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Italy’s Talks with Musk’s Starlink Stalled Over Geopolitical Tensions

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Negotiations between the Italian government and Elon Musk’s satellite internet company, Starlink, have stalled, according to Italy’s Defense Minister Guido Crosetto. The potential contract, which could have seen Starlink provide secure communications for Italy’s government and defense officials, has been delayed due to shifting discussions from technical issues to political concerns surrounding Musk’s statements and associations.

Prime Minister Giorgia Meloni’s government had been exploring a deal with Starlink to guarantee encrypted communications for diplomats and defense officials in high-risk areas. The proposed deal, valued at 1.5 billion euros ($1.62 billion) over five years, would have seen Starlink’s satellite services expand in Italy, where the company has been operating since 2021 with around 7,000 low-orbit satellites in use globally. However, tensions have arisen due to opposition from Italian politicians questioning the appropriateness of granting a national security contract to a foreign businessman with strong ties to U.S. President Donald Trump.

Crosetto emphasized that discussions should return to a technical level once the political tensions subside, stating that the ultimate goal is to determine what is safest and most useful for Italy’s national security. He referred to Musk as a “visionary genius” but acknowledged the complex political context surrounding the deal.

The situation also reflects the broader geopolitical balancing act that Meloni’s government faces as it navigates Italy’s alliance with the United States. Meloni’s coalition partner, the far-right League, has continued to support both Musk and Trump, putting additional pressure on the government.

Meanwhile, Andrea Stroppa, a representative for Musk in Italy, suggested that while Italy and its European partners should consider developing their own satellite infrastructure, Starlink could offer the most viable solution in the short term to meet urgent operational needs.

Italy’s League Party Supports Starlink Over Eutelsat for Secure Satellite Communications

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Italy’s co-ruling League party has urged the Italian government to choose U.S.-based Starlink over the French-led Eutelsat for the country’s secure satellite communications system. The League argues that Starlink offers more advanced technology, particularly for encrypted communications between government officials, diplomats, and defense personnel in high-risk areas.

Prime Minister Giorgia Meloni’s government is focused on securing a reliable satellite communications system, with a particular interest in ensuring safe communication channels for its operations in conflict zones. While Eutelsat is among the companies engaged in talks with the Italian government, along with Elon Musk’s Starlink, the League has made it clear that it supports the American company’s technology, citing its dominant position in the sector with 6,700 active satellites, compared to Eutelsat’s roughly 600.

“In the Italian interest, it would be odd to choose a French entity over a more technologically advanced and cutting-edge system like the American one,” the League stated, without directly naming either company. The League, a far-right political party, is part of the ruling coalition with Meloni’s Brothers of Italy and the moderate Forza Italia, and is a known supporter of U.S. President Donald Trump, a close adviser to Musk.

Eutelsat’s CEO, Eva Berneke, confirmed ongoing discussions with Italy, emphasizing the company’s ability to meet the country’s current needs for satellite communications as the EU’s IRIS² satellites face delays. While Starlink and Eutelsat are the primary providers with low-orbit constellations, Italy has yet to formally enter negotiations with either company, with sources from Meloni’s office indicating that any decision will follow full institutional procedures and transparency.

Opposition parties in Italy have raised concerns about entrusting such a crucial national security contract to Musk, especially given recent controversies surrounding Starlink’s role in Ukraine’s satellite communications. Despite these concerns, the League has made it clear that Italy’s national interests should be the primary consideration, avoiding any ideological biases in favor of its relationship with the U.S.

Musk responded to the League’s support on social media, expressing his gratitude.

‘Gamestop Effect’ Drives Eutelsat’s 650% Surge Amid Retail Traders’ Frenzy

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Shares of Franco-British satellite operator Eutelsat surged dramatically this week, with gains reaching nearly 650% over four days, as retail traders appeared to be behind the movement, reminiscent of the “Gamestop effect” seen in 2021. This sudden rally in Eutelsat’s stock follows speculation that the company could replace Elon Musk’s Starlink in providing internet access to war-torn Ukraine, reigniting investor interest in a stock that had previously hit record lows.

On Thursday, Eutelsat’s shares rose another 18%, pushing the company’s value to over €4 billion ($4.3 billion), although they eventually retreated by 11% in the face of heavy trading volumes. This followed a six-fold increase in the prior three sessions, marking a remarkable short squeeze, according to Bernstein analyst Aleksander Peterc. The move is seen as one of the most substantial short squeezes, driven by retail traders amplifying the effects of geopolitical tensions and speculations about the company’s future role in satellite communication for Ukraine.

The rally began after a public dispute between Ukrainian President Volodymyr Zelenskiy and U.S. President Donald Trump last Friday, which led to the suspension of military aid to Ukraine. The excitement around Eutelsat also gained momentum from intense discussions in French retail forums, particularly on Boursorama, and continued interest in platforms like Germany’s Tradegate. Eutelsat has become one of the most traded stocks on these platforms this week, surpassing even major defense stocks.

Stephane Ekolo, an equity strategist, pointed out that retail traders were likely behind the short squeeze, as hedge funds had shorted the stock, leading to heavy covering of positions. Despite this surge, analysts caution that the stock’s price reflects investor hope more than solid fundamentals. In January, Moody’s had downgraded Eutelsat’s rating, citing struggles with its OneWeb satellites and cash flow pressures due to significant investment needs.

Additionally, Eutelsat is reportedly in talks with the European Union about providing more internet access to Ukraine, potentially boosting its prospects further. The company is also discussing a deal with the Italian government for secure satellite communications. Despite this, Fitch downgraded the company’s long-term rating, citing its need for additional funding of $4.2 billion by 2032.