Eutelsat’s Equity Raise Weighs on Share Price

The French satellite operator Eutelsat has successfully secured €1.5 billion in fresh capital, but the market's reaction has been decisively negative, sending shares lower. As state-backed anchor investors solidify their holdings, major investor SoftBank Group is using the opportunity for a significant exit. Can a new, substantial operational contract in the Middle East help restore investor confidence?

Beyond the financial engineering, the company reports steady operational performance. A renewed partnership with the beIN Media Group guarantees Eutelsat continued revenue from the MENA region (Middle East and North Africa) for another five years. This agreement, covering 95% of TV households in the area, underscores the reliable cash flow generated by its traditional GEO satellite business.

The primary objectives for the newly raised funds are twofold:
1. Debt Reduction: The company aims to lower its net debt-to-EBITDA ratio from 3.9x to approximately 2.5x by mid-2026.
2. LEO Expansion: Capital will advance the development of the OneWeb constellation in low Earth orbit.

A Capital Injection with Consequences

The subscription period for the capital increase concluded yesterday. Eutelsat met its target of approximately €1.5 billion, sourced from two distinct components:

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

• €828 million was secured through a reserved capital increase finalized in November, with shares priced at €4.00 each.
• €670 million was raised via a rights issue offering shares at just €1.35 apiece.

The deeply discounted price of this second tranche has exerted downward pressure on the stock's valuation. Despite this, state-level support remains substantial. The French state (via APE) now holds nearly 30%, followed by Bharti Space and the British government. Collectively, these major shareholders pre-committed to over 70% of the total issue.

SoftBank Executes a Strategic Pullback

Significant selling pressure in recent days originated from SoftBank Group. The Japanese technology investor divested 36 million subscription rights. This move translates to roughly 26 million Eutelsat shares, representing nearly half of SoftBank's previous stake in the company.

This retreat pushed the stock to its lowest level since mid-June. Although credit rating agency Moody's upgraded Eutelsat's rating from B2 to Ba3 in early December, the technical overhang from the large supply of new shares and rights is currently overshadowing these fundamental improvements.

Analyst Outlook and Next Steps

In response to the strengthened balance sheet, JPMorgan upgraded its rating on Eutelsat to "Neutral." The bank sees limited downside potential at current price levels. The average analyst price target stands at €2.97, notably above the present trading price. The final results of the capital increase subscription are expected on December 12, with delivery of the new shares scheduled for December 16, 2025.