With contracted future revenues reaching AED25.1 billion ($6.8 billion) or 15 times its full year revenues, Al Yah Satellite Communications Company (Yahsat) has seen its 2023 net income soar 68% to AED405 million ($110 million). 

 

Revenue grew 6% for the year versus the prior year to a record AED1.7 billion. EBITDA grew 3% to AED977 million. 

 

On a normalised basis, adjusting for material, one-off items to allow like-for-like comparison, EBITDA grew 5% to reach a record of AED996 million and net income grew 9% to a record AED424 million. 

 

Revenue growth

Underpinning this impressive performance was revenue growth across all operating segments of the group for the first time since its initial public offering in July 2021. Infrastructure, the group’s largest segment providing communications capacity to the UAE Government by means of an index-linked long-term contract, continued to grow its year-on-year revenues by 1%. 

 

The Mobility Solutions segment, which provides mobile satellite services using L-band spectrum, recorded its highest ever revenues since Yahsat’s acquisition of Thuraya in August 2018. Revenue grew 23% versus the prior year, driven by a surge in equipment sales and higher service revenues. 

 

Managed Solutions, the group’s third largest segment by revenue providing complete value-added satellite communications solutions primarily to the UAE Government and related entities, reported 2% revenue growth, building on an exceptionally strong prior year performance. Data Solutions, offering satellite-based broadband data solutions, grew revenues by 6%. 

 

Contracted future revenue of AED25.1 billion, equivalent to approximately 15 times full year revenue and representing a multi-fold increase versus year end 2022 (up from AED7.3 billion or approximately 5x full year revenue).

 

Highest ever mandate

Yahsat’s highest ever mandate awarded by the UAE Government during the year worth AED18.7 billion for satellite capacity and managed services of which AED3.7 billion will be received in advance.

 

Strong cash generation with Discretionary Free Cash Flow (DFCF) of AED710 million, exceeding the top end of the previous guidance range of AED514-588 million. DFCF was 14% lower than the prior year due to a reimbursement of advance payments to the UAE Government (approximately AED275 million per annum starting 2023) previously received during the construction phase of the AY1 and AY2 satellites. This was largely offset by improved collection of receivables and higher finance income. 

 

The company has historically a strong balance sheet with an improved cash position of AED2.1 billion, negative Net Debt of over AED367 million, AED3.7 billion expected in new advance payments, access to a $300 million undrawn bridge facility and long-term visibility of future cash flows up to 2043. The group is well positioned to fund growth capital expenditures and opportunistic acquisitions, without impacting its progressive dividend policy.

 

Yahsat is on track to grow full year 2023 dividend by 2% to 16.46 fils per share or AED402 million. New guidance set for 2024 with AED1.6-1.7 billion for revenue, AED936-1,010 million for EBITDA, AED441-514 million for Discretionary Free Cash Flow and AED1.7-1.8 billion for cash CapEx and investments. 

 

Entering a new phase

Musabbeh Al Kaabi, Chairman of Yahsat, commented: “The group’s impressive achievements in 2023 have set the stage for further important developments this year. Yahsat is entering a new phase of its journey following the award of its largest ever government mandate, covering the procurement of two new satellites, Al Yah 4 and Al Yah 5, and the upcoming launch of Thuraya 4 in the second half of 2024. These new satellites represent a substantial upgrade to the Group’s current fleet and will provide completely new capabilities and applications to support future growth.

 

“In addition, the proposed merger between Yahsat and Bayanat will create an AI-powered space technology champion with global reach. To be rebranded Space42 upon completion of the merger, the merged entity will provide vertically integrated, AI-powered geospatial and mobility solutions, satellite communications, and business intelligence. The merger is subject to shareholder and regulatory approvals, and is expected to close in the second half of 2024. 

 

“This is an exciting opportunity to create one of the most valuable publicly listed space companies in the world by market capitalisation, with additional potential for significant global growth and synergies. Until the merger is approved and the necessary regulatory approvals obtained, the two companies will continue to be run independently and administer their own dividend policies.”

 

Merger with Bayanat

Ali Al Hashemi, Group Chief Executive Officer of Yahsat, commented: “2023 was a year of major achievements for Yahsat. Not only did it record an historic financial performance whilst continuing to meet the highest standards of operational excellence, it was also awarded its largest ever mandate by the UAE Government. The Board also proposed a merger with Bayanat.

 

“Yahsat recorded its strongest ever financial results, surpassing management guidance and analyst consensus figures across key financial metrics including revenue, EBITDA, net income and cash flow. The renewal of our fleet with three new, advanced, data-centric satellites, together with our valuable L-band spectrum rights and best-in-class ground infrastructure, position us well for significant growth opportunities across a range of different segments. 

 

“These include serving the UAE Government’s requirements for all satellite-enabled solutions, further commercialising our narrowband spectrum to become a critical player in Direct-to-Device (D2D) and developing IoT technologies that allow remote asset tracking and monitoring. The future is promising and we are excited to play our role in shaping it.”--TradeArabia News Service