Eutelsat Forced to Revise Financial Strategy After Asset Sale Collapses

Eutelsat FR0010221234

The European satellite operator Eutelsat is adjusting its financial roadmap following the unexpected failure of a major asset sale. A planned transaction with the private equity firm EQT Infrastructure VI has been terminated, meaning the divestment of its passive ground infrastructure will not proceed. In response, the company has issued revised forecasts and confirmed a multi-billion euro investment to overhaul its satellite network.

• The collapse of the EQT deal results in €550 million of forgone proceeds.
• The net debt-to-EBITDA target for FY 2025-26 is raised to approximately 2.7x, up from the previous goal of 2.5x.
• Management now projects an improved EBITDA margin of around 65% for FY 2028-29, compared to an earlier target of 60%.
• A major contract for 440 new Low Earth Orbit (LEO) satellites has been awarded to Airbus.
• Half-year financial results are scheduled for release on February 13.

Strategic Pivot Following Deal Termination

Eutelsat confirmed that certain conditions required to complete the sale to EQT were not satisfied. Consequently, the company's financial leverage will be higher than initially planned. By the close of the 2025-26 fiscal year, Eutelsat now anticipates its net debt-to-EBITDA ratio will stand at about 2.7x, representing an increase of 0.2 points from its original target.

While the lost capital would have provided greater financial flexibility, the breakdown of the deal carries a notable operational upside. A related long-term service agreement with EQT, which was part of the original plan, is no longer required. This change is expected to generate annual cost savings of between €75 million and €80 million. These savings directly contribute to a significantly improved profitability outlook, with the EBITDA margin forecast for 2028-29 revised upward by five percentage points to 65%.

Committing €2.2 Billion to Next-Generation Satellites

Alongside its financial revisions, Eutelsat is aggressively modernizing its OneWeb satellite constellation. The company recently finalized a substantial order with Airbus Defence and Space for 340 LEO satellites. This follows an initial order for 100 units placed in December 2024, bringing the total new satellite commitment to 440 spacecraft.

Production will be handled at the Airbus facility in Toulouse, with the first deliveries expected by the end of 2026. This new generation of satellites, equipped with enhanced digital channelizers and greater onboard processing power, is designed to replace Eutelsat's first-generation OneWeb fleet, which is scheduled to reach end-of-life between 2027 and 2028. The company has allocated roughly €2.2 billion for this comprehensive order and asserts that the financing is secure despite the failed asset sale.

Focus Shifts to Upcoming Half-Year Report

Market attention now turns to Eutelsat's forthcoming earnings report on February 13, which will cover the first half of FY 2025-26. Early indicators from the first quarter revealed a shifting business mix: the LEO segment posted impressive year-on-year revenue growth of approximately 70%, while the traditional GEO satellite and video broadcast businesses experienced declines. The half-year figures will provide clearer evidence on whether this trend is accelerating and how effectively the company is managing the transition from its legacy operations to high-growth LEO services.

@ boerse-global.de | FR0010221234 EUTELSAT