Eutelsat Shares Struggle Under Weight of Equity Dilution

Despite reporting tangible progress on several operational fronts, Eutelsat's share price remains under significant pressure. The primary culprit is a recent capital raise that has substantially diluted existing shareholders, overshadowing news of new partnerships in Africa and Asia. The satellite operator raised approximately €1.5 billion, but the consequent dilution has left the stock trading barely above the issue price of €1.35 per share.

The equity offering was executed with two clear financial objectives. The primary goal is to reduce the company's leverage ratio to around 2.5x EBITDA by the close of the 2025/26 fiscal year. Secondly, the proceeds are earmarked to fund the expansion of its second-generation Low-Earth-Orbit (LEO-Gen-2) constellation and its participation in the European IRIS² project.

However, the strategic move came at a steep cost to shareholder value. The €1.35 issuance price was set at a pronounced discount to prevailing market levels at the time. This has resulted in heavy dilution for long-standing investors, damaging market sentiment and eroding confidence. The negative impact of this dilution continues to dominate the equity narrative.

Operational Advances Fail to Lift Sentiment

Concurrently, Eutelsat has announced concrete developments that showcase its technological capabilities. In late December, the firm confirmed a collaboration with Airtel Gabon to equip passenger trains on the Transgabonais line with high-speed internet via its OneWeb satellite network.

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

In a separate project, the company is providing connectivity solutions for an Indian naval expedition named "Kaundinya Voyage." These initiatives demonstrate the practical application of its LEO infrastructure in remote and challenging environments. Yet, these announcements have done little to support the stock. The market is looking beyond pilot projects for robust financial data proving the successful integration of OneWeb and the realization of promised synergies.

Technical and Fundamental Headwinds Persist

From a chart perspective, the share price maintains a clear downward trajectory. Trading just above its capital increase price suggests a potentially cheap valuation, but it also highlights a complete absence of buying momentum. The current market capitalization appears to scarcely reflect the underlying value of the company's substantial infrastructure assets.

Analysts suggest that without a significant improvement in profit margins or the securing of major commercial contracts that extend beyond trial deployments, this weak price action is unlikely to reverse soon. Investors are demanding evidence that the increased share count will be justified by commensurate growth in earnings and cash flow.

Key Developments Summary:
* Partnership with Airtel Gabon to provide train WiFi on the Transgabonais line using OneWeb.
* Connectivity solution supplied for the Indian Navy's "Kaundinya Voyage" expedition.
* €1.5 billion capital increase completed at €1.35 per share.
* Funds allocated to reduce debt to 2.5x EBITDA and finance the LEO-Gen-2 satellite program.