Inmarsat plc Reports 2006 Interim Results

Inmarsat plc (LSE: ISAT), the leading provider of global mobile satellite communications services, today reported consolidated financial results for the 6 months ended 30 June 2006.

•First half 2006 revenue $245.9 million and EBITDA $162.8 million

•Underlying first half revenue up 2.2%, underlying EBITDA up 3.6%

•Strong growth from maritime data up 11% year over year

•Aeronautical sector grows 36% on strong Swift64 take-up

•OnAir selects Inmarsat as network for in-flight mobile telephony

•Second quarter improving trends in maritime voice and land data

•BGAN on track, take-up encouraging and customer feedback positive

•Raising interim dividend by 4% to 10.66 cents (US$) per share

Andrew Sukawaty, Inmarsat’s Chairman and Chief Executive Officer commented, “Our first half performance delivers solidly on our expectations that growth in our maritime data and aeronautical businesses would be sustained in 2006.Importantly, we also saw improved trends during the half in both the maritime voice and land data sectors.With the prospect of an increasing contribution from BGAN and an improved outlook for leasing following the signing of new business late in the first half, we remain well-positioned to achieve our goals for the year.”

Mobile Satellite Services

Revenue from our maritime sector grew by 5% year over year.Growth in maritime data revenue was 11% driven by continued strong take up and usage of our Fleet product, together with good performances from other maritime services.Growth in maritime active terminals of over 9% year over year has been bolstered by expansion of the global shipping fleet as well as increased penetration by Inmarsat products.At the same time, the average data usage per vessel has been increasing over the past several quarters, demonstrating how Inmarsat Fleet products can meet the expanding data needs of maritime end customers.

Our maritime voice business, while down 3% year over year, improved markedly during the first half resulting in a second quarter performance slightly up on the second quarter last year.Maritime voice revenue is impacted by the process of analogue to digital service migration which we expect to complete by the end of 2007.While we continue to record overall maritime voice traffic growth, this is not yet sufficient to fully offset the impact of analogue service migration and competition from other MSS operators.

Revenue from the land sector was lower year over year, in part reflecting the fact that the first half of 2005 was positively impacted by $2.0 million of demand for Inmarsat services in the area affected by the Asian tsunami.Lower demand for GAN services, particularly by government and military users in the Middle East, was the main driver of lower land data revenue.Partially offsetting the decline in GAN was increased demand for our R-BGAN service, which has been growing well in response to extended geographic coverage available with the first Inmarsat-4 satellite since July 2005 and second Inmarsat-4 satellite since April 2006.In line with the recent introduction, we recorded a small contribution from our BGAN service during the first half and saw encouraging growth in terminal activations throughout the period.The early population of BGAN terminals has been geographically diverse and includes a number of new users to our network.

Land voice revenue continues to be impacted by competitive erosion to hand-held MSS operators.During the first half of 2006 our base of active terminals for our mini-M service fell due to churn to hand-held voice competitors and we expect this trend to continue to impact our reported voice revenue and active terminals in the land sector.We also saw a fall in our base of Inmarsat C terminals, which are used for low value data services, but which contributed to a lower overall base of active terminals in the land sector.

Revenue from our aeronautical sector increased by 36% over the first half 2005.Strong growth in our aeronautical business continues to be driven by take-up of our Swift64 service.Activations of Swift64 terminals in the first half were up over 30% on the same period last year.The second quarter 2006 was a record quarter for Swift64 activations, underlining the increasing popularity and penetration of this service.

Following an announcement yesterday, we are pleased to confirm that Inmarsat’s SwiftBroadband product has been selected by OnAir, a joint venture between Airbus and SITA, to support in-flight mobile telephony trials with major airlines beginning in 2007.

As anticipated, our leasing revenue for the first half 2006 was impacted by the expiry of a number of short-term leases early in the year.Furthermore, comparison with the prior year is impacted by a non-recurring fee of $2.1 million recorded in the first half of 2005 in connection with a Japanese Civil Aviation Board lease.With the signing of new government leasing business late in the first half, the outlook for leasing revenue in the second half of 2006 has improved.

Operating costs for the first half were impacted by a non-recurring charge of $6.8 million in connection with a restructuring programme following the completion of the Inmarsat-4 programme.The charge primarily relates to severance costs for technical staff who will leave the business during the course of 2006.The restructuring programme is expected to result in full year savings of approximately $8.7 million in 2007.

Operating costs were further impacted during the second quarter by a non-recurring and non-cash charge of $2.1 million in connection with a review of the accounting policy for the lease on the company’s headquarters building in London.Adjusting for the non-recurring operating costs and non-cash foreign exchange movement in the first half, continuing EBITDA was $171.4 million, compared with reported EBITDA of $162.8 million.

Impact of volume discounts

The volume discounts we offer to our distributors have an increasing impact on our margins as the year progresses.As our distributors reach certain volume targets we reduce our wholesale prices and this process reduces margins until the end of the calendar year when our rates are then reset to their pre-discount level.In order to offset the impact of volume discounts in the second half of 2006, we must grow our overall traffic for our mobile satellite services.Growth in traffic is dependent on the continued take-up of growth services, including our recently introduced BGAN services.

Outlook

Our core business is performing well and meeting our expectations for the year.During the half we saw continued growth in our maritime data and aeronautical sectors, and improved trends in our maritime voice business.With recently signed new contracts, the outlook for leasing in the second half has improved.Our recently launched BGAN service is on track and building its contribution to revenue and active terminals.With cost expectations fully in line, we remain confident in our outlook for the rest of the year.

Liquidity

At the end of the first half we had net external debt of $846.1 million made up of cash of $15.1 million and total external debt of $831.0 million.In addition to our cash resources, we had a revolving credit facility with an amount available but undrawn at the end of the first half of $300 million.Cash used to fund capital expenditure during the half was $40.6 million.Also during the first half we used $49.7 million of cash to pay the final dividend for 2005 on 26 May 2006.

A copy of our full financial report for the first half 2006 can be accessed via our website at www.inmarsat.com/investor_relations/

Second Quarter 2006 Financial Results for Inmarsat Holdings Limited and Inmarsat Group Limited

Inmarsat Holdings Limited, through its subsidiary Inmarsat Finance II plc, is the issuer of $450.0 million of 10.375% Senior Discount Notes due 2012.Inmarsat Group Limited, through its subsidiary Inmarsat Finance plc, is the issuer of $310.4 million of 7.625% Senior Notes due 2012.Inmarsat Holdings Limited and Inmarsat Group Limited today reported financial results for the second quarter ended 30 June 2006.Holders of our notes are referred to the financial reports for the second quarter 2006 which can be accessed via our website at www.inmarsat.com/investor_relations/ and which will be filed with the SEC later today.

Other Information

A webcast recording of the analyst presentation to be held on 4 August will be posted to our website after the event.Inmarsat management will also host a conference call on Friday, 4 August at 1:30pm London time (United States 8:30am EST).To access the call please dial +44 20 8609 0238 and enter the access code 745819#.The call will also be available via webcast, to access the webcast please go to http://investors.inmarsat.com/webcast. A recording of the call will be available for one week.To access the recording please dial +44 20 8609 0289 and enter the conference code 148348.

Forward-looking Statements

Certain statements in this announcement constitute “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995.These forward-looking statements involve risks, uncertainties and other factors that may cause our actual results, performance or achievements, or industry results, to be materially different from those projected in the forward-looking statements.These factors include: general economic and business conditions; changes in technology; timing or delay in signing, commencement, implementation and performance of programmes, or the delivery of products or services under them; structural change in the satellite industry; relationships with customers; competition; and ability to attract personnel.You are cautioned not to rely on these forward-looking statements, which speak only as of the date of this announcement.We undertake no obligation to update or revise any forward-looking statement to reflect any change in our expectations or any change in events, conditions or circumstances.