Eutelsat Communications saw its share price of just over €27 fall by more than 30 per cent to just above €19 on 13 May 2016. The crash happened after the company revealed a projected decline in revenue for the period 2016-2017.
The revenue decline, which is forecast as being up to 3 per cent, was blamed on lower than expected take-up in satellite data services over South and Central America, due to an economic slowdown, and the arrival of high-throughput satellites from Eutelsat’s competitors, Intelsat and Telesat, which are lowering the cost of bandwidth. This was in addition to a general decline in military use of commercial communications satellites.
The company said it would review its €500 million annual capital spending, with a likely reduction to follow. This may lead to the cancellation of some satellites that are already under construction.
Eutelsat’s share price fall follows that of Intelsat and both are symptomatic of the pressure the industry is under. The London-based mobile satellite communications firm, Inmarsat, faces demotion from the FTSE 100 index following a decline of about 30 per cent since the start of the year.
