Imagine Europe's ambitious plan to rival Elon Musk's Starlink suddenly hitting a major roadblock. That's exactly what happened when Eutelsat, the French satellite giant often seen as Europe's answer to Starlink, saw its shares plunge 7% after reports surfaced of SoftBank slashing its stake in the company. But here's where it gets controversial: is this a strategic retreat by SoftBank, or a sign of waning confidence in Eutelsat's ability to challenge Starlink's dominance? Let’s dive in.
On Wednesday, Eutelsat's share price took a nosedive following a Reuters report revealing that Japanese investor SoftBank had offloaded 36 million rights, equivalent to roughly 26 million shares—nearly half of its stake in the satellite operator. As of 6:00 a.m. ET, Eutelsat shares were trading 7.8% lower, marking a significant setback for the company.
Eutelsat, which merged with satellite internet provider OneWeb in 2023, has been positioning itself as a formidable competitor to Starlink. However, the French group has struggled to make a dent in Starlink's market share. While Eutelsat boasts over 600 satellites in orbit, Starlink dwarfs it with more than 6,750 satellites, according to company data. And this is the part most people miss: despite a staggering 600% surge in share price earlier this year—fueled by Europe's push for tech sovereignty amid the U.S. cutting military support to Ukraine—Eutelsat's shares have since plummeted by over 70%.
Eutelsat is no small player; it’s a cornerstone of Europe's tech sovereignty ambitions. In June, the French government spearheaded a €1.35 billion ($1.57 billion) investment, becoming Eutelsat's largest shareholder with a 30% stake. But SoftBank's recent move raises questions. In November, SoftBank sold its entire stake in U.S. chipmaker Nvidia to fund investments in OpenAI and other AI projects. Founder Masayoshi Son confirmed the decision was driven by the need to bankroll its next big AI bets. Is SoftBank abandoning ship, or simply reallocating resources?
Luke Kehoe, an analyst at Ookla, told CNBC that SoftBank's Eutelsat move aligns with its broader strategy of 'aggressive monetisation' across its portfolio. 'Eutelsat is shifting from a growth story to a pillar of Europe's digital sovereignty infrastructure,' Kehoe explained. While Starlink dominates retail broadband with its sheer scale, Eutelsat is carving out a niche in government, aviation, backhaul, and emergency connectivity. But here’s the million-dollar question: Can Eutelsat's high-value, B2B-focused strategy deliver attractive returns once its current wave of capital expenditures is behind it? And more importantly, will Europe continue to foot the bill to close the gap with Starlink?
As the dust settles, one thing is clear: the battle for satellite internet supremacy is far from over. Eutelsat and SoftBank have been approached for comment, but the bigger conversation is just beginning. What do you think? Is SoftBank making a smart move, or is Eutelsat's future in jeopardy? Share your thoughts in the comments below!
