Why European Starlink rival Eutelsat shares are rocketing

Shares of French satellite operator Eutelsat skyrocketed almost 390% last week — and a potential change of tack in European defense has been helping the rally.

The firm’s stock price saw wildly volatile moves last week, up by as much as 77% on Tuesday and by another 120% on Wednesday. From its closing price on Feb. 28 to last Friday’s close, shares have risen an eyewatering 387%.

Eutelsat’s shares continued to climb on Monday, jumping more than 22% as of 1:00 p.m. local time in Paris.

What’s behind Eutelsat’s huge share price gains? CNBC runs through all you need to know.

Eutelsat is a French company that produces satellites for data connectivity. The business sends its satellites to space using rockets from the likes of Elon Musk’s SpaceX, deploying them into both low earth orbit (LEO) and into geostationary orbit (GEO).

Following a deal to combine its operations with British satellite firm OneWeb in 2023, Eutelsat became the world’s third largest satellite operator in terms of revenues. It competes with Musk’s Starlink satellite internet venture, a subsidiary of SpaceX.

Last week, reports surfaced suggesting that Eutelsat was in the running to potentially replace Musk’s Starlink in the embattled Ukraine. For years, Starlink has offered Ukraine’s military satellite its internet services to assist with the war effort amid Russia’s ongoing invasion.

However, relations between the U.S. and Ukraine have soured recently following the election of President Donald Trump. Musk serves as head of the newly instated Department of Government Efficiency, an advisory body assisting the administration.

Last week, Trump paused all military aid to Ukraine following a clash with the country’s President Volodymyr Zelenskyy. The confrontation happened after Trump shifted U.S. policy on Ukraine and Russia by reopening talks with Moscow.

In February, reports said that U.S. negotiators had raised the possibility of cutting Ukraine’s access to Starlink if the two countries aren’t able to successfully negotiate a deal for the U.S. to secure access to Ukraine’s rare earth minerals.

On March 4, Eutelsat said that it was in talks with the European Union to supply additional internet access to Ukraine.

The French company’s shares had already begun surging the day prior, on the back of speculation that Eutelsat could serve as a replacement for Starlink in Ukraine if negotiations with the U.S. fracture further.

For now, it’s not entirely clear. The company is discussing an expansion of its services in Ukraine with the EU.

“Everyone is asking us today, ‘Can you replace the large number of terminals of Starlink in Ukraine,’ and we are looking at that,” Eutelsat CEO Eva Berneke told Bloomberg in an interview last week.

Eutselsat arguably has the scale to offer additional support for Ukraine in terms of satellite-based connectivity. The firm says it currently has a fleet of 35 GEO satellites, in addition to an LEO constellation of more than 600 satellites.

Over the weekend, Musk and U.S. Secretary of State Marco Rubio had a spat with Poland’s foreign minister on X, the social media platform formerly known as Twitter, which Musk owns.

The tech billionaire said that Ukraine’s “entire front line” would collapse if he were to switch off Starlink.

In response, Polish Foreign Minister Radoslaw Sikorski said his country pays Starlink for services to Ukraine, which Warsaw has supported in its battle against Moscow’s invasion since 2022. Sikorski added Poland may have to seek alternative suppliers if Starlink proves to be an “unreliable provider.”

Rubio disputed Sikorski’s claims, saying “no one has made any threats about cutting Ukraine off from Starlink” and urging gratitude — while Musk dubbed the Polish politician a “small man.”

On Monday, Polish Prime Minister Donald Tusk defended his foreign minister, saying Sikorski “calmly” explained the “Polish raison d’état to officials from another country.”