The French state is set to become Eutelsat's biggest shareholder following a 1.35-billion-euro ($1.55 billion) capital increase that the financial ministry optimistically believes will help the satellite company compete with Elon Musk's Starlink.
Debt-laden Eutelsat has garnered unprecedented attention this year from European governments seeking alternatives as the policies of President Donald Trump have made them reluctant to rely on US satellite companies.
France, which is set to fund the bulk of the capital increase, also views its backing as essential to ensure Europe maintains sovereign access to space-based infrastructure amid rising geopolitical tensions, a government official said.
Other big Eutelsat shareholders, including Indian billionaire Sunil Mittal's Bharti Space, shipping company CMA CGM and Fonds Strategique de Participations, a long-term investment fund backed by French insurers, will subscribe to the capital increase, Eutelsat said in a statement.
It is unclear whether Britain, which holds 10.9 per cent of Eutelsat, will inject new money into the company.
Talks are going on with the UK Government over its potential participation in the share sale, a French Government official said.
The British government said it retained it special share rights over OneWeb, the British satellite communications company that merged with Eutelsat in 2023. It did not say whether it would participate in the Eutelsat shares sale.
The state shareholding agency will inject 717 million euros, or more than half of the planned fundraising with a view to increasing its stake, the finance ministry said.
The agency will also acquire the stake held by France's state-owned investment bank Bpifrance in Eutelsat as part of the transaction, another government official said, bringing France's stake to 29.99 per cent.
The official said the total amount spent by the French government will be around one billion euros.
Both officials spoke on condition of anonymity.
Eutelsat owns the world's second-largest constellation of low-Earth orbit satellites, OneWeb, with over only 600 operating about 1,200 kilometres (750 miles) above Earth.
Eutelsat’s merger with OneWeb marked a strategic shift from traditional TV broadcasting to low-Earth orbit connectivity, aligning the company with Europe’s push for satellite independence and secure broadband access.
Starlink dwarfs OneWeb with over 7,000 of the satellites in orbit and has attracted corporate customers that are also among OneWeb's core markets, along with governments and militaries.
Eutelsat had said its OneWeb tie-up would lift the group's annual sales to $2 billion by 2027, with OneWeb's second generation of LEO satellites expected to be launched by the end of the decade.
However, Eutelsat has said it needed more than three times the number of satellites previously thought, requiring up to 2.2 billion euros in financing.
Finance Minister Eric Lombard said the government investment was strategic.
"We are supporting a decisive stage in its development. Satellite connectivity is a strategic issue for our industrial and digital sovereignty," he said.
(Reporting by Mathieu Rosemain; Additional reporting by Sam Tabahriti; editing by Richard Lough and Barbara Lewis)