Eutelsat: UK-Backed Venture Struggles Amid Starlink Competition
A UK taxpayer-backed venture aiming to rival Elon Musk's Starlink has faced turbulence, resulting in a €873m loss and a plummeting share price.
Eutelsat, a Paris-listed satellite company with the British government as a major shareholder, has sought support from the French government as it pursues additional funding. The company is confronted by technology setbacks and intense competition from Mr. Musk's space enterprise.
Shares in Eutelsat nosedived by over 19% on Friday after reporting significant losses, including a €535m impairment. The British government owns approximately 10% of Eutelsat post-merger with OneWeb, a UK satellite company rescued by Boris Johnson's government in 2020.
The UK invested £400m to save OneWeb from collapse four years ago, but the taxpayer stake is now worth €65m (£54m) following Eutelsat's share decline to €1.40. Eutelsat once valued OneWeb at over €3.4bn; now, the combined entities are worth only €650m.
Both the UK and French governments have representation on Eutelsat's board. The Anglo-French company is a key player in the European Union's satellite network, aimed at competing with Mr. Musk's Starlink network amidst concerns about the billionaire's reliability.
The share price collapse has prompted Eutelsat to explore its options, including seeking billions of euros to fund a new generation of OneWeb satellites. Industry sources indicate that Eutelsat has approached the French government for additional financing.
Eutelsat outlined in its financial results that it is "actively developing a financing plan aligned with its strategic roadmap and long-term leverage objectives." The company declined to provide further comment.
On Friday, Eutelsat announced a boardroom shake-up with four directors departing. Dominique D'Hinnin, the company's chairman, also expressed his intention to retire. Michel Combes, a director from Japan's SoftBank, has been appointed to the board.
Eutelsat's stock has plummeted as it grapples with fierce competition from Starlink, which has deployed numerous satellites to create a global broadband network. Eutelsat owns a network of communications and TV satellites, including OneWeb, a constellation of 650 low-orbit satellites competing directly with Starlink.
However, OneWeb has encountered repeated technological setbacks, including a 48-hour blackout on New Year's Day attributed to a glitch that failed to account for 2024 being a leap year.
Eutelsat plays a crucial role in Europe's IRIS2 satellite project, which the EU hopes will rival Mr. Musk's Starlink and provide a sovereign alternative. Developing the project requires substantial additional financing, in the billions of euros.
Industry insiders suggest that Saudi Arabian investors considered a potential tie-up with Eutelsat in 2023, but these talks did not advance beyond preliminary commercial discussions. OneWeb has a joint venture agreement with Neom, a planned mega-city in Saudi Arabia.