Eutelsat and SES: European satellite operators under pressure over Starlink

The satellite internet provider Starlink continues to expand its Starlink network and already has more than 6,000 active satellites in use. For the European satellite communications providers Eutelsat and SES, however, the air is getting thinner financially and setbacks are piling up. In 2024, for example, the French airline Air France decided to work with Starlink to bring internet to its planes – also a decision against the French company Eutelsat, which also offers broadband internet connections.

Eutelsat had attempted to enter the market by purchasing the British company OneWeb, which, like Starlink, wants to offer a network of mini-satellites for internet access – OneWeb almost failed in this attempt and slipped into insolvency in the meantime and to date there are fewer than 600 such OneWeb satellites in orbit.

Analysts at rating agency Moody's rated the probability of Eutelsat OneWeb's success as low in view of the competition and punished Eutelsat for the purchase: at the end of January, they lowered the rating for the company's bonds to B2, such bonds are considered "speculative and a high credit risk". Speaking to the Financial Times, Ernesto Bisagno, an analyst at Moody's, said the downgrade partly reflected lower profit forecasts, increased competition and significant refinancing needs in 2027 at one point.

Rising risk

The rising risk is not only reflected in analysts' ratings, but also in the bare figures. Eutelsat has been raising capital via bonds for years and there is a clear trend: in October 2020, Eutelsat issued a bond with 1.5 percent interest and a term until 2028, raising EUR 600 million. In September 2024, the company raised EUR 600 million via a bond with an interest rate of 9.75%, which must be repaid by 2029. The higher interest rates are not only due to the general rise in interest rates. They also reflect the risk that investors are taking in return. Eutelsat has raised a total of 2.6 billion euros in capital via bonds. The company closed 2024 with a loss.

Eutelsat is not the only European satellite company with financial problems. Luxembourg-based SES also repeatedly needs money from bonds and is making losses. A similar trend can be seen: in 2021, the company raised EUR 625 million at 2.875 percent via a bond, and in September 2024 it had to offer 6 percent for a bond of EUR 500 million that runs until 2054. The company has a total of 5.7 billion euros in outstanding bonds and it is becoming increasingly difficult to generate the money: the last time it made a profit was in 2021.

Hope for Eutelsat and SES comes from Brussels in the form of the IRIS2 project (Infrastructure for Resilience, Interconnectivity and Security through Satellites). The EU-funded satellite constellation is to be set up by the industry association Spacerise, which consists of SES, Eutelsat and the Spanish provider Hispasat. Europe wants to become less dependent on US companies with this project – In addition to Starlink, Amazon is already in the starting blocks with its Kuiper project. IRIS2 will not only provide broadband internet, but also communication for authorities and disaster control.

(jam)