Inmarsat’s Maritime Revenues Stall Due to Customer Spending Cuts

[08-08-11] Mobile satellite operator Inmarsat saw its 2011 second quarter earnings increase 32 percent from the same period last year to $222.7 million, however, analysts were much more concerned about the company’s slight decline in maritime revenues — from $181.7 million in 2010 to $181.3 million in 2011.
   Inmarsat’s latest results, issued Aug. 4., showed that the company expected the maritime business to grow between 2 percent and 4 percent during the 2011 first quarter. The maritime business unit accounts for approximately 40 percent of Inmarsat’s overall revenues.
   The company’s total revenues increased 28.5 percent to $472.6 million, which included a $110 million payment Inmarsat received from LightSquared for access to a portion of its MSS radio spectrum. LightSquared will use that spectrum to help separate its signal from GPS signals and prevent interference.
   In a statement, Inmarsat CEO Andrew Sukawaty said the company would likely lower its five-year revenue growth projection, which is currently set between 5 percent and 7 percent.
   “While we believe that a return to more normalized revenue growth in our maritime business is only a matter of time, we expect near-term factors will constrain growth for longer than previously anticipated,” said Sukawaty. “Shipping customers have been spending less on satellite communications as crew members shift to e-mailing rather than voice calls. Military operations in Afghanistan also are scaling back. We will return to growth next year but we are being cautious.”