Eutelsat’s DoD setback adds to GEO headwinds as LEO growth builds

TAMPA, Fla. — The sudden loss of a large U.S. Department of Defense contract has added to Eutelsat’s geostationary challenges as the French operator shifts greater focus to its low Earth orbit (LEO) OneWeb constellation.

During earnings results May 15 for the three months to the end of March, Eutelsat said total government renewal rates fell below 50% for the quarter and would have reached 70% without the DoD cancellation.

The canceled contract reflects shifting geographic priorities under the new U.S. administration, Eutelsat said, alongside broader efforts to cut government spending.

Joanna Darlington, Eutelsat’s chief communications and investor relations officer, said the cancellation came soon after the new Trump administration took office with a strong push to reduce costs.

“We think it might be a bit of a knee-jerk reaction,” Darlington said during an earnings call with analysts, and “that future campaigns may go back to a more normal rate.”

Eutelsat reported 49.5 million euros ($55.4 million) in revenue from government services for the quarter, up 10.2% year-on-year when adjusted for foreign exchange rates.

The increase was mainly driven by growing LEO sales and a rise in demand from non-U.S. governments, which are exploring alternatives to avoid reliance on U.S.-based Starlink.

“Even with U.S. companies, it’s not certain that anybody wants to be dependent on a monopoly,” Darlington added.

Darlington told SpaceNews the DoD non-renewal was for capacity on one of Eutelsat’s satellites in geostationary orbit (GEO) but did not elaborate.

GEO troubles

Broader declines in the GEO market continued to weigh on Eutelsat’s performance over the quarter, even as OneWeb progresses through installing ground stations and securing regulatory clearances needed to expand coverage.

Fixed connectivity sales edged up 0.8% to 59.7 million euros, despite what Eutelsat said were challenging conditions for GEO-enabled consumer broadband in Europe. This included the previously announced cessation of revenues from Italian telco TIM, which decided against migrating services to Eutelsat’s KONNECT VHTS satellite in GEO.

Mobile connectivity revenues fell 2.7% to 39.7 million euros as declines in GEO services also dragged on LEO growth.

Meanwhile, Eutelsat’s shrinking GEO-enabled video business dropped 6.4% to 151.7 million euros amid the industry-wide shift to online streaming services. 

The company also expects to take an annualized 16 million euro hit after removing more Russia-related channels in compliance with sanctions stemming from its ongoing invasion of Ukraine.

Overall, Eutelsat reported 300 million euros in total revenue for the three months to March 31, the company’s fiscal third quarter, down 1.9% year-on-year. 

Despite these headwinds, the company reaffirmed its full-year revenue guidance, expecting results to remain broadly in line with the previous fiscal year.

LEO momentum builds

Christophe Caudrelier, Eutelsat’s chief financial officer, noted that U.S. spending now accounts for 50-60% of the company’s government business after falling significantly. 

However, he said this is also because demand is growing outside the U.S. for OneWeb’s LEO services.

To support future growth, Eutelsat ordered 100 satellites last year from Airbus to begin replenishing the OneWeb network toward the end of 2026. 

Caudrelier said the company is continuing talks with export credit agencies and other capital sources to help finance its broader replenishment plan, estimated to cost up to 2.2 billion euros.

Financing discussions also remain underway for Eutelsat’s roughly 2 billion euro share of IRIS², Europe’s public-private sovereign broadband constellation slated to come online around the end of the decade.

Jean-François Fallacher, currently head of French telecoms giant Orange’s domestic operations, was recently appointed to succeed Eva Berneke as Eutelsat CEO from June to help navigate its sizable capital search.