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Eutelsat cuts annual outlook on OneWeb network delays

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Adds analyst comment in paragraphs 4-5, share move in para 6

By Gaelle Sheehan

Jan 29 (Reuters) -Eutelsat Group ETL.PA on Monday lowered revenue and earnings targets for its 2023-2024 financial year saying newly merged OneWeb's low earth orbit (LEO) activities were running behind schedule, sending its shares lower.

The group, formed by the September merger of French satellite company Eutelsat with Britain's OneWeb, said delays to its ground network would directly impact revenue but also margins as a bigger share of sales would come from user terminals than expected.

The merger aimed to create a new challenger in the satellite internet market to the likes of Elon Musk-owned SpaceX's Starlink and Amazon's AMZN.O Project Kuiper.

Though "the deployment of the ground network is progressing well, towards a 90% completion rate in Q2 2024", it is not enough to fulfil the group's near-term objectives, Eutelsat said.

OneWeb's network coverage, which includes North America and the Arctic, was expected to expand worldwide early this year, but the timing is now uncertain, Deutsche Bank analyst Roshan Ranjit said in a note.

"Whilst the OneWeb network seems to be operationally sound, the issue appears more to be with the ramp up of contracts with a number of mobility take or pay contracts only contributing once the network has global coverage," Ranjit added.

Shares in Eutelsat were around 15% lower at 3.51 euros at 1057 GMT, on track for their biggest daily fall since November, 2022.

The company now expects revenue of between 1.25 billion euros and 1.30 billion euros ($1.36 billion-$1.41 billion) for the financial year ending June 30, compared with its previous forecast of between 1.35 billion euros and 1.42 billion euros.

Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) are seen at between 650 million euros and 680 million euros, down from 725 million euros to 825 million euros.

Eutelsat Group suspended its outlook for 2024-25, saying it would give an update in its full-year report in August.

($1 = 0.9223 euros)

Reporting by Gaëlle Sheehan; Editing by Jamie Freed, Kirsten Donovan


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