[Satellite News 03-20-09] Inmarsat posted better-than-expected results in 2008, with pre-tax profits increasing by more than 50 percent over 2007 to $193.8 million. Inmarsat also recorded total revenues of $996.7 million in 2008, compared to $576.5 million in revenues in 2007.
    Inmarsat’s CEO Andy Sukawaty spoke with Satellite News about the operator’s latest set of results as well as how the economic downturn may impact Inmarsat, and the rest of the mobile satellite sector (MSS) sector in 2009.

Satellite News: Do you see these difficult economic times having an impact on Inmarsat’s ability to grow revenues and profits in 2009?

Sukawaty: We have stated quite clearly that we are cautiously optimistic. I think for anyone to say they are fully immune from this economic crisis would be foolhardy, but at the same time, when we look at the day-to-day statistics, the sales, the activations, the revenues for the fourth quarter and the start of the year, it is very encouraging. Also, if you are in a services business, generally speaking, if you start the year well, that tends to have an ongoing impact for the rest of the year. As a services business, we are encouraged by a strong start to the year. … If you look at how it has occurred, that is also quite important. It has been driven by the sale of our broadband data services, on the maritime side by FleetBroadband, on the Aero side by SwiftBroadband, and on the land side by BGAN. That platform we have put in place over a long period of years at great expense is now starting to pay dividends. I think this trend towards broadband services on the move is a real and sustainable one, and one that seems to be outpacing the economic downturn.

Satellite News: Which of your core businesses — land mobile, aeronautical and maritime —do you expect to be the most resilient?

Sukawaty: The mainstay of our business has been maritime. There is probably the most concerned raised about maritime because of the economic downturn and what has happened with dry bulk shipping rates, and the capacities due to world trade. I would say that is of most concern, but so far we are resilient. In terms of growth, we have seen bulk purchasing by our largest customers in the aero business and our leasing business, which cuts across land, sea and air. We see that continuing in 2009, maybe at not quite the same levels we had last year, which were quite incredible, but still very strong levels. If you want to point to two surprises we had last year in terms of upside, I would say they are aero and leasing.

Satellite News: Do you expect the maritime industry to perform as strongly as in previous years?

Sukawaty: We are cautiously optimistic. The maritime industry is a diverse sector. It is not just dry bulk shipping. It can be liquefied natural gas container ships, which are still in somewhat short supply. There is also navy in our maritime market, which has not been impacted by the downturn. If you look at the diverse nature of the maritime business, I think you would say it has held up so far and doesn’t seem to be affected by the economic downturn. Certainly, in areas like the big container ships, which are central to world trade, you would expect some impact, but it seems to be offset by the demand for data services from ships due to automation, social welfare for crew and things like LRIT, where people have to provide data to ports before they arrive. Those things seem to be the driving force in the maritime market, and it is overcoming the downturn effects.

Satellite News: How important is it for Inmarsat’s growth prospects in Europe to get hold of a Europe-wide license? What are the prospects for S-band in Europe?

Sukawaty: With our L-Band today and AlphaSat going up, we can meet the needs of our core business for the next 10 years just with the spectrum we have. S-band is not about capacity expansion for us. It is about new applications. The new applications evolve around CGC and ATC, so that is hybrid satellite-terrestrial applications. That could be satellite radio, mobile TV, two-way communications to much smaller devices that work on both satellite and terrestrial systems. These are the three areas we are focused on for S-band. We think that our commercial expertise and background, our solid financial foundation, and the experience some of us have in the mobile arena positions us well to exploit this new opportunity. But I think the financial markets are going to have to really improve for that to get funded properly. I also think the process the EU (European Union) has going needs to stay on track and the license conditions have to be clear.

Satellite News: While I understand the company is bullish about its standalone prospects, Harbinger seems more keen than ever to try and acquire Inmarsat. Is it a distraction  for management?

Sukawaty: I think the results speak for themselves. This has been going on for quite some time. We have just put up record results. It has not been a detrimental distraction to us. We take it as a compliment that a shareholder is interested in buying all of Inmarsat. We think it is a great company and hopefully we can continue to prove that, but we have received no offer. This is an interest being expressed and some regulatory moves being made. I don’t care whether it is a 28 percent shareholder or a 0 percent shareholder expressing an interest; we have an open mind because we are a publicly listed company and we look out for the needs of all our shareholders equally. If someone wants to make an offer that exceeds the execution of our own plans, we are open to that.

Satellite News: Do you expect movement on this offer in 2009?

Sukawaty: I would expect it will be more of a 2010 issue, rather than a 2009 issue.