Starlink rival Eutelsat's first quarter hit by weak video sales

(Reuters) -French satellite operator Eutelsat reported worse-than-expected first quarter revenues on Tuesday as a decline in sales at its video business offset strong demand for government services, notably in Ukraine.

Revenue from video, connectivity and government services fell 1.2% year-on-year on a comparable basis to 283 million euros ($330 million) in the quarter to end Sept. That was below the average 295 million euros forecast by analysts, according to data from the company.

The video business, which provides satellite broadcasting services to over a billion viewers globally and accounts for around half of Eutelsat's total revenue, recorded a 10.5% fall in revenue on a comparable basis year-on-year.

That reflected both a long-term decline in the video market and a negative impact from sanctions imposed on Russian channels, the group said in statement.

Sanctions are expected to have an impact of around 16 million euros this year, the company said.

Eutelsat owns and operates a constellation of over 600 Low Earth Orbit (LEO) satellites providing broadband internet via its London-based subsidiary OneWeb. 

These satellites, currently the only other LEO constellation available besides Elon Musk's Starlink, have gained momentum as European governments seek home-grown alternatives for satellite services.

But the firm is still grappling with sluggish sales growth, weighed down by its declining legacy video business. 

Government services was the fastest-growing segment again this quarter, with revenues rising 18.5% from a year ago to 52.4 million euros, in line with estimates.

Eutelsat confirmed its annual and long-term financial targets.

($1 = 0.8575 euros)

(Reporting by Gianluca Lo Nostro and Alban Kacher; Editing by Matt Scuffham)