Eutelsat shares popped on Friday morning, after the European satellite operator announced a 1.35-billion-euro ($1.55 billion) capital raise led by the French state and backed by other investors.

The company's stock was up 22% at 10:15 a.m. London time.

The company said that, along with a debt refinancing plan, the capital increase would support its investment in its existing Low Earth Orbit (LEO) capabilities, which are focused on business-to-business and business-to-government operations.

The French state will become Eutelsat's biggest shareholder following the move, holding 29.99% of capital and voting rights, followed by India's Bharti Space Limited at 18.7%.

Eutelsat sends its satellites to space using rockets from the likes of Elon Musk's SpaceX, deploying them into both LEO and into geostationary orbit (GEO). Following a deal to combine its operations with British satellite firm OneWeb in 2023, Eutelsat became the world's third largest satellite operator in terms of revenues.

On Wednesday, Eutelsat announced a 10-year deal with the French armed forces to provide priority-access space resources on its OneWeb LEO satellite constellation.

The French firm's shares have been hugely volatile this year, experiencing an enormous spike in March on expectations that it could be a European alternative to Elon Musk's Starlink, and subsequently dropping sharply. Shares are currently up 69% year to date.

Eutelsat share price.

"As the only European operator with a fully operational LEO network, Eutelsat is positioned to play a strategic role in supporting critical sectors such as military communications, cyber-resilience, and secure government connectivity, fully aligned with European Union and NATO objectives for strategic autonomy," it said in the release.

Other investors, including the U.K., "could join the capital raise in due course," it added.

Writing on X, French President Emmanuel Macron said that by strengthening Eutelsat's position France was "ensuring its strategic independence and paving the way for Europe's" and noted he would discuss the decision at the Paris Air Show on Friday.

Earlier this year, the firm was rumoured to be in the running to replace Starlink in the embattled Ukraine. For years, Starlink has offered Ukraine's military its satellite internet services to assist with the war effort amid Russia's ongoing invasion.

However, relations between the U.S. and Ukraine soured following the election of President Donald Trump — and reports surfaced that U.S. negotiators had raised the possibility of cutting Ukraine's access to Starlink.

Since then, tensions have cooled somewhat between the U.S. and Ukraine and Starlink retains its presence in the war-torn country.

- CNBC's Ryan Browne contributed to this report.