Analysts at investment bank BNP-Paribas, in a note following the news that CEO Eva Berneke is to be replaced, said that the company’s guidance that reaffirmed the previous expectations for the year’s trading which ends on June 30th is good news. French business newspaper La Tribune said that Eutelsat’s “fragile situation has become a top priority for the French government”. The report says closer commercial ties between Eutelsat & Orange are likely, with a merger possible.
Eutelsat will report on its Q3 numbers after the market closes on May 15th.
Nevertheless, Sami Kassab, research analyst at the bank, pulled no punches in saying that Eutelsat faces “significant requirements” to fund OneWeb Gen 2 [satellites] coinciding with upcoming debt maturities over the next few years. “While in the medium to long term, OneWeb could drive double digit revenue growth we believe that balance sheet risk will be a key share price driver in the near term. With higher interest rates for longer we find the current risk/reward profile unattractive.”
But there could be good news, added Kassab. “The commercial success of OneWeb could drive double digit revenue and EBITDA growth in the medium term and may support the shares. Public subsidies to fund OneWeb Generation 2 could also boost the share value.”
Kassab continued: “Outgoing CEO Eva Berneke was appointed in January 2022 and is leaving after less than three and a half years at the helm at a time when press reports suggest ongoing difficult discussions with shareholders regarding a capital increase needed to finance €4 billion+ of upcoming investments in IRIS² and the OneWeb upgrade. While geopolitical tensions may provide new opportunities for the group (i.e. Eutelsat augmenting its services in Ukraine and Italy), the ability to finance upcoming investments in a minority shareholder friendly way has us remain Underperform after the strong year to date share price performance.”
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