Eutelsat Shares Plunge Following Major Stakeholder Move

A dramatic sell-off by a key investor has sent shares in satellite operator Eutelsat sharply lower, casting a shadow over the company's ongoing €1.5 billion capital increase. The stock fell more than 7% after SoftBank Group Capital offloaded a substantial block of rights linked to the fundraising.

Market sentiment turned negative when SoftBank Group Capital placed approximately 36 million subscription rights on the market. This volume is theoretically equivalent to around 26 million shares. The sheer size of the transaction overwhelmed demand, necessitating significant price concessions to find buyers.

While the group's stated motive is to use the proceeds to finance the exercise of its remaining rights, the market interpreted the massive sale as a vote of no confidence. The move has firmly placed the stock in a downward trend for the time being.

Complex Capital Raise Underway

The current market volatility is dominated by Eutelsat's intricate effort to strengthen its balance sheet. Analysts expect extreme price swings to persist until the subscription period concludes.

Key details of the capital increase include:

• Subscription Period: Runs until December 9, 2025
• Subscription Price: €1.35 per share (a substantial discount)
• Rights Issue Volume: €670 million
• State Stake: France is becoming the largest single shareholder with a 29.65% interest

The deeply discounted subscription price is a clear indicator of the dilution effect awaiting existing shareholders.

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

Credit Rating Upgrade Provides a Silver Lining

In a contrasting development, rating agency Moody's upgraded Eutelsat's corporate family rating from B2 to Ba3. The upgrade is directly attributed to the increased French government stake, which now classifies Eutelsat as a "Government-Related Issuer." This status implies a degree of state backing, thereby lowering the firm's perceived risk profile.

Moody's also forecasts an improvement in leverage, predicting the net debt-to-EBITDA ratio will fall from 3.9x to 2.5x by the 2026 fiscal year. The capital injection is intended to stabilize the balance sheet, at least in theory.

The Starlink Challenge Looms Large

Despite its merger with OneWeb, which brought its satellite constellation to over 600, Eutelsat faces a formidable gap in the low Earth orbit (LEO) sector. Market leader Starlink already operates more than 6,750 satellites in orbit.

CEO Jean-François Fallacher now faces the critical task of deploying the freshly raised capital efficiently to avoid falling further behind. Researchers at AlphaValue have characterized the stock as a "call option" with recovery potential but caution that significant execution risks surround the company's turnaround strategy. Doubts are mounting in the market about Eutelsat's ability to compete effectively with rivals like SpaceX's Starlink.

Institutional Activity Drives Volatility

Eutelsat's share price has become highly susceptible to institutional portfolio adjustments. The substantial discount on new shares and the selling pressure from SoftBank are distorting any fundamental valuation. A return to calmer trading conditions is not anticipated until after the December 9 subscription deadline.

Until then, the equity is expected to remain highly volatile. The full financial impact of the share dilution will only be fully reflected in the stock price once the capital increase process is complete.