Eutelsat Shares Face Dilution Pressure Despite Long-Term Satellite Ambitions

While Eutelsat advances the next phase of its Eutelsat OneWeb satellite constellation, the immediate fallout from a significant equity raise is overshadowing its strategic vision on the trading floor. The company's stock experienced a sharp decline last week, weighed down by the dilutive impact of newly issued shares. This has created a stark divergence between the firm's future prospects and its present market valuation.

Market sentiment is currently dominated by short-term technical factors. Eutelsat's share price closed at €1.61 on Friday, establishing a new low. This represented a weekly loss exceeding 20 percent. The catalyst was the recent completion of a capital increase.

In a final step to bolster its balance sheet and fund investments into its second-generation satellites, Eutelsat secured approximately €670 million in fresh equity. Although the transaction was oversubscribed, the structure of the deal has led to considerable dilution:
- The placement of nearly half a billion new shares
- A subscription price for the new shares set at €1.35
- A consequent slide in the price of existing shares toward that subscription level

The substantial influx of new paper continues to exert persistent selling pressure. From a technical perspective, the trend remains decidedly negative until the market fully absorbs this additional supply.

Refined Gen-2 Timeline with ISRO Partnership

Amid the market turbulence, Eutelsat OneWeb is firming up plans for its next-generation fleet. According to industry sources, the company is concretizing its collaboration with the Indian Space Research Organisation (ISRO), focusing on the second generation (Gen-2) of its low-Earth-orbit satellite network.

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The previously vague schedule has now been sharpened:
- Integration of over 340 new LEO satellites commencing from 2027
- Full deployment of the Gen-2 constellation targeted for completion by 2030
- Utilization of ISRO's LVM3 rockets for launch missions

Concurrently, Eutelsat and OneWeb are working to integrate the Gen-2 fleet into the European IRIS² program. Operationally, the focus is firmly set on the coming decade.

A Disconnect Between Strategy and Valuation

A pronounced gap has emerged between Eutelsat's long-term satellite strategy and its current equity valuation. Management is charting a course for the Gen-2 constellation build-out and its role in the IRIS² project through 2030. In contrast, many investors are presently fixated on the immediate effects of share dilution.

The cooperation with ISRO secures cost-efficient launch capacity for Eutelsat starting in 2027, essential for deploying the planned 340-plus Gen-2 satellites. In the near term, however, this strategic perspective offers little momentum to counterbalance the share price decline triggered by the capital measure.

As long as the shares created by the equity raise continue to burden the market technically, and the stock trades close to the €1.35 subscription price, the equity remains vulnerable to further setbacks. For now, the mathematical impact of the capital increase sets the tone for trading, while the long-term satellite initiative remains a project for the years ahead.