French Government Intervention Halts Eutelsat Asset Sale

Eutelsat FR0010221234

A major transaction for satellite operator Eutelsat has been blocked by the French state, forcing the company to revise its financial forecasts. The government's veto, issued on national security grounds, prevents the sale of certain ground infrastructure assets to financial investor EQT Infrastructure VI. This decision denies Eutelsat anticipated net proceeds of approximately 550 million euros.

Authorities in Paris intervened to stop the deal, emphasizing the need to retain full control over infrastructure deemed critical for both civilian and military communications. The French Ministry of Finance highlighted the strategic importance of the ground stations, a move analysts see as an effort to safeguard European competitiveness and autonomy in space-based communications against rivals like Starlink.

With the government's action preventing the fulfillment of the deal's suspensive conditions, the transaction has been terminated permanently.

Revised Debt Outlook and Financial Planning

The collapse of the sale creates an immediate financial impact, leaving a significant gap in the company's plans. While Eutelsat has stated that the financing for its strategic growth initiatives—including the substantial expansion of the OneWeb satellite constellation—remains secure, it has been compelled to adjust its balance sheet targets.

The company now anticipates its net debt to EBITDA ratio will reach about 2.7 by the close of the current fiscal year. This represents an increase from the previous management forecast of 2.5, indicating that the lost revenue will directly lead to a higher relative debt burden.

Long-Term Profitability Forecast Strengthened

Despite this short-term setback for debt reduction, the firm has issued an upgraded long-term profitability outlook. In a contrasting positive signal, Eutelsat has raised its EBITDA margin forecast for the 2028-29 financial year.

Instead of the previously guided figure of around 60%, the group now expects a margin in the region of 65%. This suggests that the retained infrastructure portfolio may be managed for greater long-term profitability than initially projected.

The situation presents investors with a dual narrative: a heightened leverage ratio pressures the balance sheet structure in the near term, while the elevated margin targets underscore management's confidence in the long-term trajectory. The core question for the market is whether the strategic value of maintaining control over this "systemically relevant infrastructure" outweighs the risks associated with increased debt in the capital-intensive race for space dominance.