Regulatory Delays Challenge Eutelsat’s India Ambitions

Eutelsat's anticipated commercial launch of its OneWeb satellite services in India has hit a snag, creating headwinds for the company's stock. Over the weekend, Indian Telecommunications Minister Jyotiraditya Scindia tempered expectations for an immediate rollout, citing unresolved regulatory conditions. This news weighed on investor sentiment at the start of the trading week, as final clearance is required before revenue generation can begin in this key strategic market.

The development in India holds significant strategic weight for Eutelsat Group. With major shareholder Bharti Global based there, the subcontinent is viewed as a potential home market for its low-earth orbit (LEO) satellite constellation. The current delay is particularly consequential given the intense competitive landscape. Eutelsat is engaged in a direct contest with Elon Musk's Starlink and the domestic powerhouse, Reliance Jio. Securing regulatory approval first is critical to gaining a valuable first-mover advantage in one of the world's largest growth markets.

The Twin Hurdles: Security and Spectrum Fees

Indian authorities have laid out specific requirements that are proving more complex than investors had initially hoped. Two primary issues must be settled.

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

• Security Certification: Before operations can commence, Eutelsat OneWeb must achieve full compliance with local security mandates. These stipulations include demonstrating "data localisation," which requires sensitive information to be stored within India's borders, and obtaining certification for its international gateways.
• Pricing Disagreement: A final decision on spectrum costs remains pending. A discrepancy exists between government bodies: the Telecommunications Ministry is advocating for a revenue share fee of 5%, while the Telecom Regulatory Authority of India (TRAI) has recommended a lower rate of 4%. This unresolved debate adds a layer of uncertainty regarding future operating margins.

Despite these bureaucratic challenges, there is an operational silver lining. The Indian government has already granted provisional spectrum access. This allows Eutelsat to begin demonstrating technical compliance and signals New Delhi's fundamental interest in ultimately granting a full license.

Investor Focus Shifts to Upcoming Decision

Market attention is now fixed on the impending ruling from the Digital Communication Commission (DCC). A decision to adopt the TRAI's suggested 4% fee structure would provide more favorable support for the profitability of Eutelsat's future Indian operations, once the crucial security certifications are successfully obtained. The timeline for this regulatory clarity will be a key driver for the company's near-term prospects in the region.