Eutelsat Shares Under Pressure as Major Investor SoftBank Exits

A significant divestment by a key shareholder has introduced fresh volatility for satellite operator Eutelsat. Japanese technology investor SoftBank Group has sold approximately half of its stake in the company, triggering a sell-off that pushed the share price to its lowest level since June. This move comes during a critical period for Eutelsat's ongoing capital increase.

The market reaction to SoftBank's exit was immediate and pronounced. The investor disposed of 36 million subscription rights, which equates to a holding of roughly 26 million Eutelsat shares. On December 3, this transaction precipitated a sharp decline, with the stock closing at €1.966—a drop exceeding 7 percent for the session.

SoftBank cited a strategic need to free up capital for new investments in artificial intelligence as the official reason for the sale. This decision aligns with the group's recent financial maneuvers, including the liquidation of its position in Nvidia. For Eutelsat, the timing is delicate, as the company is in the final stages of a €1.5 billion capital raise.

Key details of the current rights issue include:

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

• Subscription Price: €1.35 per new share
• Target Proceeds: Approximately €670 million from the rights offering
• Underwritten Security: 71 percent of the total amount is already guaranteed by major shareholders, including the French state and Bharti Space.

Credit Rating Upgrade Provides a Counterbalance

Despite the turbulence in its shareholder register, Eutelsat's fundamental credit profile is receiving a more positive assessment. On December 1, Moody's Investors Service upgraded the company's corporate family rating from B2 to Ba3, affirming a stable outlook. The agency based this improvement on expectations that Eutelsat can stabilize its operating performance over the next 12 to 18 months.

This improved sentiment is mirrored in the debt markets. Yields on Eutelsat bonds maturing in 2029 have fallen substantially, from a peak of 16 percent in February to approximately 7 percent recently.

Strategically, Eutelsat is positioning itself as a European-focused alternative to Elon Musk's Starlink network. Unlike its U.S. rival, the company primarily targets business-to-business (B2B) clients such as government agencies and maritime operators. Its medium-term financial targets remain ambitious: the company aims to lift its EBITDA margin to at least 60 percent while significantly reducing its leverage ratio by the close of the 2025/26 fiscal year.

The subscription period for new shares concludes on Tuesday, December 9. The outcome will reveal whether the firm's long-term growth prospects in government services and its stronger credit rating can ultimately outweigh the short-term selling pressure created by SoftBank's departure.