Eutelsat is going through a crisis due to large debts

The main European competitor of the American satellite network Starlink needs new contracts and EU support to compensate for large debts.

French newspaper Le Monde reported on this.

Eutelsat, the European operator of a network of low-orbiting communication satellites, had a debt of EUR 2.7 billion last year, almost four times its gross operating asset.

This amount of debt will be extremely difficult for the company to compensate for on its own while it remains without new contracts and needs to launch new satellites to replace worn-out ones to maintain the network.

Launched in 2019, the first satellites of the company’s OneWeb constellation are on the verge of reaching the end of their six- to seven-year lifespan. The operator also needs to launch 450 additional satellites by 2030 to complete the Iris2 network, a constellation of satellites to meet the strategic, military, and governmental needs of the European Union.

The Fitch rating agency estimates that Eutelsat will need an additional €4.2 billion in financing by 2032 to keep OneWeb and Iris2 running. Another €1 billion of debt is due to be paid to its creditors in 2027.

Eutelsat wants to become a sustainable replacement for Starlink

On March 26, during a hearing at the National Assembly’s Defense Committee, Eva Berneke, CEO of satellite operator Eutelsat, warned of Europe’s dependence on Starlink services, which was brought to light by the Russian-Ukrainian war.

“If we don’t start working together in Europe, we will simply have the choice of clinging to either the American train or the Chinese train,” Berneke said, referring to the American network and its Chinese counterpart, Qianfan. “We are the only operator with a low-orbit constellation, the only alternative to Starlink in Ukraine.”

Berneke said that her company has been providing high-speed satellite Internet services in Ukraine for about a year. There are about 1,000 OneWeb terminals in the country, but “we plan to install 5,000 to 10,000 terminals there relatively quickly,” she added, specifying that this could be done “in the coming weeks.”

However, Berneke admits that Eutelsat will not be able to completely replace Starlink in the Ukrainian military. The American network already has about 7,000 satellites, which is an order of magnitude more than Eutelsat’s fleet of 600 satellites.

Eutelsat could also meet Italy’s needs after the Italian government suspended these negotiations in March, opening the door for a European operator. Other countries may follow suit.

Analysts at the US bank Goldman Sachs have estimated that if the European Union allocated only 5% of the €150 billion in funding from the ReArm Europe plan for communications, the amount of contracts for OneWeb would reach €3.7 billion.