Starlink rival Eutelsat tumbles 7.5% in trading after SoftBank cuts stake in half
Shares of Eutelsat, the French satellite operator often described as the European rival to Elon Musk's Starlink, are down 7.5% today after a Reuters report that Japanese investor SoftBank had sold subscription rights, CNBC writes.
SoftBank has reportedly sold 36 million rights, which would correspond to around 26 million shares and around half its stake in Eutelsat.
About Eutelsat
Eutelsat owns satellite internet provider OneWeb, which it merged with in 2023 in a bid to challenge Starlink’s dominance, CNBC notes. However, the French group has struggled to gain ground on the U.S. competitor. Eutelsat has more than 600 satellites in orbit versus more than 6,750 for Starlink, according to the companies’ websites.
Eutelsat is viewed as a critical component of Europe’s ambitions for technological sovereignty, CNBC notes. In June, France led a EUR1.35 billion ($1.57 billion) investment in Eutelsat, becoming its largest shareholder with a stake of about 30%.
In early March, Eutelsat shares soared more than 600% amid Europe’s push to strengthen technological sovereignty after the U.S. cut military support to Ukraine. Since then, the stock has fallen more than 70%.
What analysts say
On November 28, AlphaValue lowered its target price on Eutelsat from EUR4.01 per share to EUR2.89 per share, while maintaining a “buy” rating. The valuation implies 38.3% upside versus the last closing price.
The stock is tracked by eight analysts. Five have a neutral stance, and three advise "sell."
Context
SoftBank is actively seeking funds to finance new investments in AI. SoftBank has invested $7.5 billion in OpenAI this year and plans to invest another $22.5 billion in the startup in December. The company is also looking to acquire chip developer Ampere for $6.5 billion. In order to cover these costs, the Japanese company sold all of its shares to Nvidia for $5.8 billion shortly before cutting its stake in Eutelsat.
SoftBank is aggressively seeking capital to fund new investments in AI. The company has invested $7.5 billion in OpenAI this year and plans to invest another $22.5 billion in December. It also acquired chip developer Ampere for $6.5 billion. To help cover these costs, SoftBank sold all of its Nvidia shares for $5.8 billion shortly before cutting its stake in Eutelsat.
