Satellite biz Eutelsat is looking to raise €1.35 billion ($1.55 billion) to grow its Low Earth Orbit (LEO) network to take on Starlink and benefit from anticipated growth in demand for connectivity.
The French-owned satellite operator said it is looking to raise capital by the end of the year. It aims to accomplish this via a reserved capital increase (new share issue) of €716 million ($824 million) to France’s Agence des Participations de l’Etat (APE) – the state investment body – and other key shareholders such as Bharti Space Limited.
Prior to this, the APE will pick up Eutelsat shares currently held by state-owned investor Bpifrance, which will see a representative from the state take a seat on the company’s board.
This would be followed by a rights issue of €634 million ($730 million) to the same investors.
Investors in the stock market seem to approve, as shares in the company shot up more than 30 percent.
Eutelsat said the capital increase will reinforce its financial flexibility and support investment in its existing LEO capabilities, plus the future IRIS² constellation – a secure satellite comms network commissioned by the EU.
The firm claims it is one of only two global operators with commercially active LEO networks, the other being SpaceX’s Starlink business. AST SpaceMobile has launched its first five commercial LEO satellites, but is not providing a service from them as yet.
Eutelsat believes there is significant growth potential in serving the B2B market via LEO services, currently valued at over $2.1 billion. While the overall satellite connectivity market is forecast to increase by 12 percent each year between 2025 and 2029, B2B connectivity is expected to show compound annual growth of 28 percent during the same period.
Following the two transactions, the French state would hold nearly 30 percent of the capital and voting rights, which is understood to make it the largest shareholder in the business.
Ironically, the LEO business comes from OneWeb, which Eutelsat acquired in 2023 after announcing the merger the previous year. Reg readers may recall that OneWeb was rescued by the UK government in 2020 after filing for bankruptcy during the COVID-19 pandemic.
A consortium led by Bharti Global and Britain won an auction to purchase the bankrupt company, with Boris Johnson’s Conservative government reportedly coughing up $500 million as part of the deal. It currently owns just 11 percent of Eutelsat, which will shrink even more as new shares are issued as part of this investment round.
However, Eutelsat said that discussions are ongoing with other interested investors such as the UK government, hinting that the latter might choose to join the capital raise as well.
CCS Insight Research Analyst Joe Gardiner told us that Eutelsat/OneWeb is currently in the best position to challenge Starlink, thanks to having the world’s second-largest LEO constellation, but doubted it would be able to pull it off.
“With only 650 satellites, it is approximately a tenth of the size of the Starlink constellation. Therefore, to offer greater capacity and coverage, it needs to increase the number of satellites in space, a task made more difficult due to the fact that many of OneWeb’s satellites are nearing the end of their lifespan and will need to be first replaced before growing the constellation’s size,” he said.
OneWeb’s hardware is not as capable as Starlink satellites, and so the company will need to invest in an entire new second generation. “From a military perspective, Starlink terminals are lighter and more mobile than OneWeb’s, so they will be useful in a military environment,” Gardiner said, but European governments may place a greater value on having military independence in light of the Trump administration’s ambivalent attitude to its traditional allies.
OneWeb already covers the Americas, Europe, parts of the Middle East and Africa, Australia, and parts of South East Asia, with a network of more than 630 satellites. Starlink has similar coverage, but a much larger constellation, comprising over 7,500 units. ®
