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Eutelsat shares hit record low as falling broadcast sales weigh on earnings

Picture illustration of Eutelsat logo and satellite model

By Lina Golovnya and Olivier Sorgho

(Reuters) - Eutelsat Communications SA reported a half-year profit on Friday that missed estimates, hurt by lower broadcasting sales and higher costs as the world's third-largest satellite operator continues its shift towards broadband and mobile.

The company's shares fell as much as 7% to an all-time low of 6.59 euros.

Eutelsat, hit by Western sanctions on Moscow that last year made it suspend activities in Iran and partially in Russia, hopes to tap into growing demand for faster internet to offset a decline of its TV broadcast business.

Broadcasting in Russia continued on some "thematic" chains such as sports, films and kids' shows, but not on news programmes, Eutelsat Chief Executive Eva Berneke said.

"The video market ... is structurally in decline," Berneke said, adding the company planned to focus on areas such as mobile connectivity, supported by the merger with Britain's OneWeb that is expected to close in the second or third quarter of this year.

Eutelsat's core profit was 419 million euros ($445.61 million) in the first half of its fiscal year, missing company-provided estimates of 426 million euros. The broadcasting unit's like-for-like sales dropped 6.7% to 338.5 million.

The European Union in November signed a deal for its own satellite internet system, as it aims to boost its space and communications sectors amid growing concern about Russian and Chinese advances in the field.

"This could be an extraordinary opportunity for Eutelsat," Berneke said, adding the company was looking at possible partners for the project.

The partners could include private space industry players, large distributors in countries where Eutelsat is less present, or satellite producers, according to Berneke.

($1 = 0.9406 euros)

(Reporting by Lina Golovnya and Olivier Sorgho in Gdansk; Editing by Milla Nissi and Shounak Dasgupta)