Eutelsat Shares Under Pressure Following Equity Offering

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The French satellite operator Eutelsat finds itself navigating turbulent market conditions. Two significant, yet opposing, developments are shaping investor sentiment: the completion of a major capital increase and the announcement of a key contract renewal.

Key Developments at a Glance:

• The subscription period for a new share offering concluded recently.
• The capital raise totals approximately €1.5 billion.
• Major investor SoftBank has significantly reduced its stake.
• A five-year contract extension has been secured with beIN Media Group.

Amid the financial market noise, Eutelsat has delivered positive operational news. The company has extended its long-standing partnership with the beIN Media Group for another five years. This agreement secures continued capacity on the EUTELSAT 7 West A and EUTELSAT 8 West B satellites for broadcasting across the MENA region.

This orbital position at 7/8° West is a critical video hub, reaching over 66 million television homes in the Middle East and North Africa. The deal underscores the resilience of Eutelsat's traditional geostationary (GEO) satellite business. While the company aggressively invests in new low-Earth orbit (LEO) ventures, its established TV segment continues to generate stable cash flow.

Equity Dilution Weighs on Market Sentiment

The dominant force in recent trading, however, has been the market's reaction to the concluded capital increase. The €1.5 billion equity offering is designed to fund Eutelsat's ambitions in the LEO sector, primarily through its OneWeb constellation, and to reduce existing debt. With the subscription window now closed, investors are fully accounting for the dilutive effect on existing shareholders.

Sentiment faced additional pressure this week following news that SoftBank, a cornerstone investor, has substantially decreased its holding. This move by a major backer has exacerbated the negative market mood and contributed to technical selling pressure.

Although the capital raise was a communicated part of the company's financing strategy, markets typically react with nervousness to the technical execution and the influx of new shares.

Balancing Legacy and Future Growth

Eutelsat's current challenge is a costly balancing act. On one side, significant investment is required for the expansion of the OneWeb constellation and participation in the European IRIS² project. On the other, its core video business faces long-term structural decline, even though contracts like the one with beIN help to slow the pace.

To compete effectively with rivals like SpaceX's Starlink, Eutelsat must invest heavily to capture market share in the B2B and government sectors. The proceeds from the recent capital increase are essential for this strategic push, despite their short-term depressive effect on the share price.

Heightened volatility is expected in the near term as the market absorbs the new shares. The critical focus for investors will be on how efficiently the company deploys this fresh capital to scale its OneWeb operations. The final uptake rate for the share offering is anticipated to be disclosed shortly.