Indra Sistemas, S.A. (IDR) Earnings Call Transcript & Summary

Good morning, and welcome to Indra's acquisition of Hispasat S.A. announcement. I now hand the conference over to Mr. Ezequiel Nieto, Head of Investor Relations. Please go ahead.

Good morning, and welcome to this conference call. I'm Ezequiel Nieto, Head of Investor Relations. First of all, let me refer you to disclaimer on Slide #1 that shows the legal framework under which this presentation must be considered. Now let me introduce the participants of this call. Angel Escribano, Executive Chairman of Indra; Jose Vicente Los Mozos, our CEO; and Miguel Forteza, Chief Financial Officer. Angel, the floor is yours.

Hello. Good morning. Good morning, everyone, and thank you for joining us today. I am Angel Escribano, Executive Chairman of Indra Group. Having recently joined the company, I am honored to present what I believe is a milestone, not just for Indra Group, but also from Spain and Europe. Today marks an exciting chapter in our journey to extend our leadership in the space sector and our commitment to innovation and strategic autonomy. To provide more detail on this exciting achievement, I am pleased to hand it over to Jose Vicente, whose expert leadership have been instrumental in bringing this opportunity to life.

Thank you, Angel, and welcome to Indra Group. I'm very convinced that with your support, we are going to accelerate our strategic plan in the future. Good morning, everybody. For me, I'm very happy today to present you this milestone for Indra Group. As we explained in our plan Leading the Future, we have prioritized the space sector. I'm very proud to share with you today the results of our efforts to creating the Indra Space NewCo. Today, we will walk through three key topics. First, the strategic fit of the space domain for Indra Group. Second, understanding of Hispasat and Hisdesat. And third, detail of the transaction term and financial supporting this acquisition. Let's now dive into the strategic fit of the space domain for Indra Group. If we go to Slide #4, that is March 2024, Indra Group outlined its strategic vision, identifying space as one of the seven critical growth pillars. To date, we restate our commitment with our strategic plan by communicating a milestone that is more than just a step forward. It's a cornerstone in the creation of the Indra Space NewCo and a significant advancement in our focus on Defense and Aerospace. This marks a transformative leap for Indra Group, scaling our ambition and positioning us firmly at the forefront of the European space industry. Slide #5, our entry into the space sector is driven by six key factors. One, secure communication and surveillance are critical for national sovereignty and private data security. Two, Spain is emerging as a core military domain with civil military duality for multi-domain application. That is our case with Defense division and Air Traffic Management division. Three, market benefit from tailwinds and increasing private investment, expecting long-term market grow close to 9%. Four, space market is evolving forward increasing space-based application, digital services and programs like IRIS2. Five, the space market is undergoing significant disruption driven by satellite miniaturization, which is accelerating industrialization and expansion of LEO constellation. And six, finally, Spain has large complementarity with Indra Group's civil and military businesses. That's our Defense, Air Traffic Management or Mobility. These six key factors underscore why Indra Group has strategically prioritized space as a core initiative, positioning us to lead in a transformation -- in a transformative market that align with our strategic goal. Slide #6. This is important for us, maybe because our industrial background is very strong to analyze the value chain. And the space value chain is structured into upstream and downstream. Upstream focuses on design, manufacturing and space technology. It includes three key segments. First, launch consists of operating satellite in orbit. This segment is not a strategic priority for us, and Indra will not be positioned. Two, satellite manufacturing, which include the satellite platform as well as payload and flight control software. And three, ground stations that control the satellite in orbit and execute their mission. On the other hand, downstream is focused on satellite operations and services, addressing civil and military applications such as secure communication, observation or navigation. It's the largest segment and has the highest EBITDA margin, being close to 50%. All segments are critical to Indra Space NewCo except for launch, which remains our strategic focus. Slide #7. If we focus in the upstream part, there are two key types of satellites, differentiated by their orbit. First, you have GEO satellite which are positioned much further from Earth, more than 35,000 kilometers away. They are large, custom built and highly complex, weighing about 5,000 kilos. These are tailored to a specific mission, making them costly and non-scalable. Second, you have LEO satellite, which operate much closer to Earth, around 2,000 kilometers away. They are much smaller, weighing at around 150 kilo and are designed to function in large constellation. These LEO satellites are highly standardized, enabling mass production with a manufacturing cost 200x less than GEO satellite. Indra Space NewCo will focus on LEO satellite manufacturing, aiming to become a global leader in this domain. Unlike GEO satellite, as you can see on the right, around 80% of the LEO satellite element can be industrialized. By standardizing elements such as avionic, inter-satellite links, embedded software, onboard computer or its structure, Indra will streamline production and achieve industrialized manufacturing at scale. This approach leverages Indra's industrial expertise to address the growing demand for miniaturized satellite and position us at the forefront of future satellite technology. Slide #8. Furthermore, the space sector perfectly complement Indra Group's core businesses across many applications. As a result, we are going to be able to start synergy from Indra's current business in cyber, air traffic management and mobility and military defense. In Defense, satellite technology allows secure communication, real-time surveillance, navigation and early warning system, supporting critical application like multi-domain combat cloud or border surveillance. In Air Traffic Management, satellite-based communication, navigation and surveillance solution ensure seamless and safe airplane operation, improving safety in global airspace. Statical, an initiative called by Indra is designed to deliver these services, representing a clear example of the significant potential to create synergies with Indra Space NewCo. Finally in mobility, satellite connectivity enables IoT and AI-driven satellite solution, like rail connectivity, autonomous vehicle operation and infrastructure surveillance, redefining how we monitor our managed fleet and mobility system. This substantial synergy put Indra in a good position to unlock new opportunities within Indra Space NewCo, while reinforcing our core business present across multi-domain civil and military application. If we go to Slide #9, I remember our Indra Group's space vision. It's very clear and is centered in three pillars. First, we want to become a Tier-1 European reference, with global footprint and leadership in main European program. I think, with this acquisition, we can be at the same level as other European players. Second, delivering end-to-end capability around the value chain, with increasing focus on MEO and LEO initiatives, we will be the most integrated European company. And third, offering a dual civil and military offering for satellite secure communication, observation and navigation. Slide #10. Our timelines reflect Indra's commitment to its Leading the Future strategy. Secure communication on Indra Group leading the future strategic plan, that is March 2024, we have aggregated our internal space capabilities. In 2024, we launched the creation of Indra Space NewCo, incorporating Deimos to complement Indra for all NewCo [ holstering ] capability. As all of you may be waiting to hear, we are very excited to announce today that we have reached an agreement to acquire a consolidated stake in Hispasat and Hisdesat. These acquisitions in the cornerstone for our Space Newco and a definite move forward, achieving our 2030 ambition of reaching more than EUR 1 billion of revenue and becoming a Tier-1 European reference with global footprint. We strongly believe that with these acquisitions, we have the necessary foundation to achieve this ambition. Slide #11. The acquisition of Hispasat and Hisdesat will now ensure our integrated positioning across the value chain to deliver end-to-end space mission, becoming a unique player in Europe. In upstream, Deimos and Indra will enable the NewCo producing satellite design and manufacturing for LEO satellite and grow segment initiative. I mentioned earlier, Indra's core focus will now include launch and GEO manufacturing. In downstream, Hispasat will boost our cyber secure communication services. And Hisdesat will allow providing military communication and surveillance services. This integration ensures a unique scalable approach to address the end-to-end initiative the market needs. In Slide #12, you can see how Indra Space, we can become one of the key player in the European space sector. Unlike key European manufacturer, the focus on tailor-made high-cost GEO satellite, we will focus our upstream effort on LEO manufacturing and ground segment. Our downstream effort will not only be focused on cyber services as is the case for other European operator, but also on the military sector, which will represent a significant part of Indra Space NewCo revenue and strategic focus. We will count with advanced services. Our ultimate goal is to deliver end-to-end capabilities with our manufacturing focus strictly on LEO satellite. Like the leading company from the United States, we aim to control the value chain and execute full LEO mission, while staying out of the launch segment. This integrated expertise gives us a unique position to unlock the full potential of the European space market. By 2030, you can see in the Slide 13, Indra Space aims for a balanced revenue mix, with 63% from the institutional sector and 37% from private sector opportunities. This strategy position us to lead in the European and Spanish space sector, while capitalizing on growing private investment. In this context and based on the year return principle, we aim to capture more than 60% of Spanish institutional investment. Our space ambition is very clear with two key institutional objectives. First, we want to increase our presence in key markets -- sorry, in key programs to become a European Tier-1. We are already positioned in major initiatives like IRIS2, Galileo, EGNOS and Copernicus. And we have the ambition to expand into key upcoming opportunities such as space surveillance, navigation or next-generation air observation programs. Second, we want to become a Spanish space national leader in the space. In the Space, we will already lead critical program like SpainSat NG or PAZ and aim to driving the incoming strategic national program that ensure national sovereignty such as Signal Intelligence or SEOT for optical Earth observation. They will follow us in the coming year on the institutional front. Spanish institutional investment for national and European program are expected to triple to EUR 1.5 billion by 2030. Indra Space aspires to acquire more than 60% of this investment, ensuring national leadership and growth. Finally, on the private front, Indra Space will continue expanding its customer base. We will leverage our strong presence in Indra Group's three home markets to accelerate expansion in high-potential regions like Middle East or Latin America. We have provided a clear explanation of how we envision the Indra Space and our ambition for the coming year. Now we'd like to shift focus to Hispasat and Hisdesat, exploring their key attribute and how they align with Indra's strategic vision. We go to Slide 15. Hispasat and Hisdesat are integral to Indra Space strategy for growth in the cyber and military downstream market. Hispasat is a leading satellite operator ranking third in Europe and fourth in Latin America by revenue. It operates 10 civil-focused satellite, generating EUR 250 million in revenue in 2023 and 50% EBITDA margin. Hispasat business has three main areas. The first one is infrastructure, where it lease satellite capacity to third parties for satellite communication. The second is providing satellite connectivity service for users in applications like mobility or enterprise networks. And third, as you may be aware, Hispasat will play a critical role in IRIS2, Europe's largest space program for secure communication. As co-leader of the consortium, Hispasat will lead the program development and leverage MEO/LEO constellation to provide connectivity services. Now let's move on to Hisdesat, a unique player in Europe focused on military satellite services with three military satellites in operation, it achieved close to EUR 50 million in revenue in 2023, delivering an impressive 60% EBITDA margin. Hisdesat primarily serves government and military clients, providing secure and critical communication and satellite-based surveillance services. We will dive into this asset in the coming slide. But as you can see, Hispasat and Hisdesat position Indra Space a downstream leader for civil and military application globally. Furthermore, together, they hold a EUR 2 billion secured backlog of 2023, ensuring a strong foundation for tourist growth. Going to Slide #16. If we're looking back to 2019, Hispasat and Hisdesat were very different from that they are becoming today. Their evolution is key to Indra Space leadership in the downstream civil and military satellite market. Starting with Hispasat, it began as video broadcasting company, relying on GEO FSS infrastructure. By 2024, it has been transitioned to high-tech GEO HTS infrastructure. And after acquiring AXESS in 2022, launched a new business line for value-add services. By 2030, Hispasat will further upgrade its GEO HTS infrastructure, shift to next-generation end-to-end services for high-growth applications and become a multi-orbit operator with IRIS2, integrating LEO and MEO capabilities. As you can see, a its big transformation that at this moment, Hispasat is in course. About Hisdesat, also, they have made a significant transformation, evolving from traditional military operations to managing some of the world's most advanced military satellites. The recent launch last week of SpainSat NG I highlight Hispasat and Hisdesat evolution, leveraging cutting-edge infrastructure. By 2024, 35% revenue will come from GEO HTS, rising to 85% by 2030. Hisdesat will continue to expand its capability and develop new programs to meet the evolving need of government and defense sector. Let's now deep dive into how this evolution translates into the revenue share. We go to Slide 17, Hispasat and Hisdesat revenue evolution reflects a shift forward new generation of high-value satellite services. Let me outline the key points. First, infrastructure remain highly relevant with advanced GEO HTS capability expanding. While it is true, will become a key pillar of our downstream business, contributing nearly 20% of revenue by 2030, integrating LEO and MEO capability for multi-orbit operations. Second, video which accounted for 50% of revenue in 2019 has already dropped to 20% by 2024 and will become negligible by 2030. Third, services currently represent close to 20% of revenue and will surely reduce its share by 2030, but will largely grow evolving into cutting-edge solution integrating AI and digital technology for enterprise broadband backhaul and mobility application. And four, government and military revenue will increase from 20% in 2024 to 20% by 2030, supported by SpainSat NG I and II program that will be launched in the following months, reinforcing Indra Space's strong military focus. As you can understand, this transition is well underway, with most on the groundwork already led. No large additional investment should be required to finalize this vision as we will outline on the next slide. Slide #18, you can understand that Hispasat and Hisdesat are fully committed to advance their infrastructure and their satellite capability. Their 2025-2030 CapEx plan reflects this vision with the pipeline of new deployment. In GEO, there is continued investment on HTS satellite, with Amazonas Nexus already in orbit and two additional launches planned for 2028 and 2029. On the military side, SpainSat NG I recently launched, and SpainSat NG II is set to launch later this year as I told you before, placing Hisdesat and Spain on the forefront of military secure communication. And that is very important inside also of NATO strategy. In MEO and LEO, the IRIS2 program will drive next-generation satellite operations, deploying 290 satellites between 2026 and 2030. Meanwhile, Hisdesat, Earth observation will remain a key priority, with PAZ 1 in orbit since 2018 set to be replaced by PAZ 2. This CapEx plan focused on high-value assets, with the groundwork already in place, a CapEx investment from Indra Space for which we have full visibility and does ensure an aggregated positive free cash flow in the 2025 and 2026 period and until 2030. In Slide 19, now let us take a closer look at IRIS2, a critical European program designed to extend Europe's strategic autonomy in Spain by providing secure communication. IRIS2 is a key program in Europe, representing one of the four flagship European space programs. Alongside Galileo and EGNOS for navigation, Copernicus for air observation and SSA for space surveillance. Hispasat, we'll call it, along side Eutelsat, an SES, the SpaceRISE Consortium. Within the Consortium, Hispasat will assume two key roles. First, Hispasat will have the prime role for two critical components of the program, the ground segment, and the low-earth orbit constellation. Both programs strongly align and can be complemented by Indra Space [indiscernible] expertise. And second, Hispasat will leverage the LEO/MEO constellation to provide secure communication across its core geographies globally. From an investment standpoint, IRIS2 is a program which is EUR 10,000 million, with 60% funded by the European Commission. Within this framework, Hispasat plans to allocate EUR 400 million in CapEx between 2025 and 2030. Moving to Slide #20, now we focus Hispasat -- sorry, Hisdesat. Hisdesat is a unique military player. It secure satellite communication and surveillance to three key ratios. First, Hisdesat is the only European public-private military operator, setting it apart in a sector, where all other players are government owned. This position make Indra Space offering unique by providing military satellite communication and observation services. Second, Hisdesat owns the most advanced military satellite fleet in the world, featuring the SpainSat NG I and NG II, GEO HTS satellites and the PAZ 1 LEO radar observation satellite. Third, Hisdesat's coverage is global. As shown on the map, Hisdesat support allied nation and NATO with intelligence and mission-critical operation, reinforcing strategic autonomy and security. Slide #21. I want to explain now the asset in detail. Let's now look at the significant value creation potential Hispasat and Hisdesat bring in the Indra Space and Indra Group. This integration unlocks major synergies through operational efficiencies and new revenue opportunities. On the operational side, leveraging Indra Space end-to-end capability, enable the internalization of upstream services within Indra and Deimos, for example. Before, the ground segment was hired by third parties, such as control of mission software or antennas. Now for some areas, Hispasat will prioritize Indra Space. Additionally, structural efficiencies can be achieved by streamlining operation between Hispasat, Hisdesat and Indra Space. On the revenue side, Indra Space will unlock new end-to-end opportunities and expand Hispasat and Hisdesat commercial reach. This includes capturing initiative as Spain leading space player or contributing to the IRIS2 low LEO and ground segment program. Additionally, the integration enable cross-selling potential within Indra Group's portfolio and geographic expansion by leveraging Indra Group home market. This synergy are substantial and are projected to generate at least EUR 20 million, EUR 30 million EBITDA by 2026 and grow to EUR 50 million to EUR 70 million by 2030, making a major step forward in Indra Space strategy. We now transition to the final section at the document, the transition term and financial. I would like to pass my word to Miguel Forteza, CFO of Indra Group, who will outline the financial rationale behind the acquisition and how it aligned with Indra strategic goal and shareholder value. Miguel, the floor is yours.

Thank you, Jose Vicente. I will start providing the detail on the key terms of the Hispasat and Hisdesat acquisition. In terms of scope, Indra will acquire a majority and consolidating stake in both Hispasat and Hisdesat on an agreed transaction equity value of EUR 725 million. The implied transaction multiple of 6.9x EV/EBITDA 2024 or 5.2x EV/EBITDA '24, including EUR 250 million net present value of synergies, and 3.9x EV/EBITDA 2026 including EBITDA growth and synergies. The transaction considers the consolidation of Hispasat's net debt of EUR 157 million, that will be fully compensated by Hisdesat net cash position, thus, not bringing net debt to Indra Group, apart from the acquisition loan that will be used for the transaction. Additionally, this is a value-accretive transaction for Indra Group by earnings per share in 2026. The acquisition is financed, and Indra has secured financing for a total of EUR 700 million, with the remaining amount to be covered from existing cash balance. I'm also proud to announce that we stick with the Leading the Future guidance commitment to all financial targets, including the less than 1x net debt/EBITDA 2026 and not surpassing 2x net debt/EBITDA, achieving our debt/EBITDA target without the need for divestments. Finally, we expect the closing date is in Q4 2025, subject to the perceptive regulatory and antitrust conditions and to a specific condition precedent of Hisdesat consolidation by Indra. Let's take now a closer look at the implied transaction multiples. The EV/EBITDA multiple starts at 6.9x in 2024, considering three key factors. First, it excludes synergies. Second, it includes the attributable IRIS2 enterprise value, but the 2024 EBITDA does not yet reflect its impact. And third, it does not incorporate the significant EBITDA growth expected in the coming years. If we factor in the projected synergies, the multiple improves to 5.2x in 2024. Finally, when accounting for Hispasat and Hisdesat strong EBITDA growth expected to exceed a 16% CAGR from 2024 to 2026. And factoring in synergies, the multiple further declines to 3.9x by 2026. This demonstrates the competitive valuation of the transaction and its transformative long-term potential, driven by the growth of Hispasat and Hisdesat and the increasing impact of synergies. Now I will hand over to Jose Vicente, who will provide more details on the 2026 projected financials for the acquired assets.

Thank you, Miguel. Well, I want to reaffirm our full commitment from the Chairman and myself to achieving Indra Leading the Future guidance for 2026. In fact, Hispasat and Hisdesat will play a key role in reaching this ambition. By 2026, Hispasat and Hisdesat are expected to make a significant contribution to our financial goal generating EUR 400 million in revenue, translating into EUR 190 million in EBITDA with a 40% plus margin and EUR 50 million in EBIT, with a more than 12% margin. Additionally, free cash flow will be positive in both 2025 and 2026. This growth aligns with Indra Group 2026 guidance with a reminded target plus the EUR 6 billion in revenue, plus EUR 750 million in EBITDA with plus 12% margin, EUR 600 million in EBIT with 10% margin, EUR 900 million in cumulative free cash flow from 2024 to 2026. And minus 1 per net debt/EBITDA 2026 and not surprising 2 per net debt/EBITDA, which we can achieve with this investment. Finally, Indra Space 2025 projected financial will be shared in the result presentation at the end of February. In conclusion, and before to give the floor to the Chairman, we are bringing today a transformational leap for Indra Group. First, the space domain fit. With this move, Indra solidifies its position as one of the key European factor, fully integrating across the value chain. The dual civil-military focus ensure leadership in secure communication, observation and navigation. Second, Hispasat and Hisdesat potential for value creation. The synergies unlocked across Indra Space NewCo and Indra's portfolio will drive significant opportunities to grow on value creation. Finally, Hispasat and Hisdesat acquisition is EPS accretive by 2026 and contribute meaningfully to achieving all targets set in our Leading the Future guidance. Hispasat, Hisdesat, they are no usual acquisition. It's a bold step forward, propelling Indra Group to the forefront of the European space sector. With this plan, Indra secures its long-term position in Spain, achieving its strategic objective without the need for further major acquisition. This March 2024, we present Leading the Future. 9 months later, we have implemented different decision. We have taken a majority of tests. We have created the JV with EDGE peers. And today, we have explained you our Indra Space division. Leading the Future is not only a plan. In the future also we will be an implementing plan that you can see. And now I give the floor to our Chairman, Angel Escribano.

Okay. Thank you for your attention. We now welcome any questions you may have.

[Operator Instructions] And our first question comes from the line of Michael Briest from UBS.

Congratulations on the deal. I didn't see a press release for the Hisdesat acquisition. And if you're saying it's 6.9x EV/EBITDA, that implies an EV of just over EUR 1 billion. Can you say who you're buying Hisdesat from and also explain the net debt situation? Are you going to be consolidating EUR 157 million? Or is the cash on Hisdesat -- it's still not clear to me. And just on CapEx, can you explain the EUR 400 million over the next 5 years and the fact that the government will pay 60% of that? Does that mean it's going to be paid back or that you'll pay 40% of EUR 400 million?

Thank you, Michael. Let me just give you some color first on the multiple of 6.9x 2024. Well, we've been using a DCF valuation methodology here, based on the business plan considered, the consolidation of Hisdesat and following the sum of the parts method, considering Hispasat, IRIS2 and Hisdesat, resulting into a blended multiple of 6.9x EV/EBITDA '24. But it's quite important to highlight some points here. So no synergies are considered within this valuation methodology. Second, the valuation incorporates the value attributed to IRIS2, but it does not include IRIS2 EBITDA, as it's not expected to generate any in 2024. IRIS² is projected to start generating EBITDA from 2026 onwards. And third, also this 2024 multiple does not reflect the significant EBITDA growth expected in the coming years. To give you a sense on this expected growth, we foresee aggregated EBITDA to grow from EUR 155 million back in 2023 to more than EUR 190 million in 2026. And then, just to make it clear on the debt. The consolidation of Hispasat net debt, we are going to consolidate EUR 157 million as debt by Hispasat, but this will be fully compensated by the net cash position in Hisdesat. So again, we are not bringing net debt to Indra Group, apart from the EUR 700 million considered to finance this transaction.

Okay. Thank you. I think, this is a very important point, because the debt will be compensated by the cash from Hisdesat, okay? That is no additional debt. That for us is very important. About the CapEx, it is true. It is true, it's EUR 10,000 million program. That 60% is supported by European Commission that Hispasat has plantified to invest CapEx for EUR 400 million from 2025 to 2030, and that is integrated in our analyze. Thank you, Michael.

Just to -- how much you're paying for Hisdesat and who you're buying it from? It's EUR 50 million of revenues and EUR 30 million of EBITDA in 2023. But who are you buying it from? And what are you paying for it? We've only seen the press release on Hisdesat.

Yes, Michael. Just to -- just bear in mind that Hisdesat holds 43% of Hisdesat. And now we have -- we already have a 7% position also in Hisdesat, so will give us at least 50% of the voting rights in Hisdesat. And it's a condition precedent also to consolidate this Hisdesat position within Indra.

This is very important, because Hisdesat is a suspensive condition in this acquisition, to buy Hispasat, that we need to consolidate Hisdesat. And that we'll give more detail when we'll present the result at the end of the month.

Our next question comes from the line of Nicolas David from ODDO.

Yes. I would like to discuss a little bit about governance here as an important topic given that the SEPI is involved on both sides of the transaction. Can you -- as Jose have mentioned that the SEPI members didn't part of the vote at the Board meeting last week. And also, could you be certain that there was at least 50% Independent Directors at this Board meeting vote? And also, is the SEPI planning not to take part of the vote during the AGM? And could you confirm that you needed a 50% of approval from shareholders vote and not 66%? And also regarding governance, do you plan to publish a fairness opinion on the valuation of Hispasat carried out by the independent expert before the General Meeting to make sure that SEPI is going to [indiscernible] on both sides, the main shareholders can be comfortable with the valuation, which has been confirmed with Hispasat? And the last point is more on the financial side. Could you give us the amount of lease liabilities on Hispasat and Hisdesat balance sheet? And also the level of EBITDA after lease, both for either Hispasat, Hisdesat or both?

Thank you. Well, I have participated very closely in this discussion from the beginning. And for us, SEPI is one shareholder more. Okay? That we have respect all the rules around -- about this project at the same level as other shareholders, that no additionally information that I have been very comfortable in the Board about this process. And SEPI has been out of the discussion in Indra, okay? I don't know in area, but I can confirm that in Indra discussion, SEPI has not been participated in the Board. And of course, in the transaction, okay, SEPI can participate on both in the shareholder meeting, okay? But frankly, I don't feel any surprise about this. Okay? That's for us, I understand the sensibility of this operation, but we have to respect all the governance rules that even certified company that we are. About the fairness opinion. Also, we have worked with different banks. About financial, about liability, all detailed finance, we'll explain when we'll explain the results at the end of the February 27 -- February 28.

All right. But do you have an estimation of the EBITDA after lease maybe? When you mentioned EUR 190 million, what would be the equivalent EBITDA after lease?

So we prefer, because we'll explain all the details at the end of the month where we present the results, okay? Because that you can understand, we need to understand in detail all the elements that we prefer to give the right answer at the end of the month.

Our next question comes from the line of Carlos Iranzo from Bank of America.

I actually have two, if I may, following on Michael's questions earlier. I just want to come back to the new Hisdesat shareholder structure. Just to be clear, is any of the current shareholders selling? Or are you actually just going to consolidate Hisdesat owning 50%? That's the first one.

Okay. Thank you for the question. We are working on this. I explained before, is a suspensive point in the contract about the consolidation of Hisdesat. Please wait some days, and you will see -- as we'll see the new Hisdesat structure, but today, I cannot give more detail. But for us, it's a right point, the consolidation of Hisdesat in this operation.

Okay. Okay. Understood. And then, on the CapEx of Hispasat, can you please share a view on the replacement CapEx of Hispasat and what will be the CapEx line through 2030? Just basically the EUR 400 million of CapEx, is this just CapEx associated to the IRIS2 project and then we're going to have additional CapEx on top of that?

Thank you, Carlos. First, let me start by explaining that this CapEx plan is focused on high-value assets. So builds on the groundwork already in place. A CapEx investment from Indra Space for which we have full visibility that we already stated and that ensures -- and this is very important and aggregated positive free cash flow in the 2026 period. But even more importantly, from '26 to 2030 accumulating aggregated positive free cash flow. On top of that, the existing fleet will need to be replaced as current satellites reach the end of the useful life. And Hispasat and Hisdesat are fully committed to advance in their infrastructure and satellite capabilities. So in GEO, there's continued investments in HTS satellites, Amazonas Nexus already in orbit, and planning two additional launches in '28 and '29. On the military side, SpainSat NG I recently launched, and SpainSat NG II is set to be launched later this year. In MEO and LEO, IRIS² program will drive next-generation satellite operations, deploying 290 satellites between '26 and 2030. And this, as you said, will require CapEx investment of EUR 400 million to be deployed over 5 years.

You can see, this company is very well managed from financial point of view, that have been one of the most positive points that I don't have doubt. We have integrated all the CapEx. Maybe because I came from car industry, cash flow for us is very important. And we have made this analysis, and we can tell this commitment that in spite of this EUR 400 million CapEx, our free cash flow will be positive, that we have taken commitment.

Our next question comes from the line of Carlos Treviño from Banco Santander.

Three, if I may. First one, could you elaborate on the synergies and EUR 20 million, EUR 30 million you are expecting by 2026? Which part of those will be coming from revenues, which part from costs? And also if these synergies should mean any kind of restructuring costs moving forward? My second question will be, while you are targeting EUR 400 million in revenues by '26 from Hispasat, Hisdesat, considering your organic contribution from the Space business and the Deimos acquisitions, total revenues will be at around EUR 500 million, so perhaps a bit below this level. But you are still targeting EUR 1 billion in revenue by 2030. My question is, do you expect to reach this organically? Or should we expect any further acquisitions in the space arena? And my third question is, what [indiscernible] lateral to Hispasat that is regarding Minsait, is this an acquisition, I assume not, but I would like to have your confirmation, anything on the [indiscernible] of Minsait. The disposal of the cycle payments continues to be open. And this -- do you expect any news in the short term there, and also about the possibility to find a partner for the remaining of Minsait?

For the question because many questions in the same question. About synergy, for example, if you take a LEO satellite, I explained you, around 50%, 60% in the satellite can be standardized, okay, because in the satellite, you can have a satellite and also the payload, the radar. And as you know, we are very relevant worldwide. You have the cameras, and you have the antenna or also we developed business on this. We think between civil and military, we can standardize in manufacturing satellites between 50%, 60% of satellites. Okay? Of course, the payload will be different. It depends on civil/military, but frankly, some elements can be a standard. And for us, it's very important. I give you one example. For example, in a Statical, we can manufacture around 250 satellite, and IRIS2 is 290. You can see the potential synergies that we can develop. So about the revenues, I think, the main asset of the NewCo are done. But we don't stop, because we'll look all the potential market opportunities to be integrated in the Indra Space, okay? But today, with the four companies, we can have more than EUR 1 billion revenue in 2030, okay? Because we have a study a stand-alone and together. And today, I can confirm you with the four companies, we can have the revenue more than EUR 1 billion in 2030 in a very conservative way, okay? About Minsait, but we are looking for a partner in Minsait, okay? And we are going to find a partner and to discuss the right moment and the right price, okay? Because for us, Minsait is a good asset, okay? You will see the result, we continue to improve the efficiency, because we understand when we analyze with best market with other competitors, we have potential. We are increasing the digital solution for our customer, and we'll explain in detail and with Minsait, all the detail that the performance in 2024 from Minsait will be better than 2023, and 2025 will be better than 2024, okay? That's number one. Number two, we are continuing to look a partner. But we are going to discuss a partner at the right price, okay? Because we have a clear strategy, we have clear assets. I think, the most important is 9 months ago, we explained the plan. 9 months later, we are discussing about acquisition and a clear step forward until the consolidation or Leading the Future.

Just as a quick follow-up. Are you considering the kind of restructuring costs for the synergies?

At the moment, we don't see this a deposit. I think we have, in some case, difficulty to integrate more people, okay? That's -- we are growing at double digit. I think, that will be continued. That today is not expected for us the restructuring.

Our next question comes from the line of Juan Cánovas from Alantra Equities.

I've got a couple of questions. First, on the European funding for the space programs. Can you explain the CapEx mechanics, i.e., are there any cash advancements before you undertake work? Is that a negative working capital business? And second, on the backlog, you mentioned EUR 2 billion backlog. Can you tell us about the distribution of this backlog over time?

About European space, it's the same mechanism that the defense programs at the moment, okay? About the backlog, Miguel, could you explain?

Just to give you sense of big numbers, backlog could be a split of around EUR 750 million in Hispasat and around EUR 1.2 billion in Hisdesat. That's main big numbers.

Sorry, a follow-up. Can you give us your share in the IRIS2 program? What's your shareholding in that program?

No, I think, IRIS2 is just defined. I think, maybe in the following weeks, we can give you more detail, because we need to discuss and deeply with the other shareholders to understand well how we share activity of IRIS2 project. Today, it's a little early that I prefer no give some assumption. I prefer to discuss when we'll study with the other partners and the European authorities.

Okay. But you're a member of a consortium which has won IRIS2. So you already have a shareholding in that consortium, right?

Yes. Yes. We are part of the consortium. But I don't know the details that I prefer to discuss with the other partners before to explain. That's maybe at the end of the month, we can give more details.

Our next question comes from the line of Laurent Daure from Kepler.

Yes. Yes, three questions on my hand. The first one is on the growth rate. You're alluding to 9% growth until 2026. So first thing is, is this growth coming from one or two programs that are ramping up? Or is this just more all around the group? And also post 2026, shall we expect some programs to ramp up and your goals to accelerate from there? So that's the first one. Second one is, just on the financing. Could you share with us cost of debt for financing conditions? And my third question is, I'd like to come back on Nicolas David's point. I'm a bit lost. You were alluding to EUR 80 million of CapEx a year. And then, we have a EUR 140 million difference between the EBITDA and the EBIT. So if you could share -- if you could help us understanding the difference EBITDA to EBIT and the CapEx you are alluding to.

About the programs, let us -- so with maybe at the end of the month, we can explain more in detail the different program in detail in the following years. About the numbers, Miguel, please.

Yes. Regarding the -- how we're going to finance the main terms, the conditions on the financing. As you know, we have secured the financing of the transaction with bank debt at a very, very competitive rate, which is below our current 4% -- 3% for our gross debt as per our last results, 9 months 2024, with an average maturity of 3.5 years. Well, regarding EBITDA, as we were -- we have also -- we have already conveyed. We expect EBITDA of 2026 of EUR 190 million and EBIT of EUR 50 million. This is basically driven by Hisdesat, which will grow very fast, but also with IRIS², okay, that will be also grow very rapidly and will contribute to the EBITDA significantly from 2026 onwards.

Yes. Sorry, I was more interested in the gap between the EBITDA and the EBIT between the depreciation, the lease, I don't know anything else. The EUR 140 million difference, how to go to from EUR 190 million expectation to EUR 50 million in EBIT? That will be useful for us, I think.

As you know, this is a CapEx-intensive business in satellites, which suffers depreciation and amortization, which is, as you can imagine, significant.

Our next question comes from the line of [indiscernible] from Goldman Sachs.

Just I think -- just seeking a little bit more clarity on the transaction structure. So it said that EUR 725 million is to be paid for the majority stake. So, so far, what we understand is that EUR 725 million is for that roughly 90% stake in Hisdesat. And along with that, whatever ownership of Hisdesat will be there, that will come over to like Indra. Is that understanding correct? And overall, like 2026 -- this is the second question, 2026, you've given the rough indication of the free cash flow being positive in '20 to '25 and '26. Like over and above the CapEx, especially like when it comes to conversion from, like, EBITDA to the operating cash flow, is there anything to be kept in mind in terms of the working capital movement here?

Sorry, sound is not good, but if I understand well, the transaction is Hispasat plus the control of Hisdesat. That is suspensive condition. That is the EUR 725 million, okay? That's both. It's the 89% of Hispasat plus including the part of Hisdesat in Hispasat and to take the control of Hisdesat and thus will be explained in the following days or week before the end of the month. About the free cash flow, we have explained. We have entered the CapEx, and we have the commitment of free cash flow positive, and we'll give more detail at the end of the month where we'll explain the results. Okay. Thank you very much. As you know, we continue to work in Leading the Future. 9 months ago was a plan. Today, you can see the key acquisitions are contributing to develop Indra. And today, we have discussed about Indra Space. I think, end of the month, you will see the result of 2024 and also where we are after 1 year of the plan.

Okay. Thank you for your question, and thank you for your time. Thank you.