Eutelsat’s Strategic Pivot: A Shareholder Reshuffle Amidst a Major Capital Raise

The satellite operator Eutelsat is navigating a complex financial transformation. While a substantial €1.5 billion capital increase has fortified its balance sheet and attracted key government investors, its shares remain under significant pressure. This restructuring sees strategic realignments, with Indian conglomerate Bharti Space expanding its stake as Japanese investor SoftBank exits, creating a dynamic of shareholder dilution, debt reduction, and intense sector competition.

At the heart of recent developments is a comprehensive capital measure finalized on December 12. The operation successfully raised approximately €1.5 billion in new equity. A critical component was a rights issue, which alone generated €670 million and was oversubscribed at a rate of 133%.

Key details of the capital raise:
* Total Volume: €1.5 billion
* Rights Issue Proceeds: €670 million
* Issue Price per New Share: €1.35
* New Shares Issued: 496,129,728

The transaction drew strong support from core shareholders and state entities. The French state, via the APE, contributed approximately €749 million, while the British government invested €163 million. Strategic partners CMA CGM Participations and Bharti Space each subscribed to €150 million worth of shares.

Bharti Space Consolidates Its Strategic Position

In a related move on December 16, Bharti Space Limited acquired approximately 88.7 million Eutelsat shares on the Euronext Paris exchange. The purchase, executed at €1.35 per share and disclosed in accordance with market abuse regulations, solidifies the Indian satellite conglomerate's influence within the shareholder base. Acting as the administrator for the satellite group, Bharti Space has used this transaction to meaningfully expand its strategic foothold.

Credit Profile Strengthens as Fitch Upgrades Rating

The financial market has acknowledged the strengthened balance sheet. In early December, the rating agency Fitch upgraded Eutelsat's credit rating to "BB" and revised its outlook to "stable." The agency cited the improved financial structure following the capital increase as the primary rationale. A stated objective for Eutelsat is to reduce its leverage ratio to approximately 2.5x by the close of the 2025/26 fiscal year.

Should investors sell immediately? Or is it worth buying Eutelsat?

Analyst Perspectives: Weighing Dilution Against Deleveraging

The influx of capital, while reducing debt, results in significant earnings per share dilution for existing shareholders. This tension is reflected in recent analyst assessments:

• Deutsche Bank: Upgraded from "Sell" to "Hold," with a price target of €2.30.
• BNP Paribas: Initiated coverage with a "Neutral" rating and a €2.00 target.
• Oddo BHF: Reinstated coverage with a "Neutral" rating, lowering its price target from €2.60 to €1.70.

The consensus views the healthier balance sheet positively but sees a balanced risk-reward profile overall. Persistent competitive pressures in the satellite broadband market, notably from SpaceX's Starlink and Amazon's Project Kuiper, remain key challenges.

Strategic Roadmap and Capital Allocation

The newly raised funds are earmarked for a clear strategic plan extending to 2029. Eutelsat aims to finance several major projects while maintaining high profitability:

• Expansion of its Low Earth Orbit (LEO) satellite activities.
• Support for the European IRIS² satellite constellation.
• Total investments of roughly €4 billion between 2026 and 2029.

Management has reaffirmed its mid-term targets, projecting revenue between €1.5 billion and €1.7 billion for the 2028/29 fiscal year, with an EBITDA margin of at least 60%.

SoftBank Exit Adds Downward Pressure on Share Price

Despite the strategic moves, market sentiment has been cautious. In early December, the stock came under selling pressure following reports that SoftBank, a major shareholder since the 2023 merger with OneWeb, was divesting its position. The share price trades significantly below its 52-week high of approximately €9.30. High volatility is expected to persist as the company manages its restructuring, executes its substantial investment plan, and contends with fierce sector competition.

The critical question now is whether Eutelsat, with its reshaped ownership structure, can successfully deliver on its ambitious investment and balance sheet objectives in the coming years.