A key transaction intended to bolster the balance sheet of satellite operator Eutelsat has been blocked by the French state. Citing overriding national security concerns, the French finance ministry has vetoed the planned sale of parts of the company’s ground infrastructure to financial investor EQT. This decision directly impacts Eutelsat’s financial strategy, removing a significant source of planned revenue and forcing an adjustment to its debt targets.
Strategic Assets Deemed Off-Limits
The government’s intervention centers on the strategic nature of the ground stations in question. French authorities have moved to retain full control over infrastructure considered vital for both civilian and military communications. Officials also referenced a broader policy aim of safeguarding European autonomy within the satellite sector against competition from outside the region.
With critical closing conditions rendered impossible by the state’s veto, the transaction has been terminated. For Eutelsat’s financial planning, the immediate consequence is the loss of anticipated proceeds earmarked for reducing leverage.
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Financial Repercussions: Revised Debt and Margin Targets
The collapse of the deal carries specific numerical implications for the company’s forecasts:
- Lost Proceeds: The company will forgo approximately 550 million euros in net earnings that were expected from the sale.
- Revised Leverage: Consequently, Eutelsat has revised its year-end net debt-to-EBITDA ratio target. The previous goal of 2.5 has been adjusted to approximately 2.7.
- Long-Term Profitability: Despite this near-term setback, the company has concurrently raised its medium-term profitability outlook. The forecast for the EBITDA margin in the 2028/29 financial year has been increased from around 60% to approximately 65%.
Management has emphasized that the strategic funding requirements for growth initiatives, including the expansion of the OneWeb constellation, remain secure.
The Bottom Line
In summary, Eutelsat faces a mixed financial picture. The French government’s action has eliminated a crucial near-term lever for debt reduction, necessitating a higher projected leverage ratio. However, the company is counterbalancing this with a more ambitious long-term forecast for operational profitability.
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