Eutelsat Sets a New Course as LEO Momentum and Leaner Leverage Take Center Stage

Eutelsat Communications’ shares jumped more than 10% after the satellite operator posted solid first-half numbers and a noticeably strengthened balance sheet. The market focus shifted to a much-improved debt profile, but investors will be weighing whether the improved leverage can compensate for ongoing operating weaknesses.

Key figures at a glance:
- Total revenue: €592 million, down 2.4% on a reported basis and flat on an adjusted basis
- LEO segment: +60% to €111 million
- EBITDA margin: 52.1%, down 3.4 percentage points
- Net debt: €1.3 billion, halved from €2.7 billion
- Net debt/EBITDA: 2.00x, improved from 3.92x

Equity financing unlocks financial room
The successful €1.5 billion equity issue reshaped the starting point for Eutelsat. With backing from core shareholders, the company reduced net debt by about €1.4 billion within a year.

Rating agencies moved promptly in response: Moody’s lifted the rating by two notches to Ba3, while Fitch increased it by three notes to BB with a stable outlook. In addition, the firm secured nearly €1 billion in export-credit financing for new LEO satellites.

LEO growth drives top-line expansion, with margins under pressure
The Low Earth Orbit business is turning into a primary growth engine. A 60% rise in the segment has it contributing roughly 20% of total revenue. The integration of the OneWeb constellation positions Eutelsat as the world’s only fully integrated GEO-LEO operator.

Other segments also rose: Fixed Connectivity up 17.2% to €132 million, and Government Services up 7.7% to €99 million, aided by LEO-based solutions in part for Ukraine.

The caveat: EBITDA margins fell to 52.1% as the company buffers the impact of the loss of sanctions-related video revenues and shifting product mix in the still-developing LEO business.

Strategy update tempered by a setback
Eutelsat ordered 440 new LEO satellites from Airbus to ensure continuity for the OneWeb constellation and to replace aging units. Concurrently, the group trimmed its investment outlook for the year from €1.0-1.1 billion to about €900 million.

A setback: the planned sale of passive ground infrastructure to EQT Infrastructure failed at the end of January, resulting in no expected proceeds of roughly €550 million. Management stresses that the failed divestment does not jeopardize financing for the strategic plan.

Mid-term ambitions and long-range targets
For the current fiscal year 2025-26, Eutelsat reaffirmed guidance: revenues at the prior-year level, LEO growth of about 50%, and an EBITDA margin slightly below the previous year.

Looking further ahead, the company aims to lift annual revenues to between €1.5 billion and €1.7 billion by fiscal year 2028-29, with EBITDA margin at least 65%. Achieving this would require a substantial uplift in profitability, driven by the scaled LEO business and higher margins in the mature GEO segment.

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