Inmarsat plc Interim Management Statement

Inmarsat, the leading provider of global mobile satellite communications services, today provided the following information for the three months ended 30 September 2011. 

Inmarsat plc Highlights 

Total revenue $364.1m up 17.9% (2010: $308.8m).

Total active customer terminals up 12.5%.

XpressLink – unique hybrid maritime service launched.

IsatData Pro launched for M2M market.

Global Xpress programme on track and budget. 

Inmarsat Group Limited Third Quarter Highlights 

Total Inmarsat Global revenue $245.2m up 21.9% (2010: $201.2m).

Total Inmarsat Global MSS revenue $180.7m (2010: $185.1m).

Total Inmarsat Solutions revenue $197.4m (2010: $186.0m).

Total Group EBITDA $224.4m up 18.4% (2010: $189.5m) .

Andrew Sukawaty, Inmarsat’s Chairman and Chief Executive Officer, said, “Revenue from our Cooperation Agreement with LightSquared continues to drive strong headline growth and offset a slowdown in our MSS revenues.  While third quarter MSS results were in line with our expectations, as previously stated, we are unlikely to see consistent evidence of a return to MSS revenue growth until next year.  However, in the meantime we are making progress with key new product developments and with our Global Xpress programme and these are important building blocks to future value and new growth.” 

Growth in Other income, primarily resulting from our Cooperation Agreement with LightSquared, was responsible for our Inmarsat Global overall revenue growth during the third quarter. During the quarter we recognised $56.4m of revenue with respect to the Cooperation Agreement and $3.5m of operating costs.     

In the maritime sector, our results continue to be adversely impacted by customer migration to our FleetBroadband service where pricing is typically lower than the older services being replaced.  In addition, voice to email substitution, lower voice pricing and competition from alternative providers, have contributed to lower maritime revenues year over year.  

During the third quarter the number of active FleetBroadband terminals increased by 1,935, making a total of 7,542 in the year to 30 September. Growth in the average revenue per FleetBroadband terminal remains encouraging and indicates that FleetBroadband will contribute to more positive maritime revenue growth as the impact of customer transition eases in due course.  

In July, we announced the availability of Inmarsat XpressLink, a hybrid service combining FleetBroadband with Ku-band connectivity. Embedded within the XpressLink offering is an upgrade path to our Global Xpress maritime Ka-band service.  XpressLink provides a compelling alternative to current Ku-band offerings and will build an advance customer base for Global Xpress services. Together with the pricing plans for FleetBroadband that we introduced previously, we believe we have significantly improved our competitive positioning relative to established VSAT services and expect this to have a positive impact on our revenue overall in future periods.  

In our land mobile sector, a decline in revenue from government and military users in Afghanistan continues to impact the sequential quarterly performance of this sector. In addition, increased usage of our services due to events in North Africa is unlikely to be a continuing factor following recent developments. Although revenue from our handheld IsatPhone Pro service is growing and we continue to see strong terminal activations, the total contribution from this service remains at an early stage.  As a result, land mobile sector revenues may remain under pressure for some time, particularly in comparison to prior reporting periods. 

Aeronautical revenues for the third quarter benefited from higher usage levels on our Swift 64 service and strong new terminal activations for SwiftBroadband.  Higher usage of Swift 64 was predominately driven by government users and such usage can be temporary in nature and therefore may not be sustained through the fourth quarter. Third quarter leasing revenue was in line with management expectations. 

Growth in our Inmarsat Solutions division was primarily driven by recognition of new revenues following the acquisition of Ship Equip earlier in the year and by growth in our Segovia business.    

Liquidity 

At 30 September 2011, the Inmarsat plc group had net borrowings of $1,162.5m, made up of cash and cash equivalents of $310.8m and total borrowings of $1,473.3m.  Including cash and available but undrawn borrowing facilities, the group had total available liquidity of $1,585.1m.  Following the completion of significant new financing in the first half of 2011, the group remains fully-funded as to all its capital needs for the foreseeable future.  In connection with our on-going share repurchase programme, during the third quarter we repurchased 13.2m ordinary shares at a total cost of $93.6m.