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Inmarsat announce launch of third Global Xpress satellite

Steve Clayton | 6 August 2015 | A A A
Inmarsat announce launch of third Global Xpress satellite

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Alongside their interim results, Inmarsat have announced that the Russian operator of the Proton rocket launcher has decided that they now know how to stop them blowing up, shortly after the blue touch paper has been lit. The delayed launch of Inmarsat's third Global Xpress (GX) satellite is now expected to take place by the end of August. The interims showed a broad continuation of the trends seen at the Q1 stage.

The stock rose 2% on news that the launch is now imminent.

Highlights:
  • Half year revenues declined by 5.5% to $616.2m, with the contribution from LightSquared within that falling from $47m to $35m.
  • Wholesale Mobile Satellite Service (MSS) revenues rose 4.2% to $403.8m.
  • EBITDA fell 7% to $342.7m.
  • Profit after tax fell by 4% to $131.6m, cushioned by a sharp fall in interest payments after an earlier debt refinancing.
  • Net debts at Jun 30 were $1,922m, an increase of $21m over the six months.
  • The interim dividend rises 5% to 19.61c per share. To be paid on Oct 23, in sterling, at the rate prevailing, four working days beforehand.

Business Trends:
LightSquared (L2) revenues come and go. The group has $208m of cash that L2 has already paid, but which has not yet gone through the income statement. Depending on L2's behaviour, as it tries to wrestle its way back to health, those revenues will be recognised, boosting profits, but with no impact on cash flow, since the money is already there.

The underlying business is seeing good demand growth for broadband data, and rapidly declining demand for maritime voice communications. Demand from Governments is patchy, whilst demand from aircraft operators is growing fast.

Inmarsat has seen strong demand for broadband services, and it has a six month order book for installations of XpressLink and GX equipment. Once the 3rd GX satellite is operational, Inmarsat will be able to offer high speed broadband services to users on the move, in ships and planes, anywhere on the planet, bar the north and south poles.

Outlook:
"No material change in the trading environment or in the Group's performance is expected in the second half of 2015, and we continue to expect underlying growth in Maritime, Enterprise and Aviation, with continued weakness in Government".

Inmarsat go on to say that full year revenues are expected to be in the range of $1,250m to $1,300m, including $70m from L2 and a lower than previously expected contribution from Global Xpress (GX), reflecting the delayed launch. Inmarsat still expect GX to deliver $500m p.a. of revenues within five years after global commercial services commence. Capex plans are unchanged.

Read more share research from Hargreaves Lansdown

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