French Government Blocks Eutelsat’s Strategic Asset Sale

In a decisive move underscoring national security priorities, the French finance ministry has formally vetoed a major divestment plan by satellite operator Eutelsat. Minister Roland Lescure blocked the company's proposed sale of its ground station assets to private equity firm EQT, a transaction that would have netted approximately €550 million. This intervention leaves Eutelsat without a significant expected cash infusion during a period of financial strain, directly impacting its balance sheet.

The rationale for the prohibition was clearly articulated by Minister Lescure in a televised interview last Friday. He stated the transaction was halted earlier in the week, emphasizing that Eutelsat represents Europe's sole competitor to U.S.-based Starlink. The ground infrastructure was deemed critical for both civilian and military communications, leading to the conclusion that it constitutes a strategic national asset. "The answer was therefore no," Lescure stated definitively.

This position is reinforced by the French state's status as the largest shareholder, controlling over 29% of Eutelsat. From Paris's perspective, maintaining control over this transmission infrastructure is a non-negotiable matter of sovereignty, placing it beyond purely economic considerations.

Financial Repercussions: A Mixed Picture

The collapse of the deal has immediate and contrasting effects on the company's financial metrics.

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

• Increased Leverage: Eutelsat has revised its net debt to EBITDA ratio target upward. For the close of the 2025-26 fiscal year, leverage is now projected to reach approximately 2.7x, compared to the original target of 2.5x.
• Improved Margin Outlook: Conversely, the operational cost structure improves. The abandoned sale would have required Eutelsat to lease back the stations, incurring annual costs of €75-80 million. With those expenses now eliminated, management has raised its adjusted EBITDA margin forecast for the 2028-29 period substantially, from 60% to around 65%.

Market Reaction and Strategic Continuity

Despite the updated margin guidance, investor sentiment turned negative, focusing on the heightened debt level and the lost liquidity. Eutelsat shares declined to historic lows following the announcement.

The company, however, affirmed that its core strategic investments remain on track. The expansion of the OneWeb low-Earth-orbit (LEO) constellation continues as planned, supported by a recent order for 340 additional satellites from Airbus. Eutelsat also confirmed its remaining financial objectives for the current 2025-26 fiscal year are unchanged.

Analysts suggest that while the near-term focus is on balance sheet pressures, the benefits of the improved cost structure may only be reflected in the company's valuation over the medium term.