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Eutelsat has come under pressure after investors baulked at the OneWeb deal, which valued the British business at $3.4bn (£2.7bn).
OneWeb will require as much as $4bn to build a new generation of satellites, a sum that has sparked concern among Eutelsat’s shareholders as rising interest rates make investment more costly.
In November, analysts at Fitch downgraded their rating of Eutelsat’s debt, warning the company now had “significantly increased execution and free cash flow risks” following the merger.
The analysts added that Eutelsat faced increased competition with Elon Musk’s Starlink. The billionaire has launched thousands of satellites into earth’s orbit to provide broadband connectivity in direct competition with OneWeb.
Under the leadership of chief executive Eva Berneke, Eutelsat is hoping to at least partly fund the cost of upgrading OneWeb with funds from a major EU space project.
The European Commission hopes to build a domestic rival to Starlink so it will not be forced to rely on the erratic Mr Musk. Satellite broadband has proved a crucial capability in recent conflicts, such as the war in Ukraine.
Eutelsat is now worth less than €2bn even after its merger with OneWeb. Meanwhile, Mr Musk’s Starlink has been sounding out investors about a funding round that would value his company at $180bn.
An industry source said: “Eutelsat has to get the EU project.”
The commission is considering potential pitches for the multibillion euro satellite project. However, officials have previously said they were wary of OneWeb’s involvement, since the UK holds a board seat and a veto over certain business deals.
In its first quarter results in October, Eutelsat reported a 4.7pc decline in its revenues. However, it claimed OneWeb had orders totalling $1bn for its satellite network.
A government spokesman said: “Share prices fluctuate in the short term but this was a long-term investment.”
For a while, the value of the Government’s stake edged up after OneWeb brought on board new investors, including Japan’s SoftBank and later Eutelsat.
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