One commentator called the award of the IRIS² contract to the SpaceRISE consortium comprising Eutelsat, SES and Hispasat and showing “a sign of life, at last, for Europe’s satellite internet” and adding that Europe’s nations did not want to remain “beholden to Starlink or other networks”.

Those sentiments may be true, but hard-headed bankers such as Exane/BNPP and its satellite analyst Sami Kassab can only look at the numbers. Kassab praised the decision and described the result as generating a “state-of-the-art LEO, MEO, GEO system whose full entry into service is planned for early 2030. It is Europe’s answer to Starlink/Kuiper.”

Kassab also described the costs, saying: “So far, the EU Parliament voted €2.4 billion funding to 2027 and the European Space Agency voted a further €0.6 billion to finance this programme. Securing EU funding past 2027 looks like the main risk for the industry. According to SES most of its related capex will be deployed from 2028, presumably after EU funding for 2028-2032 has been secured. The company stated it will maintain its investment grade rating and its dividend.”

The scheme calls for 290 satellites overall.

Moreover, Kassab says that the three core operators can expect an internal rate of return (IRR) of at least 10 per cent. “The concession agreement will include built-in protection mechanisms to guarantee a minimum IRR level. We believe IRIS² is likely to embark Eutelsat OneWeb Gen 2 payloads and reduce the investment burden for shareholders.”

“SpaceRISE and the EU Commission will now engage in finalising the precise contractual agreement. We see this news development as a positive for SES (we are positive + on SES) and Eutelsat (we remain negative – on Eutelsat). Commercial operators will benefit from massive public funding support, increase their competitiveness and are in line to generate a double-digit IRR on their investments with a guaranteed minimum level,” he says.

The end results for Exane/BNPP and in particular Eutelsat and SES are quite different. The bank stays downbeat (‘Underperform’) on Eutelsat and gives the Paris-based operator a target share price of just €3.50 (on November 1st its share price was €3.74), and much more optimistic on SES (‘Outperform’) and a share price target of €10. (On November 1st SES’s shares were €3.16). SES will reveal their latest trading results this on November 7th.

Other posts by Chris Forrester:

1. AT&T explains AST SpaceMobile strategy
2. ESA introduces Fair Return structure
3. New EU space boss explains strategy
4. Eutelsat suffers from negative bank report
5. MultiChoice, eMedia make peace
6. Eutelsat criticised over “Kremlin links”
7. Rivada Space “still working” with Terran Orbital
8. D2D: Power levels concerns
9. Terran Orbital hit with Class Action

Categories: Blogs, Broadband, Inside Satellite, Satellite

Tags: eutelsat, Exane/BNPP, iris, Sami Kassab, spacerise