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Eutelsat shareholders set to approve capital increase plan

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France to become biggest investor, UK retains stake

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Capital injection provides temporary lifeline

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Eutelsat eyes German investment

By Gianluca Lo Nostro and Florence Loeve

GDANSK/PARIS, Sept 30 (Reuters) - Satellite operator

Eutelsat must secure investment from more European

countries to bolster its efforts to challenge billionaire Elon

Musk's Starlink, EU lawmakers and analysts say following a

commitment by France.

The debt-laden Franco-British company has gained

unprecedented attention this year from European governments as

the policies of President Donald Trump have raised concern about

their reliance on U.S. satellite companies.

A 1.5-billion-euro ($1.8 billion) investment in Eutelsat led

by France is set to be approved by shareholders on Tuesday,

after which the company hopes other countries will follow suit.

President Emmanuel Macron has urged other countries and

companies to invest, framing the decision as a matter of

European sovereignty.

EUROPE'S AMBITION IN SPACE

Christophe Grudler, a French member of the European

Parliament who has urged the European Commission to find

alternatives to Starlink for Ukraine as the war with Russia

drags on, said Eutelsat is one of Europe's best responses to

Starlink but it requires political commitment.

"France's decision to strengthen its stake is a strong

political act. But it cannot stop there. Germany, and other

member states, should also step in. One country alone cannot

carry this continental ambition in space," he told Reuters.

In the latest fundraising, France will commit 750 million

euros for a 29.65% stake, while Britain will contribute 163

million euros to retain a 10.89% share in a two-stage investment

plan.

Other investors are Indian billionaire Sunil Mittal's Bharti

Space, shipping group CMA CGM, and Fonds Strategique

de Participations, a French insurer-backed investment fund.

UKRAINE TALK REVIVES EUTELSAT STOCK

Eutelsat - which has introduced a new CEO, chairman and a

revamped brand identity - confirmed to Reuters its aim to

involve more European countries, though discussions remained in

early stages.

Initial talks between France and Germany took place at the

Franco-German council of ministers on August 29, the company

said in an emailed statement.

The German and French governments did not respond to Reuters

requests for comment.

Shareholders involved in the current capital increase

declined to comment.

Eutelsat's stock has rebounded from all-time lows on talks

with the European Union to potentially replace Starlink in

Ukraine.

Operational planning and coordination with member states and

relevant stakeholders on Ukraine continue, Commission

spokesperson Thomas Regnier told Reuters in an emailed response

to queries.

Germany already pays for Ukraine's access to Eutelsat and

Eutelsat has delivered thousands of user terminals to Kyiv.

FRANCE GIVES VITAL LIFELINE TO EUTELSAT

Eutelsat told Reuters that it was not directly affected by

the collapse on September 8 of the French government. However,

the company - which is dependent on France pledging immediate

financial relief - underlined the need for stability and

continuity.

Asked about the risk of political turmoil possibly delaying

France's 2026 budget, Eutelsat said it would only affect the

next fiscal year.

"In terms of timing, it's unlikely to be impacted by a

deadlock at this stage."

The funding is expected to reduce Eutelsat's

2.6-billion-euro debt and help deploy 340 low Earth orbit (LEO)

satellites for its OneWeb constellation costing over 2 billion

euros.

Eutelsat acquired OneWeb in 2023 to capitalise on growing

demand for satellite internet.

But the gap with Starlink is stark. OneWeb has over 650

satellites compared with Starlink's nearly 8,000. Eutelsat has

downplayed Starlink's lead, maintaining it stays competitive

with government and corporate customers.

Bernstein analyst Aleksander Peterc said French and UK

backing has already made a significant difference but funding

into the next decade will be contingent on Eutelsat's improved

profitability and cash generation.

"The addition of Germany as a core shareholder would further

solidify Eutelsat's position as the prime sovereign European LEO

connectivity provider," he said.

Stifel analyst Antoine Lebourgeois was more cautious, saying

the capital increase was a short-term lifeline and not a

long-term cure.

"Support from European governments is a crucial first step

and a strong signal, but it may not be sufficient on its own to

secure OneWeb's long-term viability," he said.

"Given the intense competition and economies of scale of

players like Starlink, OneWeb will likely need a more

substantial and sustained commitment from the public sector to

truly thrive as a European alternative."

($1 = 0.8557 euros)