LEO Momentum Fuels Eutelsat, While Ground-Segment Deal Falls Short and Leverage Improves

Eutelsat reports a mixed first half of the 2025/26 fiscal year: the company?s LEO business shows robust growth, even as its traditional video segment continues to shrink. At the same time, the satellite operator has reorganized its financing and delivered meaningful improvements to its balance sheet. Yet questions remain about the stability of the stock if the planned sale of ground infrastructure fails to materialize.

Key figures at a glance:
- LEO revenues rise to 110.5 million euros, up about 60%
- Video revenues drop to 266.5 million euros, down 12.3%
- Adjusted EBITDA margin falls to 52.1% (last year: 55.2%)
- Net debt of 1.3 billion euros; Net Debt/EBITDA improves to 2.0x
- 340 new LEO satellites ordered from Airbus, bringing the total to 440 including the earlier order

Growth comes from the orbit ? Video remains a drag

The main growth driver remains Eutelsat?s LEO (Low Earth Orbit) segment. LEO revenues climbed to 110.5 million euros, now accounting for more than one third of the company?s connectivity turnover. The three connectivity sub-segments also posted gains: Fixed Connectivity reached 132.1 million euros (+17.2%), Mobile Connectivity rose to 76.6 million euros (+8.5%), and Government Services increased to 98.6 million euros (+7.7%).

By contrast, the video business continued its downward trend, with video revenues at 266.5 million euros. Eutelsat cites the impact of additional sanctions on Russian broadcasters as well as a broader structural shift in a mature market as contributing factors.

On profitability, the negative momentum is evident: the adjusted EBITDA margin declined to 52.1%. The company notes that the mix of video content and sanctions effects weighed on margins.

Refinancing and satellite orders ? but the sale falls through

From a financing standpoint, Eutelsat highlights clear progress: net debt stands at 1.3 billion euros, and the Net Debt/EBITDA ratio improved to 2.0x (versus 3.92x the prior year). Among the drivers cited are a capital increase of 1.5 billion euros, rating upgrades, and roughly 1 billion euros in Export Credit Agency financing backed by a French government guarantee (announced February 11).

Operationally, the company continues to back the OneWeb network: 340 new LEO satellites were ordered from Airbus Defence and Space, and when combined with an earlier order the total reaches 440 units. The aim is to replace aging satellites and ensure the constellation?s operational readiness.

However, one dampener remains on the deal side: the planned sale of passive ground infrastructure to EQT Infrastructure did not go through. The anticipated net proceeds of around 550 million euros are no longer expected. Eutelsat emphasizes that this setback does not derail the financing of its strategic plan, but it does lead the group to adjust its leverage guidance, targeting around 2.7x Net Debt/EBITDA by year-end rather than roughly 2.5x.

Outlook and margins intact, with a cautious stance

Guidance for 2025/26 remains intact: revenues from the four operating segments are expected to be roughly in line with the prior year, with LEO revenue growth projected at around 50%. The adjusted EBITDA margin is anticipated to come in slightly below the prior year, and capital expenditure is planned at about 900 million euros.

For the longer term, Eutelsat is aiming for 2028/29 to generate revenue between 1.5 and 1.7 billion euros, while the EBITDA margin is targeted at a minimum of 65%.

The central question going forward will be whether the strong growth in LEO can offset the ongoing softness in the video segment, all while financing remains robust and investment levels stay elevated.