Eutelsat Secures Major Debt Refinancing to Fuel Growth Strategy

Eutelsat issues €1.5 billion in bonds to replace high-cost debt, reducing interest costs and funding its low Earth orbit (LEO) satellite business growth.

Satellite operator Eutelsat Communications has launched a €1.5 billion bond offering, marking a pivotal step in its post-merger financial restructuring. The move is designed to replace costly legacy debt, significantly reducing the company's interest burden and freeing up capital for its expansion in low Earth orbit (LEO) connectivity.

Strategic Financial Overhaul Nears Completion

This bond placement represents the latest component of a comprehensive refinancing strategy initiated following Eutelsat's fusion with OneWeb. The company recently concluded a €670 million capital increase in December 2025 and secured a €400 million credit facility in November. Together, these three financing sources are intended to retire several existing obligations.

The new issuance consists of two euro-denominated senior note tranches, both guaranteed by Eutelsat S.A. and OneWeb Holdings Limited. A five-year note maturing in 2031 and a seven-year note due in 2033 are being offered, with initial yield guidance reported by Bloomberg at approximately 6.375% and 6.875%, respectively.

Targeting High-Cost Debt for Extinguishment

Proceeds from this operation are earmarked to fully repay two specific bonds. The first is a €600 million note carrying a 2.25% coupon and maturing in 2027. The second, and more significant for interest savings, is a €600 million high-yield bond with a 9.75% coupon due in 2029. This latter instrument alone costs the company nearly €60 million in annual interest payments. Eutelsat also plans to settle an outstanding loan from a credit agreement dated June 2021.

The refinancing efforts are already reflecting positively on the balance sheet. As of December 31, 2025, net debt stood at €1.3 billion, a substantial reduction from €2.7 billion a year earlier. The leverage ratio (Net Debt/EBITDA) improved dramatically to 2.00x from 3.92x. Credit rating agencies Moody's and Fitch have responded to this strengthened financial position with upward revisions.

LEO Business Segment Demonstrates Strong Momentum

Eutelsat's recent half-year results, published on February 13, revealed total revenues of €591.6 million, which remained nearly stable on an adjusted basis. The standout performer was the LEO segment, powered by the OneWeb network, where revenues surged 59.7% to €110.5 million. This segment now accounts for roughly 20% of the group's total revenue.

Growth was consistent across the connectivity divisions: Fixed Connectivity revenues increased by 17.2%, Government Services by 7.7%, and Mobile Connectivity by 8.5%. These gains were partially offset by a 12.3% decline in Video revenues, primarily attributed to sanctions affecting Russian broadcasters.

Supporting its LEO ambitions, Eutelsat placed an order with Airbus Defence and Space in January for an additional 340 LEO satellites. Combined with a prior order for 100 units, the total commitment now stands at 440 satellites, with deliveries scheduled to commence from late 2026.

Forward-Looking Financial Targets

For the first half of the fiscal year, the Adjusted EBITDA margin was 52.1%, representing a decrease of 3.4 percentage points. Management has set a target to elevate this margin to approximately 65% by the 2028-29 financial year. The company aims to stabilize its leverage ratio at around 2.7x by the close of the current fiscal year.

The final size of the €1.5 billion bond issue remains subject to prevailing market conditions in the coming days, with the transaction's completion contingent on this factor. A successful placement would largely conclude Eutelsat's refinancing program, leaving the company with a lower cost of debt and enhanced flexibility to fund its strategic LEO network expansion.