MESSAGE FROM THE CEO

"There is global demand for new satellite capacity to support the deployment of digital services."

The 2007-2008 business year marks another period of growth for Eutelsat, which continues to excel owing to the high quality of its operational and financial performance. Growth has accelerated to 5.9% and exceeds our objectives. At the same time, we have improved our gross margin to a historic record level of 79.3%, higher than any other fixed satellite services operator.

The success of satellite television

This twin dynamic is the result of specially allocating satellite resources built on growth and reliability for consumer broadcasting services. Today, these services account for three-quarters of our revenues and have this year increased by 10% with 515 new television programmes joining our satellites to bring the total number of channels to 3 123 (including 49 in high-definition mode). It is expected that this trend will continue in the long term. Research institutes such as Euroconsult estimate not only that the number of satellite television channels in the world will rise from 21 000 in 2008 to more than 35 000 in 2017, but also that the number of homes subscribing to a satellite TV offer will increase by a factor of two.

In view of the fact that they make the best possible use of satellite’s ability to reach large audiences at a marginal cost of a few cents per household per year per TV channel, consumer broadcasting services show the highest margins. Contracts here are signed over entire satellite lives, boosting the Group’s profitability and giving it high visibility over future revenues.

Our “second continent”

One of the Group's principal strengths is that it combines the solidity of its leading position in Western Europe with a historic presence in a great many countries that are seeing extremely rapid growth. Extending from Russia to South Africa, these countries are our “second continent”. This applies to Central and Eastern European countries, which, since joining the European Union, have undergone substantial development, and it is also the case of Russia. The Middle East and many of the African countries are also showing an unprecedented degree of activity and are increasingly using satellite services so that they can deploy new communications networks as quickly as possible.

Renewed utilisations in Western Europe

Nor too are the historical markets of Western Europe being left behind. After emerging as a high-quality catalyst for corporate performance, broadband has now become an essential tool also for the private consumer wishing to take advantage of the sophisticated services on offer from the telecoms operators (triple-play facilities that combine use of the Internet, telephony and television). Satellite complements the terrestrial networks to perfection, because it can be used to reach into sparsely populated areas unable to receive programmes via ADSL. There are two telling examples of this. First, the agreement with Orange, enabling it to achieve an immediate increase from 50% to 98% in the percentage availability of its TV offer in France and, second, Swisscom’s selection of our Tooway™ service to provide broadband access to Swiss homes unable to receive via ADSL. The advent of fibre-optic technology and the higher bit-rates available in towns will only serve to extend the role of satellite in providing as many people as possible with access to enhanced service offers.

An ambitious investment plan

So that it will benefit from such growth in full, the Group is undertaking one of the most extensive in-orbit investment plans in its sector. Seven satellites are in course of construction for launch dates before the end of 2010. They will increase our in-orbit resources by more than 30% and consolidate the Group’s action in securing its premium broadcasting positions at a level that ranks as the highest in the world. They will also lead to a radical increase in our Ka-band resources so that we can make an even more significant contribution to reducing the digital divide in Europe and the Mediterranean Basin.

Message from Giuliano Berretta, CEO of Eutelsat Communications