Eutelsat’s Strategic Pivot Gains Momentum as Low Earth Orbit Revenue Surges

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The latest half-year figures from satellite operator Eutelsat underscore a decisive strategic shift. The company's financial performance for the first half of fiscal 2025/26 reveals a rapidly expanding Low Earth Orbit (LEO) business, powered by its OneWeb assets, which is increasingly counterbalancing persistent softness in its traditional video segment.

For the six-month period, Eutelsat reported total revenue of 592 million euros. On a reported basis, this represents a decline of 2.4%, but revenue remained stable when adjusted for currency effects. The company's four operational segments collectively generated 574 million euros, a slight comparable decrease of 0.6%.

Profitability metrics showed some pressure. The adjusted EBITDA came in at 308 million euros, a -6.1% change on a comparable basis. Consequently, the EBITDA margin contracted to 52.1%. Management attributed this margin compression to the current product mix within the ramp-up phase of the LEO business and the ongoing impact of sanctions.

LEO Emerges as a Growth Engine

The standout performer was unequivocally the LEO division. Revenue from this next-generation connectivity service soared to 111 million euros, marking a formidable year-on-year increase of 59.7%. This segment now contributes approximately 20% of the group's total revenue. The broader Connectivity business unit, which includes LEO, also posted strong growth, advancing 11.8% to 307.3 million euros.

In contrast, the legacy Video business continued to face headwinds. Revenue there fell by 12.3% to 266.5 million euros. Eutelsat cited the imposition of additional sanctions on Russian broadcasters and the structural decline in the broadcast market as primary reasons. On a positive note, the company highlighted capacity renewals with key clients such as the beIN Group and Polsat+.

Strengthened Balance Sheet and Confirmed Outlook

Eutelsat made significant progress in reinforcing its financial position. Net debt was reduced to 1.3 billion euros, driving a major improvement in the leverage ratio. The Net Debt/EBITDA multiple strengthened dramatically to 2.0x, down from 3.92x. This deleveraging was fueled by a capital increase exceeding 1.5 billion euros and the securing of export credit financings worth nearly 1 billion euros.

The company's order book remains robust at 3.4 billion euros. Capital expenditures for the half-year totaled 291.5 million euros. For the full fiscal year, Eutelsat anticipates investments of around 900 million euros, which is lower than initially planned.

Strategically, the group reaffirmed its commitment to expanding the OneWeb constellation, confirming an order for 440 next-generation satellites. In a concurrent cost-saving move, the planned Flexsat-Americas order was cancelled, a decision expected to yield savings of over 100 million euros.

Management reiterated its full-year guidance, expecting:
- Revenue from operational segments to be in line with the prior year.
- LEO revenue to increase by approximately 50%.
- An adjusted EBITDA margin slightly below the previous year's level.

Furthermore, CEO Jean-François Fallacher indicated the company's ambition to launch its next-generation satellites in parallel with the IRIS2 project sometime after 2030.