For Eutelsat and France, sovereignty becomes about more than words
On June 18, Eutelsat OneWeb secured the kind of deal that had eluded the company for years – a large government contract worth up to €1 billion ($1.15 billion) for defense communications services. The French Armed Forces (DGA) contract covers 10 years, and ensures priority access to Eutelsat capacity, especially in LEO, plus funding to upgrade the constellation for military use.
The deal is important for several reasons.
1. Less USG business. Eutelsat’s government revenue, despite growing 10% last quarter to €49.5 million, took a hit when the U.S. military reduced its business with the company, something management attributed to Trump cost-cutting efforts (perhaps DOGE). These and other policy shifts in Washington make it increasingly important for Eutelsat to have government clients outside the U.S.
2. More domestic support. Europe and Eutelsat OneWeb have talked extensively about communications sovereignty for the past two years, but actions weren’t matching words. It was blindingly obvious that for a continent at war, and with deep reservations about dependence on Starlink, waiting six years for IRIS² wasn’t a reasonable solution. The French MoD deal is the most visible sign of a European government pushing to make sovereign LEO connectivity a near-term reality. That this came from France was not a surprise, as France owns a 12.6% stake in Eutelsat through BpiFrance.
3. Feckless UK posture. Ever since being purchased out of bankruptcy in 2020 by the British government and Bharti, OneWeb sought to craft a meaningful defense deal with the U.K. Ministry of Defense, but the U.K. was largely unwilling to make major commitments after its one-time $500M rescue deal. The British government was, among other things, paralyzed by the idea of playing favorites between local operators (then OneWeb, Inmarsat and Avanti), making it an ineffectual shareholder. Three years after the Russia-Ukraine War started, the British government never sent OneWeb terminals to Ukraine.
Most satellite operators draw a meaningful portion of their revenue from government customers. Quilty Space estimates Starlink generated $2.2 billion in government revenue in 2024 (mostly from Starshield), about 28% of Starlink’s total for the year. Intelsat generated $386 million from government customers in 2024, representing 19% of total revenue. Eutelsat is in the same ballpark, with government revenue accounting for 17% of Q3 revenue, and 14% of its last fiscal year (€165M out of €1.2B as of June 30, 2024). With French MoD backing, Eutelsat OneWeb now has a substantial domestic anchor customer, providing the company with improved stability as it seeks to finance 440 interim LEO satellites as well as the IRIS² constellation (€4.0-4.2B collectively, per Eutelsat’s estimate). Government revenue alone isn’t enough to validate the LEO business case, but it’s a meaningful part, and one that OneWeb, as part of Eutelsat, can finally count on.
Link: https://www.eutelsat.com/en/news/press.html#/pressreleases/eutelsat-and-frances-armed-forces-ministry-reach-landmark-framework-agreement-for-low-orbit-satellite-services-in-the-context-of-frances-nexus-program-3392412