Inmarsat plc Interim
Management Statement
7 May 2014
Inmarsat plc provided the following information for the
3 months ended 31 March 2014.
Rupert Pearce, Inmarsat’s Chief Executive Officer, said,
“We have made a strong start to the year in both our
wholesale MSS business and in our retail operations. Our
MSS business grew by 4% year over year, driven by strong
results from our maritime and aviation businesses. We
have also completed two strategic transactions that
enhance our existing business operations and build new
capability and market reach that will benefit the
successful take-up of Global Xpress (“GX”).
“We remain on track for two further Inmarsat-5 launches
in 2014 that will complete our GX network. Market
interest in GX is building and a number of high profile
customers have committed to service trials. New business
for GX was signed during the quarter and GX service
testing is progressing well. We remain confident that
commercial GX services will be introduced in July in
line with our plan. Finally, we are indebted to the
skill and professionalism of our team in providing vital
support and information in the search for the missing
aircraft MH370.”
Maritime
Growth in our maritime revenues was driven by increased
take-up and usage of our FleetBroadband service. During
the quarter we added a further 1,847 FleetBroadband
subscribers and ended the quarter with an installed base
of 42,891 active FleetBroadband terminals. We believe
take-up of FleetBroadband was accelerated during the
quarter by the impact of price increases on our legacy
Fleet service which took effect from 1 January and has
encouraged faster migration. In addition, our Inmarsat
Solutions business saw continued strong take-up of our
XpressLink service.
Land mobile
In the land mobile sector, we saw revenue growth from
IsatPhone Pro and M2M services, offset by a decline in
BGAN revenues primarily due to on-going troop
withdrawals from Afghanistan, but also from lower BGAN
usage levels more generally. We estimate that global
events including Afghanistan contributed $4.2m more
revenue in the first quarter 2013 when compared to the
first quarter 2014. During the quarter we continued to
add to our subscriber base with net additions of over
1,100 BGAN terminals and over 2,000 IsatPhone terminals.
During the quarter we signed a large M2M contract which
will begin to contribute during the second quarter, this
contract was won from another MSS operator and is
evidence of our progress in the M2M market.
Aviation and Leasing
The increase in aviation revenues was driven by strong
growth in subscribers and ARPU for our SwiftBroadband
service, offset by a decline in Swift 64 revenues due to
lower usage by certain government customers, including
usage related to reduced activity in Afghanistan. Growth
in SwiftBroadband revenues was driven by take-up in
business aviation and for commercial in-flight passenger
connectivity services. The decrease in leasing revenue
was due to a reduction in revenue from certain
government aviation and maritime contracts, partially
offset by growth in certain land business.
LightSquared
During the quarter LightSquared elected to restart Phase
2 of our Cooperation Agreement, triggering quarterly
payments to Inmarsat of $12.5m starting in June 2014
with an additional $5m for the first 10 quarters. In
connection with the election, LightSquared made a $5m
payment to Inmarsat which was recorded as revenue within
Other Income during the quarter. Due to a reorganisation
process that is yet to be completed, further payments
from LightSquared are subject to significant
uncertainty. In addition, following a review during the
quarter we recognised $40.3m of previously deferred
income in relation to the Cooperation Agreement.
Global Xpress
Our GX programme remains on track and the delivery
schedule of the Inmarsat-5 F2 and F3 satellites
continues to provide for launches that will complete our
global coverage by the end of 2014. We continue to
believe and be advised that current US and EU
restrictions in place against the Russian Federation do
not affect our launch plans.
The increase in Inmarsat MSS revenue at the Inmarsat
Solutions level was driven primarily by the inclusion of
the acquisition of Globe Wireless. In addition we saw
growth in maritime revenues due to take-up of
FleetBroadband and an increased share of leasing
business as a result of business moving from another
Inmarsat distribution partner. This growth was partially
offset by lower US Government aviation revenue from
Swift 64.
The decline in Broadband and Other MSS revenue was
primarily due to a reduction in revenue from the managed
network services segment of our US Government business
unit and the disposal of our energy operations to RigNet
with effect from 31 January. This decline was partially
offset by growth in VSAT revenues as a result of further
take-up of our XpressLink service and by the addition of
maritime VSAT subscribers acquired with Globe Wireless.
At the end of the quarter we had an installed base of
1,728 ships using our VSAT service, including 929 ships
using XpressLink.
Liquidity
At 31 March 2014, the Inmarsat plc group had net
borrowings of $1,829m, made up of cash and cash
equivalents of $166m and total borrowings of $1,995m.
Including cash and available but undrawn borrowing
facilities, the group had total available liquidity of $1,066m.
We remain fully-funded as to all our capital needs for
the foreseeable future.
