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Al Yah Satellite Communications Company PJSC (“Yahsat”)
Management’s Discussion and Analysis (for the period ended 30 June 2023)
1. Highlights: solid results with normalised EBITDA 7. Next reporting date ............................................. 16
and net income growth ......................................... 2
8. Contacts ............................................................. 16
2. Results of operations by segment ........................ 5
9. Alternative performance measures and terms
3. Cash flows, liquidity and capital structure ............ 7 used .................................................................... 18
4. Capital expenditure ............................................. 10 10. Cautionary statement regarding forward-looking
statements .......................................................... 20
5. Outlook ............................................................... 11
6. Earnings webcast ............................................... 16
This document should be read in conjunction with Yahsat’s consolidated interim financial statements for the six months ended 30 June 2023. Within
the MD&A, we use the terms “the Group”, “Company”, “we”, and “our” to refer to Yahsat. Due to rounding, numbers presented may not add up
precisely to the totals provided and percentages may not precisely reflect the absolute figures.
1. Highlights: solid results with normalised EBITDA and net income growth
(USD millions) Q2 2023 Q2 2022 Q2 y/y1 6m 2023 6m 2022 6m y/y ∆
Revenue 105 107 (2%) 205 206 (0.2%) (0.5)
Adjusted EBITDA 63 64 (2%) 123 122 1% 1
Margin (%) 60% 60% (0.1%) 60% 59% 1%
Operating profit 16 29 (45%) 41 51 (20%) (10)
Net finance costs 2 (1) nm 5 (2) nm 7
Net income (Yahsat-share) 18 25 (28%) 45 45 (0.1%) (0.1)
Margin (%) 17% 24% (6%) 22% 22% –
Normalised results
Normalised Adj. EBITDA 63 64 (2%) 125 122 3% 3
Margin (%) 60% 60% (0.1%) 61% 59% 2%
Normalised Net Income 18 25 (28%) 48 45 5% 2
Margin (%) 17% 24% (6%) 23% 22% 1%
Revenue for the first half of the year was stable at USD 205 million whilst Normalised Adjusted EBITDA and Normalised
Net Income increased by 3% versus the prior year to USD 125 million and 5% to USD 48 million, respectively.
The Group delivered revenue growth in Infrastructure, the Group’s largest segment providing communications capacity
to the UAE government (the “Government”, see “Alternative performance measures and terms used”), and Data
Solutions, offering satellite-based broadband data solutions. Managed Solutions, providing complete value-added
satellite communications solutions primarily to the 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
1 Shows percentage changes for monetary amounts; percentage-point and multiple-amount changes for percentages and multiples
Page 2 of 20equipment 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.
Financial guidance targets last set upon release of full year 2022 results were maintained except for cash capex and
investments, which was increased on account of the commencement of the Al Yah 4 and Al Yah 5 satellite procurement
programme (see “Outlook–Al Yah 4 and 5 update” and “Outlook–Guidance for full year 2023”).
Highlights for the period include:
• Revenue of USD 205 million, stable year-on-year.
• Normalised Adjusted EBITDA of USD 125 million, up 3% year-on-year, delivering a superior margin of 61%
(H1 2022: 59%).
Normalised Adjusted EBITDA is Adjusted EBITDA adjusted for material, one-off items recorded during the
current and comparative periods that would otherwise distort the underlying, like-for-like performance of the
business. H1 2023 Normalised Adjusted EBTIDA of USD 125 million reflects an adjustment for one-off
redundancy costs (USD 2 million) whilst there were no adjustments made to H1 2022 Adjusted EBITDA of USD
122 million.
• Positive net finance income benefiting from higher interest rates on short-term deposits versus the prior
year.
• Normalised Net Income of USD 48 million, up 5% year-on-year, generating an improved margin of 23% (H1
2022: 22%)
H1 2023 Normalised Net Income of USD 48 million reflects adjustments made to derive Normalised Adjusted
EBITDA whilst there were no adjustments made to H1 2022 net income of USD 45 million.
• Contracted future revenue of USD 1.9 billion, stable versus end of Q1 2023 and equivalent to 4.4 times last-
twelve-month revenue.
• Improved cash generation with Discretionary Free Cash Flow of USD 82 million, up 34% versus prior year.
• Historically strong balance sheet with negative Net Debt of more than USD 125 million, total available liquidity
of USD 686 million and long-term visibility of future cash flows, supports Yahsat’s future investment in organic
growth (Al Yah 4 and Al Yah 5; see “Outlook–Al Yah 4 and 5 update”) and opportunistic acquisitions, without
impacting its attractive progressive dividend policy.
• On track to grow full year 2023 dividend by at least 2% to AED 16.46 fils per share or USD 109 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.
• Guidance for full year revenue, Adjusted EBITDA, and Discretionary Free Cash Flow remains unchanged,
whilst guidance for cash capex and investments is increased to a range of USD 175-195 million from USD 155-
175 million, to reflect the commencement of the Al Yah 4 and Al Yah 5 satellite procurement programme (see
“Outlook–Guidance for full year 2023”).
Page 3 of 20Ali 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 Authorization-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.
“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.”
The full set of first half financial disclosures can be found within the Investor Relations section on Yahsat’s website.
[this section deliberately left blank]
Page 4 of 202. Results of operations by segment
Infrastructure
(USD millions) Q2 2023 Q2 2022 Q2 y/y 6m 2023 6m 2022 6m y/y ∆
Revenue (external) 60 59 1% 120 119 1% 1
Adjusted EBITDA 46 46 1% 91 92 (1%) (1)
Margin 77% 77% (0.2%) 76% 78% (2%)
The Infrastructure segment is the Group’s largest, contributing 58% of revenue and 74% of Adjusted EBITDA for the
first half of the year (H1 2022: 58% and 75% respectively). The segment benefits from a key Capacity Services
Agreement (“CSA”) with the Government, which underpins the stable and predictable revenue and Adjusted EBITDA
contributions to the Group from period to period. Group financing activities and the majority of corporate costs are
accounted for within this segment.
Revenue for the period increased by USD 1 million or 1%, reflecting an increase in CSA revenue as per the contractual
indexation clause. Adjusted EBITDA fell slightly for the first half mainly reflecting a portion of redundancy costs related
to the segment as well as lower chargebacks to the Data Solutions segment on outsourced services provided. The
margin for the segment remained strong at 76%.
The segment boasts contracted future revenue of more than USD 1.6 billion as of end H1 2023, including a 15-year
contract with the Government for the provision of capacity and associated services on Thuraya 4 Next Generation
System (“T4-NGS”; see “Outlook–T4-NGS update”). The T4-NGS Government contract value of USD 708 million2 will
support revenue growth from 2025 onwards (USD 53 million2 annually; see “Outlook–Strong growth prospects” on
contracted future revenue backlog).
Managed Solutions
(USD millions) Q2 2023 Q2 2022 Q2 y/y 6m 2023 6m 2022 6m y/y ∆
Revenue (external) 19 24 (20%) 39 39 (1%) (0.4)
Adjusted EBITDA 12 14 (11%) 24 20 19% 4
Margin 64% 58% 7% 62% 51% 10%
The Managed Solutions segment, contributing 19% of revenue and 19% of Adjusted EBITDA for the first half of the year
(H1 2022: 19% and 17% respectively), delivers critical, secure, value-added solutions primarily to the Government and
other UAE and international governmental entities. This also includes operation and maintenance (O&M) services to
the Government based on multi-year engagements, related to supporting the infrastructure capacity contracted.
Growth momentum slowed in this segment during the second quarter mainly on prior-year effects, which included the
booking of a USD 10 million turnkey component in Q2 2022. The segment had shown strong growth in the first quarter
reflecting revenues relating to the technology management element of the Managed Services Mandate (the “Mandate”)
awarded by the Government in Q1 2022, which could not be recognised in the prior year until Q3 2022, when the IFRS
revenue recognition criteria were met. The Mandate is valued at USD 247.5 million, with service revenue recognised from
2 Under the contract, the Group is entitled to receive USD 300 million in advance payments, to be offset over the contract period against invoices for
capacity services. The Group received USD 150 million advance in each of Q3 2022 and Q2 2023. Under IFRS 15, as a significant part of the contract
price is received years ahead of service provision, the contract is deemed to contain a significant financing component and requires the contract value
to be adjusted to include the imputed finance cost relating to the advance payments. Accordingly, the future revenue is adjusted to include USD 46.3
million (imputed finance cost relating to the first USD 150 million) and USD 44.1 million (imputed finance cost relating to the second USD 150 million),
bringing the total transaction price to $798.8 million as of the end of H1 2023 and future annual revenue of USD 53.3 million. The imputed finance
cost will be recorded as a charge from the date of receipt of advance payment until the advance is fully offset.
Page 5 of 201 January 2022 over the following 5 years at USD 47.5 million per year and a USD 10 million turnkey component
recognised in Q2 2022. The segment also benefited from new high-margin Government business and favourable timing
of costs related to the Mandate, leading to an expansion in Adjusted EBITDA margins to 62% (H1 2022: 51%). Full year
revenues are expected to match or exceed the prior year record performance with margins to moderate in line with historic
range of 40-50%.
Mobility Solutions
(USD millions) Q2 2023 Q2 2022 Q2 y/y 6m 2023 6m 2022 6m y/y ∆
Revenue (external) 20 18 12% 35 36 (4%) (2)
Adjusted EBITDA 5 5 (3%) 8 11 (20%) (2)
Margin 23% 26% (3%) 24% 29% (5%)
The Mobility Solutions segment, contributing 17% of revenue and 7% of Adjusted EBITDA for the first half of the year
(H1 2022: 19% and 9% respectively), provides Mobile Satellite Services (“MSS”) through its approximately 90%-owned
subsidiary, Thuraya, using L-band capacity on two satellites, Thuraya-2 and Thuraya-3.
Revenues grew in the second quarter by 12% versus the prior year driven by substantially stronger equipment sales,
thereby reducing the overall shortfall for the segment for the first half of the year to just 4% (equipment sales typically
make up 35-40% of total segment revenues). Service revenue continued to grow (+3%) with strong performance for
voice (Sudan) and maritime products (Vietnam).
Adjusted EBITDA for the period decreased USD 2 million or 20% versus the same period last year reflecting reduced revenue,
whilst margins contracted to 24% on higher operating expenses due to higher bad debt provisioning and licensing fees.
Data Solutions
(USD millions) Q2 2023 Q2 2022 Q2 y/y 6m 2023 6m 2022 6m y/y ∆
Revenue (external) 5 6 (3%) 12 11 2% 0.2
Adjusted EBITDA (1) (0.5) 27% (0.05) (0.7) (93%) 1
Margin (11%) (8%) (3%) (0.4%) (6%) 6%
The Data Solutions segment offers satellite-based broadband data solutions using Ka-band to end-users including
subscribers and enterprise customers who respectively purchase broadband subscription packages or lease capacity
to operate virtual networks. Note that the financials of this segment do not include the performance of a 20% minority
equity partnership with Hughes, a subsidiary of Echostar, in Brazil.
This segment, contributing 6% of revenue for the first half of the year (H1 2022: 6%), recorded revenue growth of 2%.
This mainly reflected growth in enterprise customer revenues whilst subscriber revenues remained broadly stable,
impacted by a change in ARPU mix and weakening African currencies against US dollar largely offset by a continued
increase in subscriber numbers (up 13% over the past 12 months). The segment remained broadly Adjusted EBITDA
breakeven for the first half of 2023, reflecting improved cost controls.
The segment is served by the Al Yah 2 and Al Yah 3 (“AY3”) satellites. During the period, the Group submitted an
insurance claim as a result of certain anomalies impacting the estimated useful life of AY3. A reduced estimate of the
satellite’s remaining lifetime has been calculated and this is reflected through accelerated depreciation3 within this
segment. AY3 continues to operate nominally, despite the anomalies, and no loss of service to customers has occurred.
3 Refer to note 6 of the Group’s financial statements for the period ended 30 June 2023.
Page 6 of 203. Cash flows, liquidity and capital structure
(USD millions) Jun-23 Dec-22 6m YTD ∆
Cash and short-term deposits 619 545 14% 75
Undrawn ECA facility4 67 78 (14%) (11)
Total liquidity 686 622 10% 63
Gross Debt5 494 542 (9%) (48)
Net Debt5 (125) (2) nm (123)
Total equity (excl. minorities) 842 851 (1%) (9)
Gearing Ratio5 (net debt / capital) (16%) (0.3%) (16%)
Net Debt / Normalised Adj. EBITDA (LTM) (0.5x) (0.01x) (0.5x)
6m 2023 6m 2022 6m y/y ∆
Normalised Adjusted EBITDA5 125 122 3% 3
Operating FCF5 (excl. capital WIP) 119 114 5% 5
Cash Conversion Ratio5 95% 93% 2%
Net cash from operations (CFO) 223 74 nm 149
Discretionary FCF5 82 61 34% 21
High liquidity
The Group’s total available liquidity as at the end of Q2 2023 was USD 686 million, 10% higher than the position at the
end of 2022. This included an increase in cash and short-term deposits reflecting the collection of significant Government
receivables relating to the provision of the Mandate within Managed Solutions as well as the receipt of a second USD
150 million advance payment related to the T4-NGS procurement programme. The reduced credit facility reflected a
further drawdown of the ECA facility by USD 11 million in Q1 2023 as T4-NGS construction milestones were achieved
(see “Cash flows, liquidity and capital structure–Low leverage capital structure”).
Total available liquidity was made up of USD 619 million of cash and short term deposits (including short term deposits
with maturities greater than three months but less than one year) and USD 67 million in undrawn credit facilities,
available to the Group during an availability period ending in November 2024 and for specific uses related to the
procurement of the T4-NGS satellite (see “Cash flows, liquidity and capital structure–Low leverage capital structure”).
The Group’s high liquidity and low leverage metrics place it in a strong position to capitalise on key growth opportunities
(see “Outlook–Al Yah 4 and 5 update”), including inorganic acquisitions that support Yahsat’s strategy (see “Outlook–
Other exciting growth opportunities”).
As of the end of Q2 2023, 15% of the Group’s total debt is classified as current (YE 2022: 20%), based on principal
amounts repayable within one year (see “Cash flows, liquidity and capital structure–Debt maturity profile”).
Strong cash flow generation
The Group enjoys an efficient business model enabling strong cash generation that includes a) robust Adjusted EBITDA
margins, b) low levels of unfunded capital expenditure, c) negligible cash taxes (until end of 2023), and d) very low
leverage.
4 Includes Term Loan 6 (ECA), which can only be drawn during an availability period ending November 2024 for specific uses related to the
procurement of the T4-NGS satellite.
5 See “Alternative performance measures and terms used” for definitions and calculation methodology used in this report.
Page 7 of 20This results in high levels of Cash Conversion Ratio of 95% for H1 2023 (H1 2022: 93%) and a high level of Discretionary
Free Cash Flow (“DFCF”) available to meet the Group’s dividend policy commitments. DFCF for the first half of the year
reached USD 82 million, a 34% increase versus the prior year (H1 2022: USD 61 million). This reflected the collection
of significant Government receivables and higher finance income which offset the return of advance payments
previously received during the construction phase of the Al Yah 1 and Al Yah 2 satellites (approx. USD 75 million per
annum split equally in the first and third quarters of each year). Based on our reconfirmed guidance, DFCF for the full
year of 2023 is expected to be at least USD 130 million, which would comfortably exceed by 1.2 times total expected
dividends for full year 2023 of USD 109 million (see “Outlook–Attractive dividend policy” and “Outlook–Guidance for full
year 2023”).
Low leverage capital structure
Yahsat’s maintained negative levels of Net Debt equivalent to -0.5x Normalised Adjusted EBITDA (YE 2022: -0.01x).
The Group’s debt funding includes two term loans:
• USD 400 million 5-year term loan (“Term Loan 5”), fully drawn, and repayable in eight semi-annual instalments
starting from 14 December 2022. The borrowing bears interest at LIBOR plus a margin of 1.30% per annum
and is hedged using an interest rate swap with a fixed swap rate set at 0.7785%. The proceeds of the borrowing
were partially used in June 2021 to pay down USD 251 million in outstanding amounts of an earlier USD 1.2
billion credit facility used to fund the development and construction of Al Yah 1 and Al Yah 2 satellites during
the 2008-2012 period.
The outstanding principal amount stands at USD 280 million at the end of Q2 2023 following principal
repayments of USD 60 million in each of Q4 2022 and Q2 2023 as per the terms and amortisation schedule of
Term Loan 5 (YE 2022: USD 340 million). Two further principal repayments of USD 60 million and USD 25
million are due in December of 2023 and June of 2024, respectively.
• USD 273 million export credit agency facility (“Term Loan 6”) with a tenor of 8.5 years and bearing interest at
LIBOR plus a margin of 0.60% per annum for drawn amounts. The loan is being used to partly fund the capital
expenditure relating to the T4-NGS satellite programme and is directly guaranteed by the French State (Airbus
is the contractor for the construction and supply of the T4-NGS satellite). The facility can only be drawn down
during a specific period and for specific uses relating to the procurement of the T4-NGS satellite, particularly
upon the achievement of certain construction milestones by the contractor. The interest rate applied to any
drawn amounts is hedged using an interest rate swap with a fixed swap rate set at 1.589%. Interest incurred is
capitalised and expensed over the accounting useful life of the satellite once operational.
The outstanding principal amount at the end of Q2 2023 was USD 206 million, an increase of USD 11 million
during the first half of the year (YE 2022: USD 195 million) reflecting the completion of construction milestones
and other permitted uses of borrowing under the facility such as capitalised interest.
• Both term loans require the Group to maintain an interest cover ratio6 of not less than 4.00:1 and a net leverage
ratio6 of no more than 3.00:1. They also contain a change of control clause that requires the mandatory
prepayment of outstanding borrowings if the Government of Abu Dhabi ceases to control directly or indirectly
50.1% or more of the share capital of Yahsat.
6 Calculation of these ratios is defined in the term loan documentation and calculation of the net leverage ratio does not match the Net Debt-to-
Normalised Adjusted EBITDA figure presented in this report.
Page 8 of 20The Group’s credit facilities provide significant liquidity whilst debt covenants offer significant headroom for further
borrowing as and if required to pursue Yahsat’s growth strategy (see “Outlook”).
Debt maturity profile
The Group’s financial liabilities repayment schedule as at the end of Q2 2023, based on the contractual undiscounted
payments, is as follows. It should be noted that the repayment schedule shown for Term Loan 6 (the ECA facility) is
based on the current forecast of future drawdowns and may change slightly depending on the actual drawdown schedule
that materialises.
USD millions
142
92
66
60
32 32 32 32 32 32
2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Term Loan 5 Term Loan 6 (ECA)
As of the end of Q2 2023, the Group’s total Gross Debt stood at USD 494 million, a decrease of USD 48 million or 9%
during the first half of the year (YE 2022: USD 542 million).
This decrease reflects the cash drawdown of USD 7 million of Term Loan 6 upon completion of construction milestones
related to the T4-NGS procurement programme and USD 4 million in interest capitalised into the principal amount of
the loan more than offset by USD 60 million in principal repayment of Term Loan 5.
[this section deliberately left blank]
Page 9 of 204. Capital expenditure
(USD millions) Q2 2023 Q2 2022 Q2 y/y 6m 2023 6m 2022 6m y/y ∆
Cash CAPEX and investments7 (8) 40 (121%) 53 89 (40%) (35)
The Group’s total cash capital expenditure for the first half of the year was USD 53 million, a 40% decrease versus the
prior year. Part of the decrease relates to a high comparative base in the prior-year period with capex spending
concentrated in H1 2022 and reflecting construction milestones of the T4-NGS programme (see “Outlook–Strong growth
prospects–T4-NGS update”) whilst the remainder of the reduction is largely due to a higher return of capital to the Group
in Q1 2023 totalling USD 5 million by Al Maisan, Yahsat’s broadcast joint venture with SES, branded as Yahlive (Q1
2022: zero).
Over 90% of the period’s cash capital expenditure relates to the T4-NGS satellite construction programme and related
new product development. Design and construction costs of the satellite are more than fully funded by both Term Loan
6 (the ECA facility) and the USD 300 million advance payment from the Government received in two equal instalments
in July 2022 and June 2023.
See “Outlook–Guidance for full year 2023” on guidance for the Group’s capital expenditure for the full year 2023.
[this section deliberately left blank]
7 ‘Investments’ refer to investments in associates, net of any dividends received and capital returned.
Page 10 of 205. Outlook
Strong growth prospects
One of Yahsat’s unique strengths is its predictable contracted future revenues amounting to USD 1.9 billion or 4.4x last-
twelve-month revenues for the Group as at the end of Q2 2023. Two contracts with the Government (with a credit rating
of Aa2 by Moody’s and AA by Fitch; Abu Dhabi rating of AA by S&P) make up over 90% of contracted future revenues.
Serving the Government’s satellite communication needs is a core business and central to Yahsat’s growth strategy,
building on an increasing trend for sovereignty and self-reliance over satellite assets. In that respect, the T4-NGS
satellite currently under construction and the expansion of the Company’s fleet with two planned new satellites (Al Yah
4 and Al Yah 5), present unique growth opportunities for the Group and further secure Yahsat’s long-term financial
future.
Roll out of contracted future revenue backlog over next 5 years and beyond8
(all figures in USD millions)
366 AY4 & AY 5
procurement in
323 68 324 advanced stages.
ATP with satellite
manufacturer
59
82 signed and
53 negotiations with
UAE Government
53 on-going.
Contracted future
182 revenues from
2027 onwards
expected to
62
increase
241 244 significantly
211 Others
62 T4 NGS* (Infrastructure)
120 8
CSA (Infrastructure)
53
2023 2024 2025 2026 2027
T4-NGS update
In 2021, the Group entered a 15-year contract with the Government worth USD 708 million9 for capacity and associated
services on the T4-NGS satellite, the Group’s sixth and forthcoming fleet addition. T4-NGS will be an MSS satellite
placed in Geostationary Earth Orbit (“GEO”) offering advanced capabilities such as higher capacity and terminal data
rates above 1 Mbps (versus approximately 0.4 Mbps available under the current system). Many of the new products
being developed to take advantage of the satellite’s new advanced capabilities will be offered to the Government as
well as other governmental and commercial customers, driving further growth across several Group segments, including
Infrastructure, Managed Solutions and Mobility Solutions.
8 Future contracted revenues in 2028 and beyond are USD 643 million
9 See earlier footnote 2 on calculation of future contracted revenue related to the T4-NGS contract
Page 11 of 20T4-NGS is expected to launch in the first half of 2024 and to start services in the first half of 2025. The full cost of the
procurement programme is expected to total USD 550 million and related capital expenditure capitalised thus far
reached USD 393 million as of the end of Q2 2023 (YE 2022: USD 350 million).
Al Yah 4 and 5 update
The Group is in advanced discussions with the Government regarding the planned launch of two new Fixed Satellite
Services (“FSS”) satellites, Al Yah 4 and Al Yah 5, in the medium term. The new satellites would supplement and
ultimately replace the capacity currently provided to the Government under the CSA due to expire in November 2026,
which utilises the existing FSS satellites, Al Yah 1 and Al Yah 2. The new satellites would benefit from new coverage,
capabilities and higher capacities to meet the increased demands of the Government. Al Yah 1 and Al Yah 2 are
estimated to reach end of life10 in 2029 and 2030, respectively, and the current CSA may be extended to run in parallel
with the procurement and initial deployment phases of the two new satellites.
The Group is confident of finalising, in the near term, a satellite procurement contract with the Government for Al Yah 4
and Al Yah 5 (the “Contract”) and signed an Authorization-To-Proceed (“ATP”) in Q2 2023 with Airbus Defence and
Space SAS (“Airbus”), a leading satellite manufacturer and long-time partner of Yahsat11, to commence initial activities
in relation to the Al Yah 4 and Al Yah 5 satellite programme. The Contract is expected to include the long-term provision
of capacity, an extension of services on Al Yah 1 and Al Yah 2 and the provision of related managed services for the
new satellites. The ATP will preserve the programme schedule, pending execution of the Contract by the end of the
financial year.
Under the terms of the ATP, an initial payment of USD 15.3 million has been made in July 2023 and a second payment
of USD 28.1 million will be payable in Q3 2023 following any extension of the ATP to the end of the year. Both payments
will be adjusted against the purchase price of the satellites upon execution of the Contract. The Group expects
contracted future revenues to increase significantly from 2027 onwards following the securing of the Contract.
Earth observation update
In February 2023, the Group signed an MoU with Bayanat, a listed subsidiary of G42 focused on geospatial mapping
and analytics, to establish and operate a constellation of synthetic aperture radar (“SAR”) and optical imagery Earth
observation (“EO”) satellites. In May 2023, Bayanat and Yahsat commenced work on establishing a formal partnership
that would include, in its initial phase, the procurement of an EO constellation of at least 5 SAR satellites from ICEYE,
a leading EO satellite manufacturer. SAR is an active sensing system that can capture images of the Earth’s surface
day and night, regardless of weather conditions or solar illumination. Launch of the first ICEYE satellite within this
constellation is expected in the first half of 2024.
The partnership will combine Yahsat’s upstream and midstream capabilities, including expertise in satellite and ground
segment operations, with Bayanat’s downstream capabilities including image processing and AI-driven data analytics.
The partnership also aims to collaborate with other strategic players in the UAE space ecosystem, such as the UAE
Space Agency, which recently established an USD 800 million national investment and development fund for the UAE
space sector with plans develop and launch an EO satellite constellation.
10 Estimated based on the latest health reports and estimated remaining fuel life, assuming typical degradation in coming years and no significant
anomalies occur.
11 Airbus was the contractor for Al Yah 1 and Al Yah 2 and is building Yahsat’s upcoming T4-NGS satellite.
Page 12 of 20Other exciting growth opportunities
The Board undertook a strategic review in late 2022 to identify promising growth opportunities in the space industry that
play to the Group’s strengths, including its robust balance sheet, knowledge, infrastructure, footprint and spectrum
rights, which comprise the following:
• Value added SatCom solutions: The Group is keen to move further down the value chain and offer
differentiated satellite solutions and services to strategic industries (e.g., enterprise/VNOs, maritime, oil and
gas, telecom).
• Direct to device: Direct satellite-to-device connectivity offers the opportunity to reach billions of mainstream
devices and is attracting significant interest from phone manufacturers and telecom operators, who wish to offer
more value-added services to their customers, as well as from satellite operators, given the potential to
significantly increase their addressable market. Yahsat is uniquely positioned to play a key role with its valuable
L-band spectrum rights covering approximately two-thirds of the globe.
• Internet of things (“IoT”): A global shift to connecting “things” is boosting the demand for IoT and machine-to-
machine (“M2M”) applications using satellite systems that can provide ubiquitous coverage and enable key
plays such as mass asset tracking, monitoring and agriculture uses. The Group’s recent investment in eSAT
Global, Astrocast and the procurement of the T4-NGS satellite, currently under construction, will enable
numerous new applications in this space.
• Mergers and acquisitions: The Group is continuously exploring inorganic growth opportunities to support its
strategic ambitions.
• UAE partnerships: The UAE’s National Space Strategy 2030 is a testament to the UAE’s long track record of,
and continued future ambitions for, a leading role in the global space industry. The UAE is currently shaping a
competitive, diversified and flexible knowledge-based economy that is powered by skilled Emiratis and effective
partnerships between public, private and technology entities. Innovation, research, science and technology are
key elements in this highly dynamic and futuristic economy. Yahsat is playing a key role in developing the UAE
space sector and plans to continue being a cornerstone of this development, including upstream expansion
within the satellite industry value chain.
In late 2021, Yahsat established a joint-venture with Tawazun Economic Council (“Tawazun”), the defence and
security acquisitions authority for the Government and Abu Dhabi Police, for engineering, designing and
manufacturing, in-country, of customized hardware and software, including advanced satellite modems, small
form factor antennas, and tracking solutions.
Given the dynamics of the industry and the opportunities arising, the Group’s management and Board regularly review
Yahsat’s business strategy to capitalise on key opportunities and maximise value for its stakeholders, including
shareholders and the UAE.
Page 13 of 20Guidance for full year 2023
(USD millions) FY 2023 guidance date
Financial KPI 28 Feb '23 9 May '23 8 Aug '23 (new)
Gross revenue 435-455 Unchanged Unchanged
Adjusted EBITDA 240-260 Unchanged Unchanged
Discretionary Free Cash 130-150
Unchanged Unchanged
Flow ('DFCF') (205-225 excl. CSA amort.)
Cash CAPEX and
155-175 Unchanged 175-195
investments12
Guidance for 2023 continues to reflect management’s expectations for:
• Up to mid-single digit revenue growth following Managed Solution’s exceptionally strong performance in 2022,
which included USD 10 million in revenue for a turnkey component of the new Mandate that will not repeat this
year. Revenue growth is expected to be mainly driven by the commercial segments, which contribute
approximately a quarter of the Group’s total.
• Adjusted EBITDA to reflect increased costs in Managed Solutions, partly due to a shift from the prior year of
higher costs related to the operations and maintenance component of the new Mandate. Group margins are
expected to moderate as a result but remain in the 55-60% range, with cost control and optimisation a key
management focus.
• Discretionary Free Cash Flow to fall from 2022 levels reflecting the linear amortisation over the following four
years (January 2023 to November 2026) of USD 291 million previously received during the construction phase
of the Al Yah 1 and Al Yah 2 satellites (approx. USD 75 million per annum). DFCF of at least USD 130 million
would comfortably cover total expected dividends for full year 2023 of USD 109 million by 1.2 times.
• Cash capital expenditure revised to reflect approximately USD 40 million in capex related to the procurement
of Al Yah 4 and Al Yah 5 satellites following the signing of the ATP with Airbus (see “Outlook–Al Yah 4 and 5
update”).
Guidance will continue to be re-evaluated by Yahsat’s management on a quarterly basis and an update provided to the
market.
12 ‘Investments’ refer to investments in associates, net of any dividends received and capital returned.
Page 14 of 20Attractive dividend policy
The Company distributes dividends semi-annually and aims to indefinitely grow them by at least two percent per annum.
Dividends for full year 2023 are expected to be at least AED 16.46 fils per share or a total of USD 109.3 million. Based
on the last closing share price, this implies an annualised dividend yield of over 6% – amongst the highest offered
by listed UAE stocks – and compares favourably to an expected Discretionary Free Cash Flow yield of 7.7% (see
“Guidance for full year 2023” for target range).
See “Cautionary statement regarding forward-looking statements” for a full disclaimer.
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Page 15 of 206. Earnings webcast
The Group will host a conference call in English for investors and analysts on Tuesday, 8 August 2023 at
16:00 UAE / 15:00 KSA / 13:00 UK / 08:00 NY time.
The Group’s results will be presented by Ali Al Hashemi, Group CEO, Andrew Cole, CFO and Shadi Salman, VP Investor
Relations.
The webcast will be conducted via Zoom Webinars – please register ahead of time using this link:
https://zoom.us/webinar/register/WN_kpvYyphZRQGTkP9Hr3SDPQ
After registering, you will receive a confirmation email containing information about joining the webinar.
A replay and transcript will be made available following the event, accessible from the Investor Relations section of
Yahsat’s corporate website.
7. Next reporting date
The Group expects to announce third quarter and first nine-month 2023 results on or around Tuesday, 7 November 2023.
8. Contacts
Investor Relations
Tel.: +971-2-507-6318
Email: ir@yahsat.ae
Shadi Salman, CFA
VP, Investor Relations
Email: csalman@yahsat.ae
8 August 2023
Al Yah Satellite Communications Company PJSC
Page 16 of 20About Yahsat
Al Yah Satellite Communications Company PJSC (Yahsat) is a public company listed on the Abu Dhabi Securities
Exchange (ADX) and a subsidiary of Mubadala Investment Company PJSC, offering multi-mission satellite solutions in
more than 150 countries across Europe, the Middle East, Africa, South America, Asia and Australasia.
Yahsat’s fleet of 5 satellites reaches more than 80% of the world’s population, enabling critical communications including
broadband, broadcasting, backhauling and mobility solutions. Based out of Abu Dhabi in the UAE, Yahsat provides C,
Ku, Ka and L-band satellite communications solutions for land, maritime and aero platforms to consumers, governments
and enterprises. Its businesses consist of Yahsat Government Solutions, Thuraya, YahClick (powered by Hughes) and
YahLink. Yahsat also participates in Hughes do Brasil, an equity partnership with Hughes, and Yahlive, an equity
partnership with SES. In 2020, Yahsat commenced construction of Thuraya 4-NGS, the next generation
telecommunications system for Thuraya, which is due to enter service during 2025.
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Page 17 of 209. Alternative performance measures and terms used
Yahsat regularly uses alternative performance measures which are relevant to enhance the understanding of the
financial performance and financial position of the Group. These measures may not be comparable to similar measures
used by other companies; they are neither measurements under IFRS nor any other body of generally accepted
accounting principles and thus should not be considered as substitutes for the information contained in the Group’s
financial statements.
Alternative performance measure
Definition
or term used
Earnings from continuing operations before interest, tax, depreciation,
Adjusted EBITDA amortisation, impairment, fair value adjustments on investment property and
share of results of equity-accounted investments
Adjusted EBITDA Margin Adjusted EBITDA divided by revenue
Cash Conversion Ratio Operating Free Cash Flow divided by Normalised Adjusted EBITDA
Net cashflow from operations less (a) advances from customers on long-term
capacity contracts (e.g., T4-NGS), (b) development and maintenance capital
Discretionary Free Cash Flow expenditure, including additions to intangible assets but excluding additions
(‘DFCF’) to satellite related capital work-in-progress, (c) investments in associates net
of any dividends received and capital returned, (d) net finance costs, and plus
(e) proceeds from disposals of assets.
Net Debt divided by total equity capital plus Net Debt (see definition below).
Gearing Ratio Capital includes share capital, additional paid-in capital, reserves and
retained earnings and includes non-controlling interests.
Unless otherwise specified, Government shall mean the Federal Government
Government of the UAE, the Government of Abu Dhabi and any instrumentality or body of
either of them, including the General Headquarters of the UAE Armed Forces
Gross Debt Interest bearing borrowings excluding unamortised transaction costs
Net Debt Gross Debt minus cash and short-term deposits
Net Income Profit attributable to the shareholders
Net Income margin Net Income (profit attributable to the shareholders) divided by revenue
Adjusted EBITDA adjusted for material, one-off items recorded during the
current and comparative periods that would otherwise distort the underlying,
like-for-like performance of the business. H1 2023 Normalised Adjusted
Normalised Adjusted EBITDA
EBTIDA of USD 125 million reflects an adjustment for one-off redundancy
costs (USD 2 million) whilst there were no adjustments made to H1 2022
EBITDA of USD 122 million.
Normalised Adjusted EBITDA
Normalised Adjusted EBITDA divided by revenue
margin
Page 18 of 20Profit attributable to the Group’s shareholders, adjusted for material, one-off
items recorded during the current and comparative periods that would
otherwise distort the underlying, like-for-like performance of the business. H1
Normalised Net Income
2023 Normalised Net Income of USD 48 million reflects adjustments made to
derive Normalised Adjusted EBITDA whilst there were no adjustments made
to H1 2022 net income of USD 45 million.
Normalized Net Income margin Normalized Net Income divided by revenue
Normalized Adjusted EBITDA minus (a) additions to intangible assets and (b)
Operating Free Cash Flow development and maintenance capital expenditure, excluding additions to
satellite related capital work-in-progress
Financial numbers presented in millions are rounded to whole numbers while those presented in billions are rounded to
one decimal place. All percentages are rounded to whole numbers. Financial numbers and percentages have been
derived from underlying numbers. Due to rounding, numbers presented may not add up precisely to the totals provided
and percentages may not precisely reflect the absolute figures.
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Page 19 of 2010. Cautionary statement regarding forward-looking statements
This announcement includes forward-looking statements, which are based on current expectations and projections
about future events. These statements may include, without limitation, words such as "expect", "will", "looking ahead"
and any other words and terms of similar meaning. These forward-looking statements are subject to risks, uncertainties
and assumptions about the Company and its subsidiaries and its investments, and speak only as at the date of this
announcement. Forward-looking statements are based on assumptions of future events and information currently
available to the Company which may not prove to be accurate and the Company does not accept any responsibility for
the accuracy or fairness thereof and expressly disclaims any obligation to update any such forward looking statement.
No representation or warranty is made that any forward-looking statement will come to pass. You are therefore cautioned
not to place any undue reliance on forward-looking statements. For further information regarding forward-looking
statements, and the factors that may cause actual results and developments to differ materially from those expressed
or implied by these forward-looking statements please refer to the Company’s Annual Report for 2022, which is available
on its corporate website at https://www.yahsat.com/Reports/2022/index.html
The amount and payment of dividends by the Group is subject to consideration by the Board of Directors of the cash
management requirements of the Group for operating expenses, interest expense, and anticipated capital expenditures,
and market conditions, the then current operating environment in its markets, and the Board of Directors’ outlook for the
business of the Company. In addition, any level or payment of dividends will depend on, among other things, future
profits and the business plan of the Company, as determined at the discretion of the Board of Directors.
Neither this announcement nor anything contained herein constitutes a financial promotion, or an invitation or
inducement to acquire or sell securities in any jurisdiction.
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Page 20 of 20

Sentiment: neutral