Eutelsat Equity Offering Meets Strong Demand Amid Share Price Pressure

Shares in the Franco-British satellite operator Eutelsat fell sharply on Friday, shedding over 7 percent of their value. This decline occurred despite the company's successful completion of a rights issue that raised over €670 million and was oversubscribed by 133 percent. The market's negative reaction is a typical response to the dilutive effect of a new share offering, even as major strategic investors demonstrated significant confidence in the firm's direction.

The capital increase forms a core part of a broader €1.5 billion financing package. It received substantial backing from key institutional investors. The French state committed a total of €749 million, while the UK government invested €163 million. Further anchor investments came from Bharti Space and CMA CGM Participations, each contributing €150 million, and the Stratégique de Participations fund, which provided €91 million.

In total, 496 million new shares were issued at a price of €1.35 each. The subscription ratio was set at 8 new shares for every 11 existing shares held. CEO Jean-François Fallacher characterized the high demand as a vote of confidence, stating it "reflects the continued trust of our shareholders in Eutelsat's long-term strategic roadmap."

Of the new shares, 476 million were irrevocably subscribed, accounting for 96 percent of the issue. An additional 20 million shares were allocated on a reducible basis.

Balance Sheet Strengthened for Future Growth

The primary use of the fresh capital will be debt reduction. The company aims to lower its leverage ratio from 3.9x to approximately 2.5x. This improved financial footing prompted Deutsche Bank to upgrade its rating on the stock from "Sell" to "Hold" on December 11. Analyst Roshan Ranjit cited "short-term balance sheet comfort" as a key reason.

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

Rating agencies have also responded favorably. Fitch upgraded Eutelsat to "BB" with a stable outlook in early December, while Moody's confirmed an improved rating.

The full €1.5 billion financing package—which includes a reserved capital increase of €828 million finalized in November—is intended to fund investments of around €4 billion between 2026 and 2029. Strategic priorities include expanding the Low Earth Orbit (LEO) satellite business and developing the IRIS² constellation.

Trading Details and Financial Forecasts

The new shares are scheduled for delivery on Euronext Paris on December 16 and will be immediately tradable. Admission to the London Stock Exchange will follow on December 17. Both Eutelsat and its strategic investors have agreed to a 180-day lock-up period.

For the current 2025/26 fiscal year, the company reaffirmed its guidance, expecting revenue to remain stable year-on-year with a slightly lower EBITDA margin. The LEO segment is projected to grow by 50 percent. Looking further ahead, Eutelsat is targeting revenues between €1.5 billion and €1.7 billion by the 2028/29 period, with an EBITDA margin of at least 60 percent. Second-quarter results are due in February 2026.