MSS Giants Inmarsat<\/b> and Iridium<\/b> have announced their latest set of results, which give intriguing insights into how the MSS business is shaping up this year. Both operators saw revenue falls in the first quarter compared to the same stage last year, and business, particularly in terms of government, continued to struggle. While there were bright points for both of the operators, it is shaping up to be a tough year.
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\nInmarsat<\/b>
\nInmarsatsaw a drop in overall revenues of close to 12 percent in the first quarter this year. This was one of the highlights of its results, reported on May 2. The operator generated revenues of $313.7 million in this period, a fall of more than $40 million compared to the same stage last year. It remains a challenging environment for Inmarsat. Rupert Pearce, the company\u2019s CEO admitted that its U.S. government business had seen a \u201csudden and pronounced deterioration in both demand and profitability\u201d putting this down to budget cuts. He also said Inmarsat does not see any change in the market environment \u201cfor the time being.\u201d
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\nHowever, there were also some encouraging signs. Maritime data revenues reached $85.3 million in the quarter, up 15 percent compared to the same stage last year. In the first three months this year, the company added close to 2,000 new FleetBroadband subscribers.
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\n\u201cFirst quarter revenues came out at $313 million, slightly below the $318 million expected by consensus. We would underline, on the other hand, the good product mix. Indeed, on its core MSS segment, results are above expectations ($185 million vs $184 million), as growth continues to be solid (+3.7 percent). This could even accelerate going forward as the migration to FleetBroadband from older services (at higher price points) progresses,\u201d Eric Beaudet, a satellite equity analyst at Natixis Securities<\/b> said in a research note.
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\nThus at the moment, Beaudet admits it is tough to analyze how the Inmarsat story may play out over the next two years. \u201cAlthough there are some positives (good MSS performance) the negatives (sudden deterioration of U.S. government spending), could slightly weigh on the stock today especially after the good year-to-date performance (+25 percent). In the end, we keep our Neutral stance on the stock as their real catalyst (i.e. the success of their Global Xpress program) will not be known before end-2014 at the earliest,\u201d he added.
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\nIridium<\/b>
\nIridium also had a tough quarter. The company, which also announced its results May 2, had revenues for the first three months of $89.2 million, a decline of 5 percent compared to the same stage last year. The company ended the quarter with 621,000 billable subscribers. Government service revenue reached $15.1 million, a 4 percent decrease compared to the same stage last year. Chris Quilty, senior vice president, Raymond James & Associates<\/b>, said in a research note that the company had \u201cweak subscriber growth.\u201d
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\n\u201cIridium added 10,000 subscribers sequentially vs. our forecast of approximately 24,000 and year-ago net adds of 21,000. Commercial voice subs (including OpenPort) were flat sequentially vs. our forecast of a 4,000 unit pickup, and M2M subs grew by 10,000 vs. our forecast 19,000. As expected, Government voice subs declined (down 2,000), but Iridium added 2,000 government M2M users,\u201d he said.
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\nIridium\u2019s performance in the government arena is a particular concern. \u201cGovernment service revenues declined for the fifth consecutive quarter (to an 11-quarter low), due to deactivations associated with troop withdrawals. Government net additions were roughly in line with our projection, however the mix was surprisingly skewed towards M2M (added 17,000 and was 6 percent ahead of our estimate) and away from voice (5 percent below our estimate).\u201d Quilty said.
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However, there are bright spots. Iridium has signed a large, multi-year agreement for satellite M2M services with Caterpillar<\/b>, one of the world\u2019s leading heavy equipment manufacturers. Quilty says overall, the results were a mixed bag. \u201cWe are never happy to see weak subscriber growth, but the Caterpillar deal, combined with management\u2019s affirmation of 2013 goals gives us some comfort that the company will be able to achieve a \u2018back half recover,\u2019 aided by an all-important DoD contract renewal,\u201d he added. <\/p>\n","protected":false},"excerpt":{"rendered":"
MSS Giants Inmarsat and Iridium have announced their latest set of results, which give intriguing insights into how the MSS business is shaping up this year. Both operators saw revenue falls in the first quarter compared to the same stage last year, and business, particularly in terms of government, continued to struggle. While there were […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":"","_links_to":"","_links_to_target":""},"categories":[2],"tags":[],"class_list":["post-81093","post","type-post","status-publish","format-standard","hentry","category-news"],"acf":[],"_links":{"self":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts\/81093"}],"collection":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/comments?post=81093"}],"version-history":[{"count":0,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts\/81093\/revisions"}],"wp:attachment":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/media?parent=81093"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/categories?post=81093"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/tags?post=81093"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}