Rheinmetall’s Satellite Play Masks Deepening Doubts on the Ground

Rheinmetall launches space-based military comms joint venture with OHB, while the Franco-German MGCS tank project faces budget cuts and delays. A €1B Bundeswehr order offers short-term relief.

Shares of the Düsseldorf-based defense heavyweight closed at €1,196.60 on Friday, a level that still leaves them nursing a 25% loss since the start of the year and roughly 40% below the 52-week high of €1,995.00 struck last September. Into that skeptical market backdrop, Rheinmetall has quietly seeded a new ambition: space-based military communications. But the same week that joint venture landed in the commercial register, the company’s most high-profile ground project – the Franco-German Main Ground Combat System (MGCS) – began to show worrying cracks.

A New Orbit for the Defense Giant

On June 11, 2026, the “OHB Rheinmetall Space Networks GmbH” was formally entered into the commercial register in Bremen. The joint venture with space specialist OHB had already received clearance from Germany’s Federal Cartel Office back in April. The venture’s sole target is the Bundeswehr’s SATCOMBw Stufe 4 program, the next-generation secure satellite communication system. OHB Rheinmetall Space Networks aims to cover the entire value chain – from development and integration through to operations, IT security and a dedicated Cyber Operation Center. The system would connect soldiers, vehicles, platforms and drones, transmitting voice and real-time data securely. No contract has been awarded yet; industry sources expect a decision around the turn of 2026/2027, after the ongoing tender phase concludes.

The Tank Alliance That Might Not Hold

Against this new frontier, the MGCS project is sending increasingly discordant signals. CEO Armin Papperger has openly questioned France’s commitment, warning that Paris plans to slash its budget to less than half the originally envisioned figure. After nearly a decade, only around €25 million have been spent on the program. Such cuts would trigger severe delays. The situation echoes the earlier collapse of the Franco-German Future Combat Air System (FCAS) – and underscores the growing friction inside European defense cooperation. For Rheinmetall, losing MGCS would mean the disappearance of a central future program that had long anchored its ground combat narrative.

A Billion-Euro Counterweight

The uncertainty over MGCS arrives at a sensitive moment. Investors are demanding tangible deliveries rather than promises – deeds, not words. On Friday, the domestic market provided a partial answer: the Bundeswehr placed a new order worth approximately €1 billion, earmarked for the short-term modernization of military equipment. While that sum adds heft to the order book, it does little to resolve the structural doubts hanging over the company’s longer-term pipeline.

Rheinmetall is sticking with an ambitious revenue target of up to €14.5 billion for 2026. But after a weak first quarter that delivered just €1.9 billion in sales, the operational pace needs to pick up sharply. The company also needs to protect its targeted profit margin of 19%. New momentum could come from the Eurosatory defense expo starting Monday in Paris, where Rheinmetall plans to showcase its new rocket launcher.

For now, the stock remains well below its 200-day moving average of €1,603.84, and a sustainable turnaround has yet to materialize. The SATCOMBw venture offers a fresh strategic lever – but the verdict on whether it will actually generate revenue will not come until early 2027.