"Our sales dynamic, notably for video and Value Added Services, led to a 900 million euro increase in our backlog, which at four billion euros, exceeds the equivalent of more than five years of revenues.

"Over 80 per cent of our Group's revenue is derived from digital video, data and broadband markets, which are today the most powerful growth engines in the global telecommunications and media industries. We are therefore in a privileged position to benefit from the emerging dynamic of High Definition Television in Europe, and the rapid deployment of digital video and broadband services in central and Eastern Europe, Africa and the Middle East.

To increase our competitive strengths, we have continued to expand our in-orbit resource with the launches of HOT BIRD 7A and HOT BIRD 8, which fortify our premium video neighbourhood at 13 degrees East and release satellites to provide capacity at other orbital positions. Contracts have also been awarded for HOT BIRD 9, W2M and W2A, while negotiations for the procurement of W7 are advancing.

In parallel, the opening of the new teleport in Turin operated by our Skylogic subsidiary has supported growth of Value Added Services, which is driven by provision of broadband solutions in regions not served by terrestrial infrastructure and access to GSM networks, notably for maritime markets.

Our performance in 2005-2006 demonstrates the continued efficiency of our business model and the quality of our strategic vision: to consolidate our leading positions in Europe, and to optimise use of in-orbit resources through major new video positions in emerging markets and through the expansion of Value Added Services.

With the ongoing implementation of this strategy we expect revenue above 800 million euros in 2006-2007 and more than 4.5% compound annual growth rate for 2007-2008 and 2008-2009. We revise upwards to 77 per cent our guidance for an EBITDA margin for 2006-2007. For 2007-2008 and 2008-2009 the EBITDA margin objective is maintained above 76%.

Together with a net debt to EBITDA ratio down to 3.6x, which is in line with our objective of 3x to 4x, our Group is fully equipped to pursue its development, while providing an attractive return to our shareholders".

Business Highlights

- Solid revenue growth supported by commercial expansion across all activities[4]

- Video Applications: +3.4% to 528.6 million euros, driven by consolidation of leading premium orbital positions in European Union countries and by the development of major orbital positions in emerging markets (Eastern and Central Europe, the Middle East, North Africa and Sub-Saharan Africa).

In European Union countries served by the HOT BIRD (13degreesE) and EUROBIRD 1 (28.5degreesE) positions, the number of channels grew by 16.7% year-over-year, from 1,051 channels to 1,227. In addition, the entry into service of the HOT BIRD 7A broadcast satellite in April 2006 increased capacity at 13 degrees East and marked the last major phase in the switchover from analogue to digital at the HOT BIRD position, with only four analogue channels broadcast at this orbital position.

Across its fleet Eutelsat has now almost completed this switch-over with only eleven analogue TV channels.

Reflecting the dynamics of emerging markets, the number of channels broadcast from Eutelsat's video positions to serve these regions (Eastern and Central Europe, the Middle East, North Africa and Sub-Saharan Africa) grew by 37.9%, from 544 as of June 30, 2005 to 750.

In the course of 2005-2006, ATLANTIC BIRD 3 also supported the deployment and expansion of Digital Terrestrial Television (DTT) networks in France and Italy. In France, the 28 DTT channels (of which ten are pay-TV) are now distributed through ATLANTIC BIRD 3 to digital terrestrial retransmitters, up from eight channels a year ago.

2005-2006 also marked the launch on Eutelsat's fleet of the first commercial High Definition Television (HDTV) channels. As of June 30, 2006 Eutelsat's satellites were broadcasting 12 HDTV channels.

- Data and Value-Added Services: +4.6% to 169.1 million euros, fuelled by robust sales in Value Added Services. While Data was impacted by the conversion of certain high-yield short-term contracts to lower-priced long-term deals, which procure more visibility on revenues and by the technical incident that affected the W1 satellite on August 10, 2005, Value-Added Services benefited from the ongoing deployment of D-STAR terminals worldwide[5]: up 29% year-over-year, they totaled 5,300 by June 30, 2006.

Maritime services providing Internet access and GSM extension also began ramping up during the business year.

- Multi-Usage applications: +14.5% to 69.7 million euros, primarily supported by high renewal rate of one-year contracts for government services.

- Successful launch in March 2006 of HOT BIRD 7A, which increased capacity at 13 degrees East from 100 to 102 Ku-band transponders. It enabled the Group to strengthen its premium video neighbourhood at 13 degrees East, and to release satellites to provide capacity at other orbital positions.

Eutelsat has also leveraged its on-ground investments, notably its new teleport in Turin operated by its Skylogic subsidiary: these are aimed at expanding Value-Added Services and at developing video services, following the success of the video network provided during the XX Winter Olympic Games to the Olympic organising committee.

- 29% increase in backlog: at 4 billion euros, representing more than five times the year's revenue, of which 92% are related to Video Services. Furthermore, 85% of the backlog is made of satellite lifetime contracts, thus increasing the weighted average residual life of the contracts to 7.7 years as of June 30, 2006. This provides long term visibility on revenues and operating cash flows.

- Group fill rate stood at 80.7% as of June 30, 2006. The number of leased transponders represents a total of 373 as of June 30, 2006, out of a total of 462[6] operational transponders across the fleet, compared to 343 leased transponders as of June 30, 2005, out of a total of 474 operational transponders. This increase reflects the development of Video Services and Value-Added Services in emerging markets, as well as the consolidation of the Group's premium orbital positions serving European Union countries.

Strategic directions, outlook and dividend

Eutelsat Communications conducts an annual review of its strategic plan which was completed in June 2006. The results achieved in 2005-2006 are validating its long-term strategy: the Group aims at consolidating its leading position in European Union countries, and at optimising use of capacity through the creation and development of major new video positions. It also targets the continued expansion of Value Added Services, notably in emerging countries.

The Group provides the following update to the financial objectives presented on February 17, 2006:

- Revenue objective for 2006-2007 is above 800 million euros. This objective is consistent with the Group's initial target of more than 4.5% Compound Annual Growth Rate (CAGR) for the next 3 fiscal years (2006-2007 to 2008-2009), which was based on the initial revenue target of 769 million euros for 2005-2006. The Group expects a CAGR above 4.5% for fiscal years 2007-2008 and 2008-2009.

- Given the performance achieved to date, the ongoing efficiency of its strict cost control policy, the Group is raising its profitability objective to 77% for fiscal 2006-2007, as expressed by the consolidated EBITDA margin. For 2007-2008 and 2008-2009, the EBITDA margin objective is maintained above 76%.

- Annual capital expenditure should be 250 million euros on average over the fiscal years 2006-2009. In fiscal year 2005-2006, only 231 million euros were spent compared to the originally estimated 320 million euros.

- Beyond 2009, on an annualised basis, the Group considers that approximately 260 million euros per year should be invested in order to progressively renew its fleet, which is expected to comprise 572 transponders in operation by June 30, 2009.

A sum of 0.54 euro per share, taken from "Share Premium", representing a distribution yield of 4.5% based on the IPO price of 12 euros will be submitted to the approval of the shareholders. Eutelsat Communications will convene a General Shareholders' Meeting on November 10, 2006 in Paris.

In the coming years, the Group intends to maintain an attractive distribution policy.

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