Banking Law and Space-Based Internet Infrastructure Finance in Spain

1. Introduction

Space-based internet infrastructure refers mainly to satellite systems that provide broadband and communications services from orbit. These projects can include satellite constellations, ground stations, gateways, spectrum rights, launch arrangements, data-processing facilities, and terrestrial connections.

In Spain, there is no single statute called a “Space-Based Internet Infrastructure Finance Law.” Instead, financing such projects sits at the intersection of Spanish and EU banking regulation, telecommunications law, space law, competition law, cybersecurity rules, public procurement, state-aid law, and general contract and security law.

For banks, the central question is therefore not simply whether a satellite project can obtain financing. A lender must determine whether the borrower has legally secure operating rights, whether those rights and revenues can support financing, and whether the resulting exposure satisfies banking prudential requirements.

2. Banking Regulatory Framework

Spanish banks financing satellite-internet infrastructure are principally governed by Law 10/2014 on the regulation, supervision and solvency of credit institutions, its implementing rules, and the EU's Single Rulebook.

At EU level, the Capital Requirements Regulation and Capital Requirements Directive framework establishes requirements concerning capital adequacy, credit risk, large exposures, governance, liquidity and risk management.

Major Spanish banking groups are also subject to the Single Supervisory Mechanism (SSM). The ECB directly supervises significant institutions, while Banco de España participates in the supervisory structure and directly supervises less significant institutions within the SSM framework.

Consequently, even when a satellite-internet loan is commercially attractive, a bank must assess matters such as:

• borrower creditworthiness and projected cash flows;
• construction, launch and deployment risks;
• technology and obsolescence risks;
• spectrum and telecommunications authorisations;
• cybersecurity and operational resilience;
• political and regulatory risks;
• concentration and large-exposure requirements;
• collateral enforceability; and
• environmental and sustainability risks.

A project involving an experimental satellite network will normally present a very different credit profile from financing an established telecommunications operator purchasing additional satellite capacity.

3. Project-Finance Structure

Large space-based internet projects can use project-finance principles.

A special-purpose vehicle may own or operate infrastructure and enter into contracts covering satellite manufacture, launch services, ground infrastructure, network operation and customer services.

Banks may lend on the basis of projected project revenues rather than relying exclusively on the sponsor's general balance sheet.

Potential revenues include subscription payments, wholesale telecommunications contracts, government connectivity agreements, capacity leases and enterprise connectivity services.

A simplified structure could be:

Sponsors → Project Company → Satellites/Ground Infrastructure → Internet Services → Customer Revenue → Debt Repayment

The difficulty is that satellite infrastructure involves unusually high technological and deployment risks. Lenders therefore frequently require substantial sponsor equity, contractual protections, insurance, reserves and other credit enhancements.

4. Spectrum and Telecommunications Rights

Spectrum represents one of the most important regulatory components of satellite broadband.

Spain's principal telecommunications legislation is Law 11/2022, General Telecommunications Law, operating alongside EU telecommunications rules and international spectrum coordination through the International Telecommunication Union framework.

A lender must investigate whether the project has the necessary spectrum-related and telecommunications permissions.

This is particularly important because financing may depend on revenues that cannot legally be generated if the network lacks the required regulatory rights.

Spectrum rights also cannot automatically be treated like ordinary privately owned assets. Their transfer, duration, conditions and regulatory treatment are governed by public law.

Therefore, banks should not assume that spectrum authorisations can simply be seized and sold like conventional equipment following borrower default.

5. Security Package

A Spanish financing transaction could include security over eligible project assets, bank accounts, receivables, shares in the project company and certain contractual rights.

For example, subscription receivables from Spanish or European customers may provide an important source of collateral and debt servicing.

Lenders may also seek contractual mechanisms such as direct agreements with major suppliers and counterparties.

However, regulatory licences create additional complexity. A security agreement cannot override administrative law. If regulatory approval is necessary to transfer an authorisation or replace the operator, contractual enforcement remains subject to those requirements.

This distinction is particularly important in satellite communications financing.

6. Satellite and Launch Risks

Space infrastructure presents risks that ordinary terrestrial broadband financing may not have.

A satellite can be extremely expensive to replace following deployment failure. Constellations additionally require continuous replenishment, maintenance and technological upgrades.

Banks therefore examine:

Manufacturing risk: whether satellites will be completed to specification.

Launch risk: whether satellites reach the intended orbit.

In-orbit risk: whether they function for their expected operational lives.

Constellation risk: whether enough satellites are deployed to provide commercially viable coverage.

Technology risk: whether competitors or technological advances make the system commercially obsolete.

Insurance can mitigate certain losses, but insurance coverage does not eliminate the underlying credit risk.

7. Cybersecurity and Operational Resilience

A satellite-internet project combines space infrastructure, telecommunications infrastructure, software, cloud services and ground networks. Cybersecurity is therefore directly relevant to financing.

Banks financing such businesses need to consider the EU cybersecurity framework, including the NIS2 regime as implemented through applicable Spanish measures, as well as telecommunications security requirements.

For the financing bank itself, the Digital Operational Resilience Act (DORA) has applied since 17 January 2025.

DORA is particularly relevant where financial institutions depend on information and communications technology services. A satellite-connectivity provider supplying critical connectivity to banks could therefore become part of a much wider operational-resilience analysis.

Cybersecurity failures can reduce project revenues and potentially create regulatory liability, service disruption and reputational damage.

8. EU Space Connectivity Policy

Spanish financing must also be considered in the wider EU space-policy framework.

A major development is IRIS², the EU programme for secure satellite connectivity and resilient communications. It illustrates the increasingly strategic relationship between satellite infrastructure, digital sovereignty, cybersecurity and public-sector connectivity.

For Spanish banks, this creates potential opportunities involving satellite manufacturers, telecom companies, infrastructure operators, ground-station providers and subcontractors participating in European connectivity programmes.

Public-sector involvement may improve parts of a project's revenue profile, but it does not automatically eliminate construction, technology or counterparty risk.

9. Public Financing and State Aid

Satellite connectivity can also involve public guarantees, subsidies, EU programmes or financing from institutions such as the European Investment Bank.

Where public support gives an undertaking an economic advantage, Articles 107–109 TFEU and EU State-aid rules may become relevant.

Banks must therefore distinguish between ordinary commercial financing and financing supported by government measures.

This matters because unlawful State aid may eventually be subject to recovery.

Case 1: Altmark Trans GmbH, Case C-280/00

The Court of Justice established important conditions under which compensation for public-service obligations does not constitute State aid.

For satellite broadband, the principle can matter where government authorities compensate operators for providing connectivity to remote or underserved areas.

The financing bank must understand whether government payments are ordinary commercial revenues, qualifying public-service compensation, or State aid requiring a lawful basis.

Case 2: Commission v France (Stardust Marine), Case C-482/99

The Court considered when measures involving public undertakings can be attributed to the State.

The case is relevant where space-connectivity financing involves publicly controlled financial institutions or companies. The mere presence of a public undertaking does not automatically determine the State-aid analysis; State imputability and the economic circumstances must be examined.

10. Government Guarantees

Government guarantees can significantly improve the bankability of infrastructure projects, but EU State-aid law remains important.

Case 3: Residex Capital IV CV v Gemeente Rotterdam, Case C-275/10

The case concerned an unlawful public guarantee.

The Court confirmed the importance of effective remedies in State-aid situations. For lenders, the lesson is significant: a public guarantee should not automatically be assumed to be legally secure merely because a government body issued it.

Due diligence must examine whether the guarantee complies with applicable State-aid requirements.

11. Competition Law and Satellite Networks

Space-based internet markets can involve extremely high fixed costs and network effects. Competition law therefore becomes relevant where financing supports mergers, joint ventures, exclusive infrastructure arrangements or dominant telecommunications operators.

Case 4: United Brands v Commission, Case 27/76

This foundational EU competition case developed principles concerning dominance and relevant-market assessment.

In a satellite-connectivity context, regulators may need to determine whether the relevant market is satellite broadband alone or a broader connectivity market containing fibre, mobile and fixed-wireless alternatives.

That market definition can materially affect assessments of market power.

Case 5: Hoffmann-La Roche v Commission, Case 85/76

The Court developed important principles concerning dominant positions and abusive conduct.

A satellite operator obtaining significant market power must therefore consider whether practices involving exclusivity, customer tying, discriminatory access or related commercial arrangements could raise Article 102 TFEU concerns.

Competition-law violations can become banking risks because regulatory fines or restrictions can damage the borrower's cash flows.

12. Infrastructure Access

Satellite broadband still requires substantial terrestrial infrastructure, including gateways, data centres and connections to communications networks.

Case 6: Bronner v Mediaprint, Case C-7/97

The Court established a demanding standard concerning circumstances in which a dominant undertaking may be required to provide competitors access to infrastructure.

Although Bronner did not concern satellites, its principles can become relevant when assessing claims concerning access to infrastructure considered indispensable for competition.

A bank financing infrastructure that may become strategically important should therefore consider access regulation and competition risk when forecasting long-term revenues.

13. Data Protection

Satellite internet providers processing information relating to European customers must comply with the GDPR and Spanish data-protection legislation.

Cross-border data transfers can be especially significant because satellite networks inherently operate across jurisdictions.

Case 7: Schrems II, Case C-311/18

The CJEU invalidated the EU-US Privacy Shield and emphasised the need for effective protection when personal data is transferred internationally.

The judgment matters for satellite internet operators using global cloud infrastructure, network-management systems or foreign service providers.

From a banking perspective, material GDPR exposure can affect the project's legal-risk assessment and operating costs.

14. Cross-Border Nature of Financing

A Spanish satellite-internet project may involve:

• satellites manufactured outside Spain;
• launches from another jurisdiction;
• ground stations in several EU states;
• international spectrum coordination;
• customers throughout Europe;
• multinational lenders; and
• insurance from international markets.

Financing documents therefore require careful governing-law, jurisdiction, security and insolvency analysis.

Banks cannot assume that Spanish security documents alone will provide effective security over every project asset.

15. Insolvency and Bankability

The Spanish insolvency framework is another critical consideration.

Lenders must examine what happens if the project company enters restructuring or insolvency proceedings. Particular attention is required for security interests, essential contracts, receivables and regulatory authorisations.

The commercial value of a satellite project may depend heavily on keeping the network operational. Consequently, liquidation of individual physical assets may produce much less value than preservation of the business as a functioning network.

This makes restructuring planning especially important.

16. Sustainability Considerations

Banks increasingly incorporate environmental considerations into lending decisions.

Space projects create unusual sustainability issues, including orbital congestion, debris mitigation, satellite disposal and the environmental effects associated with launches and terrestrial infrastructure.

EU sustainable-finance requirements do not automatically classify every satellite broadband project as sustainable. Banks must assess the particular activity and applicable disclosure and taxonomy rules rather than simply treating digital infrastructure as "green."

17. Practical Lending Example

Suppose a Spanish company seeks €500 million to establish satellite broadband coverage for Spain and other EU markets.

Before providing financing, lenders would normally investigate:

1. telecommunications and spectrum rights;
2. satellite ownership and manufacturing contracts;
3. launch agreements;
4. insurance arrangements;
5. ground-station permissions;
6. customer and government contracts;
7. cybersecurity systems;
8. intellectual-property rights;
9. data-protection compliance;
10. competition-law exposure;
11. State-aid implications;
12. collateral enforceability; and
13. insolvency and restructuring scenarios.

The loan could then be structured using sponsor equity, senior secured debt, reserve accounts, insurance proceeds assignments, security over receivables and shares, and contractual protections relating to major suppliers.

Conclusion

Banking law and space-based internet infrastructure finance in Spain is a hybrid legal field rather than a separate statutory category. Spanish banking and security law provide the financing foundation, while EU prudential rules determine how banks manage the exposure. Telecommunications and spectrum law determine whether the network can operate commercially, while competition, State-aid, cybersecurity, data-protection and insolvency rules can directly affect project bankability.

The cases of Altmark, Stardust Marine, Residex, United Brands, Hoffmann-La Roche, Bronner,* and *Schrems II demonstrate an important point: even though Spain has relatively little reported case law dealing specifically with bank financing of satellite-internet constellations, established EU jurisprudence supplies legal principles that directly affect public funding, guarantees, competition, infrastructure access and data governance.

For lenders, therefore, the decisive issue is not merely the physical value of satellites. The real bankability of a Spanish space-based internet project depends on the combination of enforceable revenue streams, secure regulatory permissions, manageable technological risk, resilient infrastructure and a legally effective financing and security structure.