Summarize this content to 2000 words in 6 paragraphs in Arabic Unlock the Editor\u2019s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Investors are growing increasingly concerned about the finances of two of Europe\u2019s largest satellite operators as the rapid rise of Elon Musk\u2019s Starlink deepens the pressure on the continent\u2019s ailing incumbents.The cost of buying insurance against France\u2019s Eutelsat and SES of Luxembourg defaulting on their bonds has soared to record highs, as investors fear the two will struggle to repay their debts, which together amount to about \u20ac7bn.Legacy satellite operators have struggled to adapt to the rise of new communication services from low Earth orbit, as their traditional, higher- orbit broadcasting businesses decline.In just five years Musk has expanded Starlink to more than 6,000 satellites, more than 60 per cent of the spacecraft in orbit, serving some 130 countries. His company is also increasingly taking market share in the lucrative market for in-flight connectivity with airlines, including beating Eutelsat to win a contract with Air France. Pressure on Eutelsat and SES is expected to intensify when Amazon\u2019s Project Kuiper launches its broadband satellite service, expected later this year.\u201cEurope\u2019s incumbents are in danger of being left behind,\u201d said one high-yield credit investor who has recently sold out of Eutelsat\u2019s bonds, citing Starlink\u2019s technological advances.Musk\u2019s relentless expansion of Starlink, alongside with the European duo\u2019s sluggish response to the new low Earth orbit challenge, have driven down their share prices to record lows. In response to the emerging competition, Eutelsat and SES have sought to consolidate, with Eutelsat snapping up the UK\u2019s OneWeb in 2022 and SES buying Intelsat for $3.1bn last year.Credit investors have bought credit default swaps, derivatives that act like insurance contracts that pay out if a company reneges on its debts.Spreads on five-year CDS on Eutelsat, which has debts of almost \u20ac2bn, have climbed more than 800 basis points to 1,220bp in the past six months. That implies that investors now give Eutelsat a 65 per cent chance of defaulting on its bonds.The equivalent CDS spreads for SES, which has about \u20ac5bn worth of debt made up mostly of euro-denominated bonds, has also hit an all-time high in recent weeks. On Thursday it touched 309bp compared with 100bp at the start of 2024, giving it a probability of default of 22 per cent. Eutelsat said its low Earth orbit product \u201cis a highly competitive global offering\u201d and said it was \u201cuniquely positioned\u201d in the market. SES did not respond to a request for comment.Last month, Moody\u2019s downgraded Eutelsat\u2019s credit rating by two notches from Ba3 to B2, plunging it further into junk territory.The credit rating agency blamed the cut on Eutelsat\u2019s takeover of the start- up OneWeb, which has far underperformed its own predictions. Last year Eutelsat said OneWeb\u2019s revenues were barely half the target forecast at the time of the takeover, and Eutelsat downgraded its earnings outlook up to 2025.Ernesto Bisagno, an analyst at Moody\u2019s, said the downgrade in part reflected the lower earnings forecasts, increased competition \u201cand the significant refinancing needs in 2027 at a time when its cost of funding has increased materially.\u201dSES\u2019s debt is rated at BBB at Fitch and Baa3 at Moody\u2019s, placing it just inside of investment-grade territory.\u201cIt\u2019s just too hard to tell how that industry will play out with Starlink\u2019s advances\u2009.\u2009.\u2009.\u2009Visibility of that threat is troublesome,\u201d said another high-yield bond investor. In December, the EU signed a \u20ac10.6bn deal to develop a European satellite network, with 61 per cent funded publicly and the rest coming from the SpaceRise industrial consortium, led by Eutelsat, SES and Spanish operator Hispasat.Eutelsat is counting on the project, called Iris\u00b2, to help fund the development of its next generation of OneWeb satellites and is the project\u2019s single biggest private sector investor, committing \u20ac2bn. The project will not be ready to operate until 2030 at the earliest.Despite Europe\u2019s attempt to boost its own industry, Italy\u2019s government, led by Giorgia Meloni, has entered preliminary talks with Musk\u2019s SpaceX over a potential deal worth up to \u20ac1.5bn to provide secure military communications.The deal could involve using Starlink services for \u201cencrypted data communications\u201d, according to the Italian government.<\/p>\n","protected":false},"excerpt":{"rendered":"
Summarize this content to 2000 words in 6 paragraphs in Arabic Unlock the Editor\u2019s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Investors are growing increasingly concerned about the finances of two of Europe\u2019s largest satellite operators as the rapid rise of Elon Musk\u2019s Starlink deepens the pressure<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[63],"tags":[],"class_list":{"0":"post-196746","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-tech"},"_links":{"self":[{"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/posts\/196746","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/comments?post=196746"}],"version-history":[{"count":0,"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/posts\/196746\/revisions"}],"wp:attachment":[{"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/media?parent=196746"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/categories?post=196746"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/tags?post=196746"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}