Eutelsat Secures Major Capital Infusion for Strategic Shift

Eutelsat FR0010221234

The satellite operator Eutelsat has successfully concluded a pivotal financing round, raising a total of €1.5 billion. This capital increase, which was oversubscribed by 133%, provides the financial foundation for the company's ambitious low-Earth orbit (LEO) strategy and significantly reduces its debt burden. However, existing shareholders who did not participate are paying a steep price for this stabilization through substantial equity dilution.

The fresh capital is earmarked for balance sheet repair. The move is expected to lower the company's leverage ratio from 3.9x to approximately 2.5x EBITDA. Market analysts responded swiftly to the improved financial outlook. Deutsche Bank upgraded its rating on Eutelsat shares from "Sell" to "Hold," maintaining a price target of €2.30. The bank noted that previously cited financing risks have now been addressed.

Demand for the new shares substantially exceeded supply. Eutelsat placed approximately 496 million new shares at €1.35 each through a rights issue. The transaction featured prominent support from state-backed entities. France, via the APE (Agence des participations de l'État), invested €749 million, while the British government contributed €163 million. Together with major shareholders like Bharti Space and CMA CGM, roughly 71% of the offering was secured in advance.

Shareholder Dilution and Operational Moves

The downside of this capital raise is acutely felt by shareholders who did not exercise their rights. The issuance of nearly 500 million new shares drastically reduces their relative ownership stake. A holding that previously represented a 1% share of the company now equates to just 0.58%. Eutelsat's share price reflects this pressure, trading well below its 52-week high of €9.30 reached in March.

Operationally, the company is already leveraging its newfound stability to pursue new business. Its subsidiary, Eutelsat Network Solutions, has entered a strategic partnership with Intellian Technologies for military satellite terminals. This step aims to monetize investments in the OneWeb network within the government sector.

Funding a Clear Roadmap

With this capital secured, Eutelsat's investment plan through 2029 is now funded. Management has outlined expenditures of around €4 billion, which will flow primarily into expanding LEO activities and the IRIS² project. The corporate focus consequently shifts immediately from financing to the operational execution of its growth strategy.