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Moody’s upgrades Eutelsat

Moody’s Upgrades Eutelsat’s Rating on French Government Stake, Capital Boost

Moody’s Ratings has upgraded Eutelsat Communications SA’s long-term corporate family rating to Ba3 from B2, the rating agency announced Monday.

The upgrade reflects two key factors:

  1. Government-Related Issuer (GRI) Status: The rating action acknowledges Eutelsat as a Government-related Issuer following the French State’s acquisition of a 29.65% stake, making it the largest shareholder. This resulted in a one-notch uplift, according to Ernesto Bisagno, Moody’s Vice President and lead analyst for Eutelsat.
  2. Improved Credit Metrics: The upgrade also reflects expected improvements in credit metrics following a major capital raise.

Capital Raise Details

The upgrade follows Eutelsat’s announcement of a €1.5 billion capital raise, which included:

  • A reserved issuance on November 21, which raised €828 million at €4.00 per share.
  • A €670 million rights issue, priced at €1.35 per share, which will run until December 9. Core shareholders have already committed approximately 71% of this offering.

Following these steps, the French State will become Eutelsat’s largest shareholder with the 29.65% stake.

Financial Outlook and Debt

  • Debt Ratios: Reported net debt to EBITDA is expected to decline significantly, from 3.9x in fiscal year 2025 to around 2.5x in fiscal year 2026.
  • Unsecured Debt Upgrade: Moody’s also upgraded the ratings on senior unsecured debt instruments issued by Eutelsat SA to Ba3 from B1. This applies to three sets of €600 million notes maturing in July 2027, October 2028, and April 2029.
  • Long-Term Guidance: Eutelsat reiterated its guidance for total revenue to increase to €1.5-1.7 billion by fiscal year 2029, representing a compound annual growth rate of approximately 6.6%. The company also expects its EBITDA margin to improve to at least 60%, up from 54.4% in fiscal 2025.
  • Capital Expenditure: Moody’s anticipates Eutelsat will generate negative free cash flow of around -€500 million annually on average over 2026-2028 due to substantial planned investments:
    • €2 billion between 2025 and 2029 for its Low Earth Orbit constellation (OneWeb).
    • An additional €2 billion from 2028 for the IRIS 2 program.

Stable Outlook

The stable outlook reflects Moody’s expectation that Eutelsat will stabilize its earnings profile over the next 12-18 months. This stabilization is anticipated to be driven by the ramp-up of its Low Earth Orbit operations through OneWeb and a stronger contribution from government services.