French Government Intervention Halts Eutelsat’s Asset Sale

Eutelsat shares are facing significant pressure following a decisive move by the French government. In late January, authorities blocked the satellite operator's planned sale of ground station assets to the infrastructure fund EQT Infrastructure VI. Finance Minister Roland Lescure justified the intervention by citing the strategic importance of the infrastructure for national sovereignty, highlighting Eutelsat's role as Europe's sole competitor to Elon Musk's Starlink network. For the company's investors, the immediate consequence is clear: a crucial €550 million liquidity injection has vanished.

This governmental blockade arrives at a challenging financial juncture for Eutelsat. The company is in the midst of a substantial capital expenditure cycle, underscored by a major mid-January order for 340 new satellites from Airbus. These "Gen 1 Continuity" units are intended to maintain the OneWeb low-Earth orbit (LEO) constellation into the next decade, prior to the operational readiness of the European IRIS² system.

While this satellite procurement is considered essential for remaining competitive with SpaceX, it places a heavy burden on cash reserves. The market is now questioning how Eutelsat intends to manage these substantial outlays without the proceeds from the terminated EQT deal. Concerns are mounting that the company may need to pursue alternative capital-raising measures, which could potentially dilute existing shareholder value.

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

Key Financial Implications

The French state's decision carries several direct financial consequences for Eutelsat:

• The loss of €550 million in anticipated net proceeds from the asset sale.
• An estimated increase in the net debt to EBITDA leverage ratio, from 2.5x to approximately 2.7x.
• A reduction in strategic flexibility, as government interests now directly influence corporate decision-making.

Upcoming Earnings: A Crucial Test for Management

All eyes are now on Eutelsat's scheduled half-year results announcement on February 13. This presentation will serve as a critical test, where the executive team must outline a credible alternative strategy for debt management. During the subsequent earnings call, investors will be listening closely for answers to several pressing questions:

• Are there other, less politically sensitive assets that could be sold to raise capital?
• Can the organic growth trajectory of the OneWeb business generate sufficient cash flow to partially offset the financial shortfall?
• Will the company's dividend policy be reconsidered in light of the tightened liquidity position?

The coming days will determine whether Eutelsat can convincingly articulate a path to achieving its financial targets despite this state intervention. Until then, uncertainty regarding the company's balance sheet structure is likely to be the dominant factor influencing its share price.