Exclusive-Europe's Eutelsat vies for secure Italian telecoms contract, sources say

By Angelo Amante and Elvira Pollina

ROME (Reuters) - Franco-British satellite operator Eutelsat, a rival to Starlink, is among companies that are in talks with the Italian government to provide systems for secure satellite communications, two sources close to the matter told Reuters.

Italy is aiming to guarantee encrypted communications between the government, diplomats and defence officials operating in risky areas, and Eutelsat is among the contenders, along with Elon Musk's Starlink, the officials said.

The firm's involvement has not been previously reported and underscores how Europe is keen to develop potential homegrown alternatives to Starlink, which dominates the sector and is in focus now amid transatlantic tensions over the war in Ukraine.

The sources, who asked not to be named, declined to provide details on how far in the talks Eutelsat has progressed. The company merged with Britain's OneWeb in 2023 and manages a constellation of around 650 low Earth orbit (LEO) satellites.

A spokesperson from Eutelsat told Reuters that the company "regularly engages with European governments and institutions on secure satellite communications" as part of a commitment to "resilient and sovereign connectivity solutions."

The company declined to comment on confidential or ongoing discussions with specific governments.

The Eutelsat network is much smaller than that of Starlink, a dominant force in the sector with 6,700 active satellites, but its shares have surged in recent days on talks with the European Union to supply additional internet access to Ukraine.

Eutelsat - founded as an intergovernmental body between Italy and France - is now a French-led company. The Italian concession holder is Telespazio, a joint venture between Italy's Leonardo (67%) and France's Thales (33%).

Discussions between Prime Minister Giorgia Meloni's right-wing government and Musk's Starlink have met sharp criticism from opposition parties in Italy, which question the wisdom of handing a national security contract to a foreign businessman.

Meloni is an ally of U.S. President Donald Trump and was one of only a few foreign leaders to attend his inauguration in January. However, tension has been rising between the United States and Europe over the defence of Ukraine.

Italy's government says that no contract had been signed with Musk, a close adviser to Trump, and told parliament it was also aiming to develop its own low-orbit satellites involving Italy's main national players.

That hardly represents an immediate solution to Italy's needs, and Meloni in January said no public alternatives were available yet, amid delays in the development of the EU's IRIS² satellites.

A source with knowledge of the matter told Reuters earlier this year that Rome was considering a five-year deal with Starlink worth a total 1.5 billion euros ($1.61 billion).

($1 = 0.9337 euros)

(Reporting by Angelo Amante and Elvira Pollina, additional reporting by Giselda Vagnoni; Editing by Adam Jourdan and Bernadette Baum)