The European space sector is experiencing a significant shift as countries reconsider their reliance on Starlink, the satellite network backed by Elon Musk. This shift comes in response to increasing criticisms of Musk and the geopolitical implications surrounding the use of his technology.

Growing Opposition to Starlink Contracts

In Italy, a notable $1.5 billion contract with Starlink aimed at enhancing secure military communications is facing backlash. Meanwhile, Ontario, Canada, has terminated a $100 million agreement with the service. Concerns over Starlink’s dominance have led European governments, particularly in Ukraine, to explore alternative satellite operators to ensure reliable battlefield communications and drone connectivity.

Shifting Market Dynamics

As European nations seek alternatives, operators such as Luxembourg’s SES and France’s Eutelsat are gaining attention. Eutelsat, for instance, recently witnessed a dramatic rise in its stock value, nearly quadrupling in a week due to renewed interest as the satellite operator prepares to diversify its offerings.

Financial Challenges and Competition

The landscape for traditional satellite operators is becoming increasingly difficult. Eutelsat’s revenues, primarily relying on satellite broadcasting, face a structural decline as newer low Earth orbit solutions emerge. The company is planning a substantial investment of €2 billion to €2.2 billion for its own low-Earth orbit satellites by 2029, despite a challenging financial situation.

Eutelsat’s net debt is currently close to four times its annual adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), which raises questions about its financial stability, particularly in light of growing competition from Starlink and Amazon’s upcoming Kuiper project.

Potential Revenue Growth

Despite its challenges, Eutelsat has opportunities for revenue growth. Analysts estimate that the company’s capacity utilization is only at 15-20%, which indicates potential for increased business. If contracts, such as the Italian deal, shift from Starlink to Eutelsat, the firm could gain an additional $300 million in revenue annually, significantly impacting its financial outlook.

Furthermore, Eutelsat’s participation in the IRIS² project—a €10.6 billion initiative funded primarily by the European Union—highlights a strategic move towards enhancing European satellite capabilities by 2030.

The Road Ahead

While monetary resources are essential, the timeline for deploying new satellite systems poses a challenge. Even if funding becomes available immediately, integrating ground terminals and navigating the tender process for additional satellite orders will require time and careful planning. Nevertheless, Eutelsat’s current position is arguably the most favorable it has experienced in years, prompting a re-evaluation of its strategies.