Mobile satellite operator Inmarsat has selected International Launch Services (ILS) for the launch of three Inmarsat-5 (I-5) birds in 2013-2014. The satellites will be lifted on the Proton rocket from the Baikonour Cosmodrome in Kazakhstan.
The three…
Mobile satellite operator Inmarsat has selected International Launch Services (ILS) for the launch of three Inmarsat-5 (I-5) birds in 2013-2014. The satellites will be lifted on the Proton rocket from the Baikonour Cosmodrome in Kazakhstan.
The three 702HP Ka-band satellites, currently being built by Boeing, will support the company’s next generation global service, Global Xpress. This programme illustrates the company’s push in Ka-band, as it expects US$500m of annual Ka-band revenues five years after global service launch. In August last year, Inmarsat CFO Rick Medlock added that the new Ka-band network should not, however, eat away at the company’s L-band revenues.
Inmarsat estimates that the total cost of Global Xpress will be US$1.2bn, which includes the fixed cost of the satellites, as well as the cost of additional ground network infrastructure, product development, launch services and insurance.
In its interim results to 30 June 2011, Inmarsat said that US$1.45bn of new financing has now been completed and that I-5 is fully funded.
In mid-May 2011, Inmarsat announced that it secured a US$700m 12.5-year credit facility from the Export-Import Bank of the United States to fund the construction of the Inmarsat-5 satellites by Boeing. ING is believed to have advised Inmarsat on the ECA process.
Inmarsat then followed this by securing a new US$750m a five-year revolving credit facility in late June. The revolver, which was upsized from an initial target of US$600m due to strong demand, replaces an existing US$500m facility that Inmarsat secured in July 2009. One banker suggested it will be used to support the cost of the Global Xpress programme.
The ILS announcement was released just prior to Inmarsat reporting its first half 2011 results. The satellite operator posted total revenues of US$682.9m for H1 2011, up about 20% year-on-year. Its EBITDA also jumped 28% to US$426.9m, while its profit before tax was up 68% to US$254.8m.
Despite these improved results, Inmarsat’s share price actually fell 20% to close at 391.3p after the company warned over a slowdown in its business. Inmarsat stated that “results continue to be adversely impacted by rapid customer migration to our FleetBroadband service where pricing is typically lower than the older services being replaced.
“While we remain confident in the longer term prospects for our maritime business, we now expect the impact of migration to last longer than previously anticipated and this will have an effect on maritime results for the remainder of the year and possibly the early part of 2012.”
Other potential impediments to future growth include the impact of the withdrawal of troops from Afghanistan, where the company provides satellite communications to soldiers as well as ongoing interference issues between US satellite-terrestrial 4G venture LightSquared and the GPS industry.
Inmarsat has already been reaping the rewards of its US$368.8m cooperation agreement with LightSquared, but market fears over the long term viability of the LightSquared project given the GPS issues has impacted its share price if not its revenues.
As part of its results announcement, Inmarsat also announced a US$250m share repurchase programme over the next year. It will be funded from available liquidity and Inmarsat said that any repurchased shares would be cancelled.
