Eutelsat: Can Europe's Satellite Star Outshine Starlink Amid Debt Pressures?

The race for dominance in low-Earth orbit (LEO) satellite technology is heating up, and Eutelsat Communications (EZA.PA) is Europe's most visible contender to challenge Elon Musk's Starlink. But here's the catch: while the company's strategic importance to European autonomy in space is undeniable, its balance sheet is under siege. Today, we dissect whether Eutelsat can survive near-term liquidity risks to capitalize on geopolitical tailwinds—or if investors should steer clear until the smoke clears.

The Debt Dilemma: Can Eutelsat Refinance Without Collapsing?

Let's start with the elephant in the room: Eutelsat's debt. As of late 2024, the company's net debt stood at €2.7 billion, with a debt-to-EBITDA ratio of 3.92x—well above its medium-term target of 3x. The weighted average maturity of its debt portfolio is just 3.0 years, meaning refinancing needs loom large.

The 2025-2026 refinancing wall is particularly treacherous. While the company hasn't disclosed exact maturities, its €500 million bond issuance in 2023 to refinance older debt suggests it's already scrambling to extend maturities. Compounding the pressure: interest costs are soaring. The average cost of debt after hedging rose to 4.84% in early 2024, up from 3.16% the prior year.

But here's the silver lining: Eutelsat has €1.24 billion in undrawn credit lines and cash, providing a liquidity buffer. However, this must cover not only debt repayments but also capital expenditures. Full-year CapEx for 2024-2025 is expected to be €500-600 million, down from earlier projections, as the company delays LEO investments to conserve cash.

Geopolitical Tailwinds: The EU's Backing Could Be a Lifeline

Now, let's pivot to the upside. Europe's reliance on U.S. and Chinese satellite technology is a national security risk, and Brussels knows it. Enter IRIS², the EU's €6 billion initiative to build a sovereign LEO satellite network. Eutelsat is a cornerstone of this project, with its partnership in OneWeb and plans to contribute to IRIS²'s infrastructure.

The geopolitical stakes are massive. If the EU funnels defense funding into Eutelsat's projects, it could transform the company from a debt-burdened also-ran into a strategic asset. Already, its government services segment grew 10.2% year-over-year in Q3 2025, signaling pent-up demand for sovereign satellite capacity.

Moreover, the company's pending €500 million sale-and-leaseback deal for its passive ground infrastructure—expected to close in early 2026—could inject much-needed cash. This transaction isn't a panacea, but it buys time to secure further refinancing.

Why the Market's Skepticism Might Be Premature

Investors are skeptical, and Eutelsat's stock has lagged peers like SES (SESG.SR) by a wide margin. The bears argue that Eutelsat's traditional GEO satellite business is declining (video revenue fell 6.4% YoY in Q3), and its LEO ambitions are undercapitalized compared to Starlink's $10 billion war chest.

But here's where geopolitics trumps economics: Europe can't afford to let Eutelsat fail. A collapse of its satellite infrastructure would leave critical defense, telecom, and emergency services reliant on foreign-controlled systems. Brussels has already shown willingness to prop up strategic assets—just look at the €100 billion NextGenerationEU fund.

Investment Thesis: Buy the Dip if EU Backing Materializes

So, should you bet on Eutelsat? Here's the play:
1. Hold for now, but consider dipping in if the stock falls below €15—a level it hasn't breached since early 2023.
2. Monitor refinancing news: A successful bond issuance or EU-backed loan facility in late 2025 could spark a rally.
3. Look for IRIS² milestones: Any funding commitments or launch announcements tied to the project should be treated as bullish catalysts.

Avoid the stock if:
- Debt costs spike further due to rising rates.
- The EU delays IRIS² funding, or the sale-and-leaseback deal falters.

Final Take

Eutelsat isn't a buy for the faint-hearted. Its debt load and reliance on geopolitical tailwinds make it a high-risk, high-reward bet. But in a world where Europe's tech sovereignty is non-negotiable, this satellite operator could emerge as a winner—if it survives the next 12 months. For investors willing to bet on Brussels' resolve, now is the time to mark your cards.

Action Plan: Wait for a pullback below €15, then allocate 5% of your portfolio. Keep a close watch on EU funding news and debt refinancing updates.