UAE: Yahsat H1 net profit rises 5% to $48mln

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UAE - Al Yah Satellite Communications Company (Yahsat), the UAE’s flagship satellite solutions provider, has seen its first-half (H1) net profit rise 5% to AED175 million ($48 million), generating an improved margin of 23% (prior year 22%).

Revenue for the first half of the year was stable at AED753 million whilst EBITDA increased, on a normalised basis, by 3% versus the prior year to AED460 million.

The group delivered revenue growth in Infrastructure, its largest segment providing communications capacity to the UAE government, and Data Solutions, offering satellite-based broadband data solutions. Managed Solutions, providing complete value-added satellite communications solutions primarily to the UAE government and related entities, maintained revenues versus an exceptionally strong prior year. Mobility Solutions, the Thuraya business providing mobile satellite services using L-band spectrum, recorded strong double-digit growth in the second quarter of 12% versus the prior year, driven by higher equipment sales, a trend that is expected to continue into the third quarter and help achieve revenue growth for that segment by the end of the year.

Contracted future revenue

Contracted future revenue of AED7.0 billion, was stable versus end of Q1 2023 and equivalent to 4.4 times last-twelve-month revenue.

The firm saw improved cash generation with Discretionary Free Cash Flow of AED296 million, up 34% versus prior year. Historically the company showed strong balance sheet with negative Net Debt of more than AED454 million, total available liquidity of AED2.3 billion and long-term visibility of future cash flows, supports Yahsat’s future investment in organic growth (Al Yah 4 and Al Yah 5) and opportunistic acquisitions, without impacting its attractive progressive dividend policy.

It returned positive net finance income benefiting from higher interest rates on short-term deposits versus prior year. The firm is on track to grow full year 2023 dividend by at least 2% to 16.46 fils per share or AED402 million – based on the last closing share price, this implies an annualised dividend yield of over 6%, amongst the highest offered by UAE listed stocks.

EBITDA guidance unchanged

Guidance for full year revenue, EBITDA, and Discretionary Free Cash Flow remains unchanged, whilst guidance for cash capex and investments is increased to a range of AED643-716 million from AED569-643 million, to reflect the commencement of the Al Yah 4 and Al Yah 5 satellite procurement programme.

Ali Al Hashemi, Group Chief Executive Officer of Yahsat, commented: “Yahsat continues to improve its business operations and profitability, and we remain focused on growing both our core government business and commercial segments, whilst controlling and optimising costs across the group.

“In addition to completing the Thuraya-4 NGS satellite procurement programme, which remains on track to be launched in the first half of 2024, we have signed an Authorisation-to-Proceed (ATP) with Airbus, a long-time partner of Yahsat, to commence initial activities relating to the procurement of the Al Yah 4 and Al Yah 5 satellites. In parallel, we are in advanced negotiations with the UAE government to secure a long-term contract that would significantly increase and extend our backlog of contracted revenues beyond 2040.

Bayanat partnership

“We have also commenced work on establishing a formal partnership with Bayanat to offer Earth Observation (EO) capabilities using, in the first phase, synthetic aperture radar (SAR) technology, which provides higher resolution data than conventional sensors. This partnership aims to develop a constellation of five satellites, with the first satellite expected to be launched in the first half of 2024, which will further diversify our current portfolio of fixed and mobile satellite communication services from GEO orbits and expand it to include Earth observation services from LEO orbits.

“The satellite industry continues to witness substantial investments and the development of new business models. Together, these forces are driving industry consolidation and the necessary emergence of larger and stronger players. Yahsat remains in a strong position to take advantage of these developments, underpinned by our unique backlog of future revenues and our historically strong and robust balance sheet.”