French Government Boosts Eutelsat's Capital Amid Satellite Industry Competition

Eutelsat shares surged on Friday following the French government's declaration that it would emerge as the satellite company's largest shareholder after injecting a €1.35 billion capital increase. The French finance ministry underscored that this investment would bolster Eutelsat, which boasts the world's second-largest constellation of low-Earth orbit satellites, enhancing its competitive edge against Elon Musk's Starlink.

President Emmanuel Macron highlighted the significance of the capital boost, affirming France's commitment to securing strategic independence in Europe's satellite industry. The move comes as European governments express heightened interest in domestic satellite options due to shifting U.S. policies under former President Donald Trump. The company's stock experienced a notable increase of 9%, following a 14.5% rise on Thursday after sealing a deal with the French military.

Analysts, including Alessandro Cuglietta from Kepler Cheuvreux, pointed out that the capital reinforcement provides Eutelsat with increased financial stability. However, JP Morgan warned that Eutelsat's leverage is anticipated to stay high in the medium term. Despite the merger with OneWeb, Eutelsat requires additional financing to expand its satellite fleet, eyeing up to €2.2 billion in funding.

(With inputs from agencies.)