Satellite alliances and industrial awakenings for Europe
3' min read
3' min read
The news that three European groups with strong public shareholdings operating in the satellite sector, the Franco-German Spanish Airbus, the French Thales (which controls two-thirds of the Thales-Alenia Spazio joint venture) and the Italian Leonardo intend to prepare an operational merger agreement to face competition from Elon Musk's two American companies (Space X and Starlink) sends out an interesting signal of industrial awakening in one of the directions called for by the Draghi Report of 2024 and echoed with vigour in Draghi's own speech at the recent 'High-level conference on competitiveness' on 16 September 2025.
We talk about the "coordination of state aid that often acts as protectionism, blocking activity within borders instead of building globally competitive European industries. IMF research shows that one country's aid often comes at the expense of growth in neighbouring countries (...) So far, the European response has fallen into two traps: uncoordinated national efforts or blind faith that market forces will build new industries. The first can never guarantee the necessary scale. The second is impossible when others distort markets and tilt the playing field'.
Until the first decade of the 2000s, competition in this sector was essentially between satellites launched into geo-stationary orbits 36,000 km above the earth. Then Musk changed the market by focusing on networks of small, and therefore much cheaper, satellites launched into low orbits (around 800 km from earth).
The three-way marriage of Airbus-Thales-Leonardo would create a €6 billion turnover group, able to optimise competition between high- and low-orbit satellite systems, realising economies of scale from the huge investment in research and development and more generally from state aid.
For several years now, European industrial policy has had state aid coordination instruments such as the IPCEIs (Important Projects of Common European Interest), starting with the one on semiconductors approved in 2003, which mobilises EUR 8 billion of public funds, distributed among 14 Member States with 56 companies in 68 projects, with the aim of achieving a 20% share in global semiconductor production by 2030: an objective that the European Court of Auditors itself considers 'very unlikely'.
