUR 21.5 million, down 7.7% year-on-year and broadly stable quarter-on-quarter. This reflected lower revenues at European Broadband in the context of scarcity of capacity in Western Europe and slower than hoped for progress by the retail joint venture with Yahsat. In this context, we are refocusing our efforts on the world set strategy. In addition, the recently completed management lineup of experienced professionals is working to optimize conditions for the arrival of significant incremental capacity in the next couple of years, starting with the Al Yah 3 capacity for the launch of the African Broadband service in August, to be followed by the KONNECT and KONNECT VHTS satellites in 2020 and 2021, respectively.Turning to Mobile Connectivity, third quarter revenues stood at EUR 17.9 million, up 17.9% year-on-year, reflecting, on the one hand, the full quarter effect of Eutelsat 172B with capacity presold to Panasonic, which entered into service at the end of November '17; and on the other hand, continued growth on wide beam capacity notably over the Americas. Quarter-on-quarter, revenues were broadly stable.Let's turn to the backlog and fill rate. The order backlog stood at EUR 4.6 billion at the end of March '18 versus EUR 4.7 billion at the end of December '17, reflecting natural backlog consumption and in the absence of significant renewals during the third quarter. Year-on-year, it reflects mainly the impact of the integration of Noorsat, which is an impact of minus EUR 0.4 billion. The backlog was equivalent to 3.1x the revenues of 2016-'17. Video Applications represented 83% of the backlog. The number of operational transponders stood at 1,424 at the end of March, up by 50 units compared with end of March of last year, reflecting mainly the entry into service of Eutelsat 172B and the subsequent relocation of Eutelsat 172A at 174 degrees East. As a result, the fill rate stood at 66.8% at the end of March 2018 versus 68.2% a year ago. Net, 2 incremental transponders were leased during the third quarter, reflecting notably new business in Government Services at 174 degrees East and the incremental volumes leased at HOTBIRD. I will now hand back to Rodolphe.

[Rodolphe Belmer, CEO & Director]

Before turning to the outlook, a quick word on KONNECT VHTS. We recently ordered the next-generation VHTS satellite system to support the development of the European fixed broadband and in-flight connectivity businesses. This satellite is due to enter service in 2021 and will be bid by Thales Alenia Space. It will be launched with multiyear, multimillion euro distribution commitment from Orange and from Thales. It replaces the ViaSat-3 project and is fully covered by our CapEx envelope. So what was behind this decision? After a comprehensive analysis of the different options, this deal emerged as the best from a commercial, technical, financial and operational perspective, offering the optimal balance between cost, derisking and availability. Commercial first. The partnership with 2 blue chip companies, both leaders in their respective fields, Orange for retail in European countries, where it has retail presence; and Thales, in particular, for Government Services. Technical. The satellite will provide the highest usable capacity over Europe with 500 gigabits per second, with unmatched procurement terms for total cost of ownership, both in terms of CapEx and OpEx per gigabyte per second. It will embark the powerful onboard digital processor for maximum flexibility in terms of bandwidth allocation and ground segment rollout. Financial now. The project enables derisking through multiyear capacity precommitments, representing several hundred million euros. Operational finally. Time-to-market is favorable compared to ViaSat, in particular, given the availability of KONNECT from 2020. In addition, KONNECT VHTS is compatible with multiple ground technologies. Finally, the project should be simpler to manage than under a [indiscernible] framework, allowing to maximize synergies with the rest of our broadband operations.As a reminder, the potential for connectivity via satellite is significant. The core market for fixed broadband via satellite is estimated at some 5 million homes in Europe in 2030. Demand for in-flight connectivity capacity is expected to exceed for the whole sat part only, EUR 1 billion globally in 2025. KONNECT VHTS will be a game changer in addressing these markets, thanks to production costs in line with our CapEx per gigabit target of EUR 1 million, space and ground CapEx included, thus enabling the provision of fiber-like service at a fiber-like price and also paving the way for the transition from niche to more mass markets. By temporarily redirecting some of the KONNECT capacity to Europe -- KONNECT, that's the African satellite, African Broadband Satellite -- we will size the early mover advantage to prepare for the arrival of the far bigger KONNECT VHTS satellite. The KONNECT VHTS investment can be managed within our current CapEx envelope. And it means that Eutelsat retains its infrastructure business model to protect high EBITDA margin.Before turning to the outlook, a quick reminder of our priorities for the current year within the framework of our strategic plan.Step 1, our medium-term cash flow generation strategy is based around stabilizing revenues and maximizing financial efficiency. On the first element, our target is a return to stability, principally at HOTBIRD, and we are seeing an improvement in trends, notably in revenues, fill rates, backlog and HD penetration. As well on Video, we are delivering on our HD stimulation measures with total HD channels on the fleet up by 28% year-on-year. And we have streamlined distribution in [ EMEA ] with the integration of Noorsat, which is progressing smoothly. On Data, we can say that the decline remains broadly in line with our assumptions. On Connectivity, we have been successful in leveraging new innovative resources, notably at Eutelsat 172B HTS payload, which is now fully sold just 3 months after its entry into service. In terms of other efficiencies other than revenues, the LEAP cost saving plan is fully on track and will contribute to an EBITDA margin uplift next year. On CapEx, we are making strong progress, notably with our design-to-cost strategy, and we already know that our 2018 CapEx will be below our estimated 3-year average. And we are also continuing to delever, which will be accelerated with the Hispasat proceeds.Turning to Stage 2, preparing the ground for a return to growth. The vast majority of the capacity of EUTELSAT QUANTUM is now reserved. The deployment of KONNECT Africa was delayed due to the late availability of Al Yah 3, but it is now on track to be launched in August 2018. And finally, on Connectivity, one disappointment, which is the performance of the retail joint venture with ViaSat, and one significant milestone was the procurement of KONNECT VHTS.Turning now to the financial outlook. During the first 9 months, the revenue performance of the group's 5 operating verticals continued to improve, with a run rate of minus 1% in the third quarter. On the other hand, Other Revenues, which means the revenues which are not related to the ongoing commercialization of capacity and are less predictable by nature, those revenues are running behind expectations following the outturn of the third quarter. We have a handful of active Other Revenues opportunities in the pipeline, which would enable us to land at the low end of our full year total revenues objective of minus 1% to minus 2%. However, in the event that none of these Other Revenues opportunities materialize in the fourth quarter, the decline of revenues could be up to around minus 3.5%. This has no impact on our other objectives for the current and following 2 years, which are fully conferred. Organic revenues are expected to return to slight growth from 2018, '19 onwards. The EBITDA margin at constant currency is expected above 76% for fiscal year '18 and above 77% from fiscal year '19 onwards. Cash CapEx is maintained at an average of EUR 420 million per annum for the period July 2017 to June 2020. For the current year, it is expected below this level. Discretionary free cash flow is expected to deliver mid-single digit CAGR in the period July '17 to June 2020 at constant currency. And of course, our leverage objective and commitment to stable or progressive dividend are also confirmed.Thank you for your attention, and we are now ready for your questions.

[Operator]

[Operator Instructions] We will hear first from Sami Kassab with Exane.

[Sami Kassab, Media Research Director, Co]

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

[Rodolphe Belmer, CEO & Director]

Sorry, Sami, I didn't get your question.

[Sami Kassab, Media Research Director, Co]

The last question was asked was on EUTELSAT 16A. It looks to me like there are negative trends there. And I was wondering whether there was something in particular at play on EUTELSAT 16A in Eastern Europe that would explain what I see on my tracking there.

[Rodolphe Belmer, CEO & Director]

[ I got 2. ] Okay. Thank you for your questions. On the top line evolution for fiscal year '19, we said and we reiterate that we expect a slight growth, which will be a very slight growth actually. And what are the basis for that, for those projections? First, as you can see, our -- the revenues of our 5 operational verticals are improving. And actually quarter-on-quarter, they are stabilizing, they are stable. Second element, there are some positive elements that we expect as of next fiscal year, which is, first, the entry into service of our African Broadband initiative. It has been delayed, as you know, due to the late launch, let's say, to keep it simple, of Al Yah 3 satellite. This satellite will enter into service during the course of the month of June, meaning that our commercial operations will be able to start up as of beginning of August. The second point, we have sold most of the available capacity on the 174 satellite, which is a new satellite for us. It's a new orbital slot. And again, most of this capacity will start being exploited from July. And lastly, there is the big contract we have been able to sign with China Unicom at the 172B position, and which will start by the month of June -- of January, sorry, meaning at the middle of next fiscal year for us. And for all those elements, very robust underlying trend of our securing revenues on all 5 verticals, plus the positive elements that I've mentioned, we are able to reiterate that fiscal year '19 should be slightly, slightly growing. On question 2 on the RetailCo that we have with ViaSat, the joint venture that we have with ViaSat in Europe to distribute the service to subscribers in Europe, the main reason why we think that the revenues from this joint venture have been disappointed -- disappointing is twofold. First, we think that it took time to establish this joint venture and to merge the teams and to find a common ground of working in common with ViaSat. And second element, we think that the best strategy for Europe is to work through experienced and powerful distributors, like Orange for instance, and that it's much more difficult to go for a direct distribution approach, direct to consumer, given the diversity of the situation of the market positions in the different European countries. And that's also what we have learned during our time of working together with ViaSat. And on the question on 16A, that's a satellite which covers mostly Africa. Maybe I will turn to Michel Azibert, who will able to give more color on that question.

[Michel Azibert]

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

[Operator]

We'll now move on to our next question. That will come from Aleksander Peterc with Societe Generale.

[Aleksander Peterc, Equity Analyst]

Just a few, if I may. First of all, on mobility, I was wondering if you had the addition of the full quarter of 172B and you have some wide beam capacity growth over Lat Am, why are we just flat quarter-on-quarter in the reported quarter? The second one is just kind of maintenance. Can you just quantify for us the one-off in Government last year that will come in your final quarter of the fiscal year in the comp so that we can have the correct figures?

[Rodolphe Belmer, CEO & Director]

Okay, thank you, Aleksander. Why is mobility sort of flattish quarter-on-quarter? Even though I will remind that you should take a year-to-date perspective. The growth rate is quite impressive at around 18% in value terms year-on-year at end March, which is quite substantial growth. [indiscernible] quarter-on-quarter growth is stable. Why? That's because the big contract that we have been able to sign were fully -- were at full pace already during the course of this quarter and that we were not able to add new significant contract during the course of this quarter. We are expecting new contracts, which are very important to enter into exploitation and commercialization, later during the course of this [ 7 year ], we said that we were able to register the revenues coming from China Unicom as of next January. This is a very big contract. We have given sort of order of magnitude of the size of the contract when we said that the backlog associated with this contract was above $100 million, but it's true that this specific quarter didn't come with a new big contract to report that would have added to the growth, which is already quite impressive of this segment during the course of the quarter. Now on your -- what you called your maintenance question on the Government business line, it's true that we have a sort of drag on this business line, which comes under the form of a one-off that we had on the contract we had with a non new -- with non-DoD customer, a contract that we signed a year ago, and which was not -- which revenues were not recognized in a linear way. It was a fully anticipated impact, and we highlighted this item in last year, fiscal year result presentation, where we say that we were recognizing revenues, which were not completely [ linearized ].

[Aleksander Peterc, Equity Analyst]

So I just had a final question on the RetailCo situation, whether that can be fixed in your view? It would seem to me that ViaSat had a strategy of going direct rather than going through resellers. So how long would it take for the situation to be fixed, if it can be fixed at all?

[Rodolphe Belmer, CEO & Director]

Well, I don't know how to answer your question. We have 2 joint ventures with ViaSat. One is for infrastructure JV that we control at 51%, and the other is the retail JV that ViaSat is controlling. Those 2 JVs are exploiting the capacity of KA-SAT satellites and distributes services for broadband to consumers in Europe. Those 2 JVs will continue to exist. And ViaSat is going to continue to operate the retail joint venture, and we are going to continue to operate the infrastructure joint venture. It means that we are -- we have realized that going direct in Europe is very difficult and does not bear the fruit that we had anticipated, that we had expected, meaning, that when you look at the revenue's trajectory on KA-SAT with the previous approach that we had and the revenue trajectory of KA-SAT this year, obviously you see a [ disfavorable ] inflection, and we think that this [ disfavorable ] inflection relates partly to the change in commercialization strategy, meaning going more direct. That's what we have learned during the course of this year and notably with the joint venture we have with ViaSat. We have decided ourselves to change strategy, meaning to adopt the VHTS satellite, because we think it's a better technology [indiscernible] proposition and also, we have decided to change commercial strategy in broadband and to come back to our historical strategy, which is a world-best strategy, leveraging distributors which we believe are better than ourself to push this service to the end users, to the consumers. And what we have decided is to join forces with very powerful, high-profile distributors, and that's why we have decided to work with Orange, which is, as you know, very well, a quite prominent telecom company in Europe with a very large pan-European footprint and with the ability and commercial strength to push telecommunication services, including satellite-based services, obviously, to homes in Europe. And we think that's a far better strategy to maximize our churn, to get an optimum penetration in Europe.

[Aleksander Peterc, Equity Analyst]

So this is one of the main reasons for your change of heart with respect to the CapEx plan that you outlined, I suppose?

[Rodolphe Belmer, CEO & Director]

Well, our main reason to finally decide on the VHTS strategy is because it makes sense, technically speaking. That's a very good satellite, which will bring the highest possible -- the highest capacity over Europe. Second, we think that financially it's a very good solution, since we have been able to reach our target in terms of CapEx per gigabit. We said that we wanted to reach the target of EUR 1 million of CapEx per gigabit of capacity, and we have sort of reached this level, and it's a better proposition than the alternative proposition that we had on the table. We think it's also a better proposition in terms of derisking, because we have been able not only to embark with the blue chip distributors like Orange or Thales, which will undoubtedly serve as a reference to extract distributors in this initiative with us, but also they have -- those 2 distributors, they have accepted to give to us quite significant minimum guaranteed, which are in the order of magnitude of hundreds of millions of euros. That's why we said several hundred million euros, which means that they are bringing not only commercial expertise and know how and power, but also they are helping us derisking this initiative. And lastly, in terms of operational cost, this option is very good, this VHTS option. Why? Because this is technology agnostic, meaning that with this VHTS satellite, you can work with all the terminals and all the kinds of ground equipment, which means that we can take advantage of the competition between providers and manufacturers of terminals and ground equipment and make sure that we can grasp all the technical innovations related to ground segment. And second point, the operational cost associated with running this VHTS satellite is very, very competitive, in that the level of operational cost is relatively contained and will enable us to have -- to generate a quite substantial EBITDA margin out of that initiative.

[Operator]

Our next -- and now next, we will hear from Paul Sidney with Credit Suisse.

[Paul Sidney, Research Analyst]

Just a first question on the June '18 guidance. We've got 3 growth rates out there now. We got minus 1 to minus 2 and then you've now given us the minus 3.5, depending on what happens in Q4. I was just wondering if you could help us, just, what do these growth rates actually deliver in terms of an absolute number in terms of revenues for full year, June '18? We're obviously stripping out various things and we're pro forma-ing numbers and these growth rates. But can you just help us, just to get an idea of the absolute revenues for June '18 that these growth rates equate to? And secondly, just bigger picture, we're seeing some more solid results from the satellite operators in the quarter just gone. And you mentioned stable many times in your release and your presentation when referring to revenue growth trends. I was just wondering, in your opinion, big picture, do you think we're getting to the end of the drag from these transitional headwinds? And then just lastly, on HOTBIRD, again, you mentioned [indiscernible] a capacity deal that you signed recently, but just how much of this is sort of recontracting existing capacity, and how much is incremental? Where are we in terms of the recontracting of the capacity that you brought back in-house in 2016?

[Rodolphe Belmer, CEO & Director]

Thank you, Paul, for your questions. On the guidance for this fiscal year, what we said is that our objectives in terms of revenues for this fiscal year is to land in the bracket from minus 1% to minus 2%. What we said today is that when we look at the operating verticals of our business, meaning, all the business consisting of Video, Government, Fixed Data, Broadband and Mobile Connectivity, you should take all that together, we will reach within the scope of this bracket that I've just mentioned. Since those revenues -- well, the revenues out of these 5 verticals, of the 5 verticals of our business, are at minus 1.5% at end March. And as you've seen, the revenue trend from these 5 business verticals is improving, and we're at minus 1% at the third quarter. The fact is that part of our revenues, there is a line which is more difficult to predict by nature, which we call Other Revenues. That's revenues which are not related to capacity sale, which is not recurring. They are -- well, they consist typically of termination fees, engineering fees that we are able to get. And for this year, we -- and those revenues, they are more lumpy than our traditional revenues, and they are more difficult to predict by nature, because they are not part of our, I would say, core business of our regular recurring revenues out of our 5 business -- 5 verticals. And this year, for reasons that are difficult to predict, these Other Revenues are significantly lower than usual. And even though we are working on quite substantial pipeline of initiatives to generate Other Revenues in line with our objectives, in line with our guidance, it's still uncertain at this point in time that we will make it. We wanted to make sure that we give as much transparency as possible, as much visibility as possible to the financial market. We just wanted to point that element out and to point out that even if we don't make those Other Revenues, we should not land below minus 3.5%. That's the -- doesn't mean that we estimate that we will land that low, because we're still working on Other Revenues initiatives, and we hope that we'll be able to get those initiatives, to obtain the signature of those contracts before the end of the fiscal year. But it's true that we are never certain by definition, given the nature of those Other Revenues, that we are -- that we will make those. And second, we are not certain that we will make those during the course of the fiscal year. And that's why we wanted to give this visibility. As I said before, those Other Revenues have nothing to do with the 5 verticals of our business. And even though we are not making the revenues we would have expected on this Other Revenues lines, it has no impact on the following years. And that's why we are able to reiterate that next fiscal year, we will have a slight growth, because our 5 verticals, which are the recurring part of our business and the vast majority of our business -- obviously, it's more than 90% of our business -- those verticals are doing relatively well. Doesn't mean that we are seeing the end of the sort of the [ edge of ] our industry. Sounds like actually the industry is going through better times, better weather conditions, I would say. The fact is that Video segment, as always, remains very robust for us and will remain very robust for the foreseeable future. It's a very, very resilient business with very predictable, underpinning factors and solid elements of growth embarked. The fact is that Fixed Data remains difficult. For ourself, this segment has been declining by 9% year-on-year, driven mostly by a lower price for this segment. But we see in the future that the other verticals will be in better positions, like the Government Services vertical will remain for ourself and for the rest of the industry stable to slightly growing after quite a few years of substantial and successive decline. And the Broadband and Mobility segments will enjoy a quite significant growth in the future and will more than compensate the drag brought by the Fixed Data application. And that's why we think that we are probably -- even though some negative elements remain at play in our industry, like Fixed Data, the good news are going to compensate for the bad news going forward. On HOTBIRD, we said that we will stabilize HOTBIRD revenues, and we are achieving that. All the underpinning factors are well oriented on HOTBIRD, including the fill rates. We have not mentioned that in our presentation, but the fill rate of HOTBIRD is returning to slight growth, which means that we have been able to sell more capacity, and meaning that most of the contracts that we have had, have been renewals, but we have been able to sign new contracts which have been able -- with have brought more capacity on HOTBIRD. And that's the underpinning elements for the slight growth in the fill rate of HOTBIRD.

[Operator]

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

[Michael Bishop, Equity Analyst]

Just a couple of questions for me. Just picking back up on the Orange and Thales commitments. Clearly, you've mentioned that, that's roughly in the magnitude of several hundred million in terms of total order book. I mean, if I was to think about that in terms of the total capacity, that those 2 operate some effectively commit at all, would I be right in thinking it's in the region of 10% to 20%? Or is it widely different from that? And then secondly, just asking the usual question on Video with regards to the TV and renewal, just could you give us a bit more color on what favorable conditions actually means? And then my final question is, if you were to assume that the Other Revenues don't materialize, do you think that the lower CapEx, i.e. below EUR 420 million, will offset the impact of lower Other Revenues from a free cash flow perspective?

[Rodolphe Belmer, CEO & Director]

Thank you, Michael. On the Orange and Thales commitments, it's minimum guaranteed. It doesn't mean that they're not going to go beyond what they are committed above the minimum currency that they have taken. And so with your question which was quite precise, sorry, I would say that the other -- that the range that you've quoted is a good range, is a good [indiscernible]. On your second question on the favorable conditions on the renewal on Video contract. Favorable conditions means that the revenues that we generate -- that we extract for those contracts are stable or growing. Typically, it means that we have been able to maintain volume and price. Sometimes there is a slight erosion of volume, but an increase in compensated buyer price increase. In our terminology, favorable conditions means that we have been able to maintain the revenues that we generate from these specific clients. And actually, we have been able to sign very important contracts on HOTBIRD lately with TVN in Poland, with Mediaset in Italy, with Polsat in Poland, very important volume of renewals and with the typical HOTBIRD price with our typical pricelist on HOTBIRD. Meaning, that those very important blue chip renewals came with favorable conditions. And we mentioned that because there have been some doubts or questions around our pricing power of HOTBIRD, our ability to maintain price or to grow price on HOTBIRD, and the reason why we pushed forward those examples with a very big sophisticated clients that we have been able, in those cases, to maintain price and to sell at the list price of HOTBIRD just to give reassurance and comfort that we are able to have a decent pricing power and that's the value of HOTBIRD for our customers remains untouched, which is actually normal when you realize that the penetration of HOTBIRD among the European population is slightly growing. On the last point on cash flow, I maintain and I want to reiterate clearly that our cash flow objective, our cash flow guidance is untouched and we are committed to deliver mid-single-digit CAGR on our cash flow KPI, cash flow metric, which more than largely, more than largely covers the dividend that we serve to our shareholders. Our dividend is covered around 1.5x, which gives a lot of headroom to execute our -- the dividend policy, which I remind is stable to growing dividend policy. And that's why we are so focused on cash flow generation. It's one of our key priority. It's the key objective of the manager of the group, and everybody is not only focused, but also remunerated against that objective.

[Operator]

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

[Wilton George Fry, Equity Analyst]

You've made much virtue growing the business with a focus on free cash flow. When I look at your balance sheet at December, 36% of your debt at balance sheet are mature more than 3 months old, and that's up from sort of 13% 5 years ago. That's more than 10% of revenues. Now is that an increase deliberate on your part or is it simply that your clients aren't paying on time?

[Rodolphe Belmer, CEO & Director]

I'm very sorry, but I'm not sure I got your question fully. Sandrine, did you get?

[Sandrine Téran, CFO & IT Officer]

Not completely Wilton. Your question was on the level of working capital on the balance sheet at the end of December. Is that right?

[Wilton George Fry, Equity Analyst]

It's on the aged profile of your trade debtors. So the dates you gave us obviously fit this until December. You had EUR 148 million of more than 3 months old trade receivables, and that's up from sort of EUR 36 million in 2012. You're running very high aged profile debt. And I was just wondering why. On the one hand, you've got business for cash flow, yet I don't see why you're not collecting on those debts? Or is that the underlying clients aren't paying on time for some of these [indiscernible] financial difficulty?

[Sandrine Téran, CFO & IT Officer]

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

[Wilton George Fry, Equity Analyst]

But the number has been increasing year-over-year for some time. Do you think it will improve by the time you get to June year-end?

[Sandrine Téran, CFO & IT Officer]

I will not say so far for the end of this fiscal year.

[Rodolphe Belmer, CEO & Director]

But we don't count on the significant improvement on these aspects to meet our objective in terms of cash flow generation.

[Operator]

Nick Dempsey with Barclays will have the next question.

[Nicholas Michael Edward Dempsey, Research Analyst]

My search for, as you're be in competition in Europe with ViaSat for [indiscernible] onwards. Can you tell us whether they have all of the Ka-Band spectrum lines that they need across Europe? So in other words, if the technical playing field level between the 2 of you? Second question, given how we are for each operational in August, are you still happy with that EUR 15 million of contribution from African Broadband? And are we now thinking about that is offsetting sort of an underlying decline and the rest is Fixed Broadband in FY '19? And then just a final question on HOTBIRD and pricing. I mean, you've showed us that the HD penetration versus MPEG-4 penetration is favorable for you, and you've pointed the channel counts going up in HOTBIRD, and yes, I think you're saying the revenues is kind of on a stable basis there, but isn't the last part of that formula price you're talking about quite positively about price?

[Rodolphe Belmer, CEO & Director]

Well, thank you for those questions. On the competition with ViaSat and on the availability for ViaSat of Ka-Band spectrum to enable them to position the ViaSat's 3 satellites to look at it over Europe, I would not comment on that. Maybe that's a question that you probably you might direct directly to them. What I can say on the competition with ViaSat is that, first, we believe that we will benefit from a first mover, first cover advantage to Europe because we will launch our Konnect Africa satellite in 2020, and part of the capacity of the satellite could be directed to Europe, which means that we would be able to ramp or to accelerate our broadband business in Europe as of 2020, with capacity and with forward pricing which will enable us to establish our value proposition for Europe in the first place. That's the first element. Second element, we think that the European market, the European market potential for consumer broadband is quite large. We have said and I think we have reminded that today, that we estimate that the market size for Europe is 5 million homes. That will not be served by terrestrial infrastructure by 2030, which leaves more than enough room for 2 large operators in Europe, we'll be the first one, it doesn't mean that there is not room enough for the second player in Europe and for both players to generate very significant revenues and see profitability. That's the second element I wanted to convey on competition. We are not afraid of competition because market is large enough to feed 2 players or more, I would say. On the broadband revenue trajectory for next fiscal year, it's true that we expect significant revenues in the order of magnitude of the figure you have quoted coming from our African Broadband initiative next fiscal year, in fiscal year '18. And it will more than compensate the difficulties in the European Broadband initiative. That doesn't mean that the European Broadband business will shrink next year. We hope that the revenue trend in Europe for broadband, for European Broadband business, will be better oriented than this year because we will have returned to our wholesale commercial strategy, which has proven better for us in the past. But it's true that the open broadband business will not be brilliant next fiscal year, but that's the growth of our total broadband business will be fueled by the African Broadband initiative. On HOTBIRD, it's true that most of the KPIs, the factors of the revenues of HOTBIRD are well oriented. HD is growing quite fast, and we have now reached 31% HD penetration on HOTBIRD, and it's growing faster than MPEG-4. That's what we've said for quite a few quarters, and it materializes today. Channel cost is stable, very slightly growing. What about price? Price is stable also. Price is stable also. Specifically in Western Europe, price is absolutely stable at -- given some color with quoting the prices, we have been able to reach with some blue chip renewals that we signed over the past few months, but overall, our Western Europe broadband HOTBIRD business has had a stable price per transponder.

[Operator]

Now we'll move to the next question and that will come from Patrick Wellington with Morgan Stanley.

[Patrick Thomas Wellington]

Yes, I'd like to ask some questions about other. The first one is the guidance basis. You seem to have switched seamlessly to talking about the minus 1 to minus 2 on a vertical basis rather than all-in basis. Can I check that next year's slight growth is for the whole company? Or is it for the verticals? So are we moving our basis of guidance for next year? Or we staying for the whole company? Secondly, other was, I think, about EUR 55 million last year. I think the beginning of the year, you said it'd be about a EUR 30 million headwind so down to about EUR 25 million. We've done EUR 12 million after 9 months, so we're kind of missing EUR 12 million or EUR 13 million at the moment. Can you give us some sort of steer given that we're in the middle of May as to how much you might get back? And can we assume that 100% of missing other revenue drops through to the bottom line, that it's 100% profit. So I'm kind of looking for a profit impact there as well. And then the third thing, actually just picking up from what you just said about Western European Video being the pricing being stable on HOTBIRD, that made me think that the pricing in Eastern Europe was not stable. Would that be my -- would that be a correct assertion?

[Rodolphe Belmer, CEO & Director]

Thank you for those 3 questions. Well, we are trying to, I'm thinking about the words that you have used, but you modified our guidance smoothly. That's the word that you said. We said that you should take our verticals of 5 applications they are to date, well, their revenue growth rate is at minus 1.5%, which is exactly in the middle of the scope of the guidance that we have given. It doesn't mean that the guidance was not all-in. It's all-in, as you said, but we wanted to give some color on the fact that our key -- our 5 verticals, our 5 applications, they're doing quite well because we think that it gives you the better visibility on what's going to happen next fiscal year because obviously the recurring part of our business is these 5 applications, the 5 operational verticals, the Other Revenues, by definition, they're not recurring and they don't -- have been able to forecast for the future. For next fiscal year, the guidance that we've given for fiscal year '19 onwards, the slight growth, the return to slight growth, and we said a very slight growth, it's for the whole company and not for the 5 verticals only. And I want to make that very clear. For the -- well, the math that you've made on the magnitude of the other revenues and the drag that they bring on our total top line revenues, it's true that the Other Revenues, while the consensus estimate that we should have Other Revenues around EUR 30 million is not totally wrong, it's not totally true either, but not totally wrong. Meaning, that part of the gap we've had between our run rate of today and the objectives, the significant part of it comes from the Other Revenues. Some part of it comes from the growth segment, as you know, because we have said that in the past, and notably due to the late launch of Al-Yah-3, it has bring an unfavorable element to our revenue this year and the in other magnitude of around EUR 15 million, and that's probably the 12 -- EUR 10 million to EUR 12 million that you are missing and that you are looking for in your analysis. Other Revenues, typically, they are very profitable and they will drop further very, very vast majority into profits directly. I'm not sure 100%, but they are, well, typically, they're very, very profitable and they come with very little operational cost, operational expenditures. On the pricing of HOTBIRD, it's true that I said because I think that's what matters the most, that the pricing in Western Europe is stable because that's where we're supposed, "supposed" to suffer from the biggest competition from OTT. And what I was trying to reinforce is the notion that channels count is growing, HD is coming and pricing is stable, meaning that the value of HOTBIRD, even in Western Europe which is supposed to be, "supposed," our main point is untouched. When you look at pricing in the other regions where we sell HOTBIRD, if you look at that on an aggregate basis, there is a slight erosion because we have considered some promotional price and developed HOTBIRD in new languages. For instance, we have been able to develop under the Farsi language, and to achieve that, we have been considered -- conceding, sorry, promotional pricing to track in the sort of initial phase of customers or channels of this language. And obviously, it has an impact on the cost per transponder on the price for transponder of HOTBIRD outside of Western Europe.

[Patrick Thomas Wellington]

Rodolphe, that's very helpful. And can I just come back on other? You've done EUR 12 million after 3 quarters. Let's say you do EUR 4 million again next quarter. That can get you to EUR 16 million. You said that the original number that people are looking for was EUR 30 million. The difference between 2 is EUR 14 million, EUR 14 million is 1% of growth. If you turn that to 2019, you said that you'd do very slight growth, let's say slight growth was 1%. It could be that your slight growth in the next year is produced simply by having missed a level this year, if you like. Would that be a reasonable interpretation? Shouldn't your very slight growth be higher if your base of other is lower in 2018?

[Rodolphe Belmer, CEO & Director]

Well, yes, it's a good question because it's true that we give guidance in terms of growth and obviously the points of reference that you take matters. But the fact is that we will have slight growth for next fiscal year with the kind of objectives or revenues that we have for this year. The thing is we're not trying to push artificially Other Revenues from this year to next year in order to artificially inflate the total revenue lines for next fiscal year, and thus, achieving sort of artificially our revenues for next fiscal year and meet our guidance of slight growth. Our slight growth will be -- objective will be made, also, if you take the 5 applications. Okay, well, I'm not sure I'm clear, but even if you take the 5 applications to 5 verticals of the business, of the operational verticals, they will have a slight growth. Meaning that even if we don't take into consideration the Other Revenues, if we take the recurring part of the business, it will be slightly growing. Again, it's not sort of a buoyant volume growth, but it will be a slight growth.

[Operator]

And now we'll hear from Laurie Davison with Deutsche Bank.

[Laurie Davison, Research Analyst]

Can you just remind us of exactly how you determine whether revenue should fall into other versus the 5 verticals? How do we know that there hasn't been the definition that you provide in your annual report is sufficiently vague, that there could be some element of moving revenues between verticals? How can we be confident you're not covering up for underlying weakness by blaming other?

[Rodolphe Belmer, CEO & Director]

If I were -- I would say it's not cool, but I'm trying to answer seriously to that question. Our definition of Other Revenues, we think, it's very clear, transparent and very rigid. We record in the Other Revenue lines the termination fees, the fees that we get from litigations, the engineering fees when we sell the time and efforts and expertise of our engineers to third parties, the operators. When we do some coordination work for frequencies with -- for third-party operators because we have experts, engineers on that front also. And I think that's the exhaustive list of elements that are -- that may be included in the other revenue lines. And we are -- and I think it's very, very clear and very, very transparent. Let me have a look at the definition that we do provide to make sure that I have not forgotten anything. Yes, I forgot an element, which is the impact of the currency hedging, which is also recorded into this other revenue lines. Meaning, that it's only elements, which are not related to capacity sell or to a set of service coming with capacity. That's all the elements that we consider outside of our core business that is Video, Fixed Data, Broadband, Governments and Mobile Connectivity, and there is nothing else account, and we are not trying to cover for any, as you called out, underlying weaknesses, given the fact that we think that most of our business line they proved pretty robust starting with Video, which is stabilizing and the Broadcast segment within the Video which is the most important part of our business, that's the vast majority of the valuation, as you know very well, of our company, this broadcast segment is slightly growing. It's positive. We have said that Q-on-Q, it's plus 4.5%, year-on-year, plus 4.2%. I think that the most important part of our business is slightly growing, is returning to growth, and for us, that's the most important signal of the robustness of our business and the valuation of our company going forward.

[Laurie Davison, Research Analyst]

You've never registered 0 Other Revenues in the past 10 years of this business, so I'm just wondering, there seems -- it does seem exceptional that you've registered 0 Other Revenues. What in particular has been materialized which you expected to?

[Rodolphe Belmer, CEO & Director]

Well, actually, there are 2 elements. As you know very well, last year, in this revenue line, there were 2 elements that didn't perpetrate. There is the proceeds of the litigation the we've had with SES at 28 degrees. That's the first element. And the second element, and I will comment more on that, that's the termination fees associated with the so-called purge of HOTBIRD. And this is important because one of the reasons why there was no Other Revenues this quarter is because we didn't really have, well, significant termination fees with clients, which is, per se, the good news, but it came also to the sort of detriment of the revenues of the level of revenues in this line. And other than termination fees, the revenues that we get and that come in this line are engineering fees and those type of revenues that are very lumpy, and we don't have those every quarter. We had 1 very important last year in Egypt, and we disclosed that. It was a high single-digit engineering fee. But those kind of elements, they don't happen regularly and we don't have those every quarter. What we've had particularly was the litigation, the proceeds of the litigation, the outcome of the litigation with SES and the termination fees with -- and with other clients which often in the past -- well you remember all that very well on those termination fees that constantly sort of fueled this -- sorry, fueled this revenue line, good news that we don't have termination fee for this quarter, bad news, it has an impact on our -- on our revenue trajectory. But the fact is that we were counting on some engineering revenues, and that take time to materialize. But we still hope that we will be able to get those before the end of the year. They're quite substantial, but we are not certain yet.

[Laurie Davison, Research Analyst]

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

[Rodolphe Belmer, CEO & Director]

Do -- sorry, I didn't get your question. You want the absolute -- the addition, you mean, of the revenues by application?

[Laurie Davison, Research Analyst]

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

[Rodolphe Belmer, CEO & Director]

Well, I will turn to -- normally, we don't communicate on that, but I will turn to Joanna.

[Joanna Darlington, Head of Investor Relations]

I mean, just to make clear, I mean, of course, I'm not going to answer that question. Just to make the financial outlook for current year revenues absolutely clear, the outlook that we gave at the beginning of this year was as a decline in total revenues of between 1% and 2% at constant currency and perimeter. So I mean, we're not going to change the way the nomenclature that we guide on. So there's absolutely no confusion. We're not giving 3 levels of guidance. We're simply saying that the original top line guidance of between minus 1% and minus 2% at constant currency is still achievable, depending on the level of Other Revenues that we generate in the fourth quarter. The reason we've given the number of minus 3.5% is to give you a floor by saying that if we absolutely don't materialize any of the revenues in the fourth quarter, then the maximum decline in revenues for this year will be 3.5%. Okay, so there's no change in the way we're guiding. We're not guiding, stripping out Other Revenues. We're simply giving you a clarification based on what we know at this stage on the materialization of Other Revenues.

[Operator]

Now we'll move on to a question -- I'm sorry, go ahead.

[Rodolphe Belmer, CEO & Director]

I was saying that, again, the probability that we have to materialize some other revenue, some initiatives that we are pursuing and which will drop in the other revenue lines, the probability is not 0. We have a pipeline of opportunities which we are working, and some of them might materialize before the end of the fiscal year, which means that we will land above the minus 3.5% that we have mentioned today. The only element that we said that, if we materialize all the elements, which are in our pipeline, we will reach in the guidance of minus 2%. But since there is a level of uncertainty, the materialization of this Other Revenues initiatives which are, by nature, more difficult for us to predict, that's why we're giving this visibility today.

[Operator]

Now we'll hear from Giles Thorne with Jefferies.

[Giles Thorne, Equity Analyst]

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

[Rodolphe Belmer, CEO & Director]

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

[Giles Thorne, Equity Analyst]

And a clarification very, very quickly. And the legacy KA-SAT subscribers, how many of them are through satellite solutions worldwide? And the reason I ask is because obviously SSW is now intimately partnered with ViaSat, thanks?

[Rodolphe Belmer, CEO & Director]

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

[Operator]

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

[Aleksander Peterc, Equity Analyst]

I apologize in advance to be a pain with this one. It's again about guidance and other. Unfortunately, there's something that I don't quite manage to tally. You said previously minus 1% to minus 2%, and if only others to be blamed in H2, that 0.9% negative. So for your minus 1% to minus 2%, which will be moved to minus 2% to minus 3%, yet you're now guiding at minus 3.5% as there had been 0 other scenarios. I was wondering what else is not quite where you thought it would be 3 months ago when you reported H1?

[Rodolphe Belmer, CEO & Director]

Well, our 5 verticals are more or less where we thought they would be. Actually they are slightly below in the sense that what we said in the conversation of today -- in today's call that, in total, those 5 verticals which make the operational part of our business, they are at minus 1.5%. Our guidance was in between minus 1% and minus 2%, meaning, that we would have expected those verticals to land around minus 1%. That would've been our, let's say, hope and target. And the rest, the rest of the gap that you're referring to comes from the Other Revenues. And I think that if you take those 2 elements into consideration, that will add up.

[Operator]

Now with that ladies and gentlemen, this does conclude the question-and-answer session. I will turn the call back to your host for any additional or closing remarks.

[Rodolphe Belmer, CEO & Director]

Okay, thank you very much, very much, thank you for your attention. Thank you for all the full questions and for the new [indiscernible] questions.

[Operator]

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