Eutelsat exits two Russian capacity leases after satellite failure

TAMPA, Fla. — Eutelsat has ended capacity leases on two Russian spacecraft after one failed in orbit and the other is set to relocate, escaping contracts hit by Western sanctions and the structural decline in TV broadcasts from geostationary orbit (GEO).

The Paris-based company had planned to lease capacity for at least three more years from Express-AT1 and Express-AT2, which launched together in 2014 for Russia’s state-owned operator RSCC.

RSCC announced last week that Express-AT1 had ceased operating March 4 for unknown reasons and was declared lost after Russia’s ISS Reshetnev, the satellite’s manufacturer, was unable to restore operations.

A competitive process is underway to order a replacement called Express-AT3 for the 56 degrees East position, RSCC said, covering the same area across most of Russia’s territory and slated to begin operations in late 2030.

RSCC added that some satellite TV customers would have services restored within days by reconfiguring equipment to a different orbital position, while others would need to wait closer to a month.

The Russian operator did not respond to questions about ISS Reshetnev-built Express-AT2, which covers the extreme east of Russia from 140 degrees East and is likely part of the operator’s fleet contingency plan.

Express-AT1 carries 32 Ku-band transponders in total and, like Express-AT2 with 16 Ku-band transponders, was designed with a 15-year lifespan. Eutelsat had leased 19 transponders from Express-AT1 and eight from Express-AT2.

Eutelsat’s GEO exposure shrinks

Eutelsat now counts 31 satellites in its GEO fleet for video and broadband services, including RSCC-owned Express-AMU1, which covers parts of Russia, Europe and sub-Saharan Africa from 36 degrees East and is marketed by the French operator as Eutelsat 36C. Express-AMU1 was built by Europe’s Airbus and has a 15-year design life after launching in 2015.

Eutelsat announced March 12 it expects a “low single-digit million impact on revenues” after terminating the Express-AT1 and Express-AT2 capacity contracts.

However, it said there will be virtually no impact on earnings before interest, taxes, depreciation and amortization (EBITDA) for its 2025–2026 fiscal year ending June 30.

Ending the leases means Eutelsat will no longer pay for the satellite capacity, offsetting much of the lost revenue and limiting the impact on profitability.

While contract details were not disclosed, the French operator also likely avoided early-termination fees common in similar industry agreements.

The move comes as sanctions related to Russia’s invasion of Ukraine continue to eat into a video business already suffering a broader decline in satellite television demand.

“These were long-standing arrangements, but due to sanctions and underlying structural decline in video, they no longer support the same business case as when they were originally signed,” a Eutelsat spokesperson said via email.

The operator recently reported earnings showing video revenues across its GEO fleet fell 12.3% to about 267 million euros ($306 million) in the six months ending Dec. 31, on a like-for-like basis excluding currency fluctuations, reflecting in part additional sanctions on Russian channels. 

Overall revenue rose 0.1% to roughly 592 million euros during the period, driven by growth from its OneWeb low Earth orbit (LEO) broadband network of more than 650 satellites.

LEO connectivity now account for about 20% of Eutelsat’s total revenue, with OneWeb sales rising nearly 60% year-over-year to around 111 million euros.