Eutelsat, the French satellite operator that’s supposed to be Europe’s answer to Elon Musk’s Starlink, just posted first-quarter results that were… not great. Revenue came in worse than expected, and the reason why tells you a lot about the messy reality of competing in the satellite business.
The company reported revenue of €283 million (about $330 million) for the quarter ending in September, down 1.2% from last year. That might not sound terrible until you realize analysts were expecting €295 million. Missing expectations by €12 million when your total revenue is under €300 million? That’s a pretty significant miss.
Here’s what’s dragging them down: their video business is bleeding money. We’re talking about the service that beams satellite TV to over a billion viewers worldwide—it’s nearly half of Eutelsat’s total revenue—and it dropped 10.5% compared to last year.
Some of that is just the natural decline of satellite TV as more people cut the cord and switch to streaming. That’s happening everywhere, and there’s not much Eutelsat can do about it. But there’s also a specific problem that’s uniquely annoying: French regulators ordered them to stop broadcasting two Russian channels after finding connections to sanctioned entities.
Those sanctions are expected to cost Eutelsat around €16 million this year. Not huge in the grand scheme, but when you’re already struggling with declining video revenue, losing €16 million because of geopolitics doesn’t help.
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The Starlink Problem
Here’s where things get interesting. Eutelsat owns OneWeb, which operates more than 600 Low Earth Orbit satellites providing broadband internet. It’s literally the only other LEO constellation available besides Starlink. Europe has been pushing for home-grown alternatives to American satellite services, so you’d think Eutelsat would be in a good position.
But they’re still getting crushed by Starlink’s momentum. “We still see a strong progress of Starlink on the broadband and B2C segments,” admitted Christophe Caudrelier, Eutelsat’s finance chief, during a call with analysts. “Clearly, the demand for connectivity by satellite is growing fast.”
Read between the lines there: the market is growing, but we’re not the ones capturing that growth. That’s basically what he’s saying.
The problem Eutelsat faces is that they’re trying to fight a two-front war. On one side, their legacy video business is slowly dying as the world moves to streaming. On the other side, they’re trying to compete with Starlink in broadband internet, except Starlink has more satellites, more funding, and a massive head start.
It’s like trying to run a marathon while also carrying a heavy backpack that keeps getting heavier. The backpack is the declining video business, and it’s dragging down everything else they’re trying to do.
There Is Some Good News
Not everything is falling apart. Government services—basically contracts with governments and military customers—grew 18.5% to €52.4 million. That’s been their fastest-growing segment for a while now, and it makes sense. Ukraine’s been a big customer, presumably because having satellite communications that don’t rely on Russian infrastructure is pretty important when you’re, you know, at war with Russia.
But €52.4 million in government revenue doesn’t offset a 10.5% drop in a business segment that generates way more total revenue. The math just doesn’t work.
France and Britain are stepping in with a €1.5 billion capital injection that’s supposed to be completed by the end of 2025. Eutelsat is hoping other European countries will chip in too. That money is meant to help them close the gap with Starlink and strengthen their position.
Whether €1.5 billion is enough to compete with someone like Musk, who can seemingly fund SpaceX launches whenever he feels like it, is an open question. Starlink has thousands of satellites already in orbit and is launching more constantly. Eutelsat has 600-something through OneWeb. The scale difference is massive.
The Reality Check
What’s happening to Eutelsat is a case study in how hard it is to pivot a business model. They built their company around satellite TV broadcasting, which was a fantastic business for decades. Now that business is slowly dying, and they’re trying to reinvent themselves as a broadband internet provider while simultaneously competing against the most well-funded and aggressive competitor in the space.
Oh, and they’re also dealing with geopolitical complications like sanctions that cost them revenue and complicate their operations. And they’re trying to do all this while being based in Europe, which has been historically bad at creating tech companies that can compete at the scale of American giants.
Caudrelier acknowledged that satellite broadband demand is “growing fast,” which is true. The market is absolutely there. But saying the market is growing and saying you’re capturing that growth are two very different things. Right now, Starlink is capturing that growth, and Eutelsat is watching from the sidelines while trying to keep their legacy video business from collapsing too quickly.
The company confirmed its annual and long-term financial targets, which is corporate speak for “yes, this quarter was rough, but we’re sticking to the plan.” Whether that plan is realistic given the competitive dynamics and their structural challenges is something investors are probably questioning right now.
Europe wants a homegrown alternative to Starlink for strategic and economic reasons. That makes total sense. But wanting something and being able to build it profitably are different problems. Eutelsat might be Europe’s best shot at a Starlink competitor, but based on these quarterly results, they’ve got a long, expensive road ahead of them.
And that €1.5 billion capital injection? It might not be enough. But it’s a start, assuming they can figure out how to stop the bleeding in their core video business long enough to actually build out their satellite internet capabilities. That’s a big assumption.