Shares in Inmarsat (ISAT) jumped 7 per cent in intraday trading after the mobile satellite services provider delivered a strong set of half-year results, bolstered by the announcement of a strategic partnership agreement that will enable the company to tap into the lucrative market for satellite communications services to the energy sector.
Adjusted pre-tax profits increased by 6 per cent to $183m year on year, thanks to continued strong subscriber growth in Inmarsat's core MSS business. Revenues there grew 3.7 per cent and more than offset weakness in the Inmarsat Solutions business due to US government contract losses in Afghanistan. But the big news is that Inmarsat has signed a long-term distribution agreement for its soon-to-be-launched Global Xpress super-fast broadband service with RigNet, one of two huge providers of "managed remote communications solutions to the oil and gas industry". Penetrating the large energy market is key to the success of Global Xpress and this should quickly open up the service to RigNet's large and growing customer base.
It is anticipated that Global Xpress will be a large driver of growth for Inmarsat over the near and medium term. The service is supposed to be launched in 2014, although there is some risk to this schedule after the launch vehicle Inmarsat was supposed to use crashed last month.
INMARSAT (ISAT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 725p | MARKET VALUE: | £3.25bn | |
| TOUCH: | 724-725p | 12-MONTH HIGH: | 749p | LOW: 484p |
| DIVIDEND YIELD: | 4.1% | PE RATIO: | 29 | |
| NET ASSET VALUE: | 252¢* | NET DEBT: | 147% | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2012 | 684 | 223 | 38.0 | 16.9 |
| 2013 | 640 | 186 | 28.0 | 17.8 |
| % change | -6 | -17 | -26 | +5 |
Ex-div: 2 Oct Payment: 25 Oct *Includes intangible assets of $0.95bn, or 211¢ a share £1=$1.53 | ||||
