Eutelsat Shares Plunge as Major Investor Exits

Eutelsat FR0010221234

A dramatic move by a cornerstone shareholder has rattled investor confidence in Eutelsat. The Japanese technology investment giant SoftBank has opted for a major divestment, choosing to sell down its stake during the satellite operator's delicate capital increase process. This exit raises immediate questions about the company's strategic direction and whether French state backing will be enough to stabilize its future.

In a decisive action on Wednesday, SoftBank liquidated a significant portion of its holding. The investor offloaded 36 million subscription rights to the market, a transaction equating to approximately 26 million shares. This sale reduces SoftBank's interest by roughly half, marking a substantial retreat.

The timing of this disposal, structured as a "Tail Swallow" transaction, is particularly damaging. Eutelsat is currently navigating a complex recapitalization effort to raise fresh capital, with the process set to conclude on December 9. For a key shareholder to press the sell button during this critical phase is widely interpreted as a vote of no confidence in the company's strategic path.

The market's reaction was swift and severe on the Euronext exchange:
* Share Price Decline: The stock fell 5.71% on Wednesday.
* Key Level Breached: Prices dropped below the psychologically important €2.00 threshold, closing at €1.97.
* Continued Pressure: The equity continued to struggle the following morning, trading around €1.94 as it searched for a floor.

The State Steps In as Private Capital Flees

Does SoftBank's withdrawal signal a total loss of faith? Not necessarily. While private investors retreat, the balance of power is shifting decisively toward public ownership. The French state is poised to expand its stake to nearly 30% through the ongoing capital measures, positioning itself as the dominant and uncontested shareholder.

This de facto government guarantee is already having an effect. Ignoring the share price volatility, the ratings agency Moody's upgraded Eutelsat's credit rating yesterday from B2 to Ba3. Market analysts view the state's backing as a stabilizing factor for the company's liabilities, even as its core operations face immense challenges. The primary battle remains competing with the dominant rival Starlink (SpaceX), which with its fleet of over 6,750 satellites dictates market terms and pricing—a Herculean task for Eutelsat's significantly smaller OneWeb constellation.

A Volatile Path to December

For current and prospective investors, the coming weeks demand steady nerves. Extreme volatility is expected to persist until the subscription rights trading concludes on December 9, as the market works to absorb the surplus of securities. From a charting perspective, the outlook appears bleak, with the stock down over 30% for the year and having broken through the €2.00 support level. The central question for the market is whether the government's safety net is robust enough to counteract the selling pressure from disillusioned long-term shareholders.