Inmarsat plc reports Third Quarter Results 2015

London, UK: Inmarsat plc (LSE: ISAT.L), the leading provider of global mobile satellite communications services, today provided the following information for the three months ended 30 September 2015.

Third Quarter Financial Headlines

• Total revenues $323.1m (2014: $300.6m)
  • Maritime up $2.6m to $150.2m (+1.8%)
  • Government up $0.9m to $77.2m (+1.2%)
  • Enterprise down $1.2m to $39.7m (-2.9%)
  • Aviation up $11.9m to $32.6m (+57.5%)
  • $17.9m from LightSquared (2014: $9.8m)
• Wholesale Mobile Satellite Service (MSS) revenues $27m, up 11.3% (2014: $192.0m)
• Total EBITDA[1] $180.2m (2014: $166.0m)

Operational Headlines

• I-5 F3 launched successfully, putting Global Xpress (‘GX’) on track for the introduction of global commercial service by the end of the year
• Strategic partnership with Deutsche Telekom established, to develop the European Aviation Network, an LTE-based hybrid satellite and ground network for commercial passenger connectivity
• MOU signed with Lufthansa to provide inflight connectivity services in Europe, subsequently converted into a 10-year contract to install and deliver GX initially to 150 Lufthansa aircraft

Rupert Pearce, Inmarsat’s Chief Executive Officer, commented,

“We delivered solid growth in the quarter, across our business.  In Maritime, higher FleetBroadband and XpressLink revenue off-set the continuing decline in legacy services, enabling a resumption of growth. A number of new contracts in the US and other government markets allowed us to report growth in our Government business for the first time for several years. Enterprise experienced an Isatphone 2 manufacturing issue, now resolved.  Aviation had another strong quarter, financially and strategically.

The successful launch of I-5 F3 at the end of August means that we expect to introduce GX commercial services globally by the end of the year. This will be a key milestone for Inmarsat, enabling us to deliver the high-speed, high-volume seamless global service that customers want, and to start to build towards our medium-term revenue targets for GX.

Our Aviation business also took two major steps forward, when we joined in a strategic partnership with Deutsche Telekom to develop the ground component of our European Aviation Network. We also signed an MOU with Lufthansa, which has now become a ten-year contract, to provide high-speed inflight connectivity services on board Lufthansa’s European fleet.

In the third quarter we therefore saw real progress across all three of the core elements of our strategy – L-band, GX, and aviation passenger connectivity – and we are confident that we can maintain this momentum in all of these areas of opportunity for Inmarsat.”

Outlook

No material change in the trading environment or in the Group’s performance is expected during the remainder of the year.

• For the full year 2015 total Group revenue is expected to be in the range $1,250m to $1,300m, including revenue of $71m expected to be received from LightSquared.
• Full-year 2015 Group capex is expected to be in the range $450-500m.

The Group’s longer-term guidance for Global Xpress revenue also remains unchanged, with annual GX revenues of $500m expected by the fifth anniversary of the global launch of commercial GX services, including approximately $100m of existing XpressLink revenue which is expected to be migrated to GX over the next three years. The global launch of commercial GX services is currently on track for the end of 2015.

At the 2015 Preliminary Full-Year results the Group will provide additional medium-term revenue guidance, in the form of an expected range for total Group revenue in 2018.

As guided at the Interim results on 6 August, capex in each of 2016 and 2017 is currently expected to be less than $400m. However, as set out at the Capital Markets Day on 8 October, a number of new developments may have a material impact on this guidance, including the potential launch of I-5 F4 in 2016, the agreement with Deutsche Telekom to build the ground component of the European Aviation Network, aviation cabin connectivity costs in respect of the Lufthansa and any other service contracts awarded to Inmarsat in the future, and the initial development costs of the I-6 satellites which will be commissioned to replace older Inmarsat satellites. The combined potential impact of these new developments is expected to be finalised over the coming months and incorporated into new revenue and capex guidance which will be published with the 2015 Preliminary Full Year results.

From 2016 onwards the Group will report total actual capex broken down into three main categories of expenditure: (a) major project investment, such as satellite and ground infrastructure; (b) success based investment, such as Maritime and Aviation equipment tied directly to contract revenues; and (c) maintenance, product development and other expenditure.

Results Conference Call

Inmarsat management will discuss the third quarter results in a conference call on Friday 6 November at 08.30 hrs London time.

To access the call please dial +44(0)20 3427 1910 (US: +1 646 254 3364). The conference ID for the call is 4302217. The call will also be web-cast at www.inmarsat.com.

The call will be recorded and available on our website after the event. A copy of this announcement can also be found on our website at www.inmarsat.com.

^[1]  EBITDA is defined as profit before net financing costs, taxation, depreciation and amortisation, loss on disposal of assets, impairment losses and share of profit of associates.