August 1, 2018 / 9:37 AM / 3 months ago

UPDATE 1-France's Eutelsat on track to return to revenue growth

(Adds details of call, analyst comment)

Aug 1 (Reuters) - French satellite operator Eutelsat posted better-than-expected full-year revenue on Wednesday, boosted by gains from one-off items including termination fees and currency hedging, lifting its shares by about 7 percent.

The company reported full-year revenue of 1.41 billion euros ($1.65 billion), down 4.7 percent on year. Analysts in a company-compiled poll on average expected a revenue of 1.39 billion euros.

The satellite operator confirmed guidance of a return to revenue growth in 2018-19 and raised its guidance on earnings before interest, taxes, depreciation and amortisation (EBITDA) margin to over 78 percent for 2018-19 due to IFRS changes.

However, even excluding the impacts from IFRS, the cut to capex guidance on an underlying basis of 25-30 million euros a year should aid free cash flow generation, analysts at Berenberg said in a research note.

Eutelsat said its cost-saving “LEAP” programme was running ahead of schedule on capex.

The group recommended a dividend increase of five percent to 1.27 euros per share, underpinned by discretionary free cash-flow growth.

The industry is in transition, so it is difficult for many companies to generate cash flow and maintain dividend payments, Eutelsat management said in a conference call.

The industry needs to consolidate as it will need to improve infrastructure to meet the increasing demands for hi-speed broadband networks, it added.

However, Eutelsat said it did not need consolidation to pursue its own growth strategy, and declined to comment on any specific M&A plans.

$1 = 0.8565 euros Reporting by Zuzanna Szymanska in Gdynia, Editing by Sherry Jacob-Phillips and Jon Boyle

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