Inmarsat says Proton delay will hold up new network

Reuters News
Posted: Aug 05, 2014 6:29 AM

By Paul Sandle

LONDON (Reuters) - British satellite company Inmarsat said the global implementation of its new communications network would be delayed by as much as six months as its Russian launch provider Proton recovers from a failure.

Chief Executive Rupert Pearce said the delay came as no surprise after the most recent failure of a Proton rocket, the workhouse of the satellite industry, in May.

"The guesstimate at the moment given what we know, is that we will have both birds up and be fully launched for a global service by the end of the first half of next year," he said in an interview on Tuesday.

"But despite that, having seen the resilience in our business, we are reasserting our medium-term guidance of MSS wholesale revenue growth of 8-12 percent over the 2014-16 period."

Pearce said the prevailing sanctions against Russia over the political situation in Ukraine were not a barrier to the launch.

The company, which provides communications for ships, aircraft and users in remote locations, had expected the two remaining satellites for its new network to be in orbit by the end of this year.

Pearce said the potential for the network was shown by interest from customers such as the U.S. government, even on the regional basis that can be provided by the satellite already in orbit.

"It signals the confidence we have in Global Xpress (GX) that our important customer, the U.S. government, will be buyers," he said.

Shares in Inmarsat were down 2.2 percent at 705.5 pence at 5:39 a.m. EDT (0939 GMT), after earlier touching a two-month low of 699.5 pence.

Analysts at Jefferies said they were cautious coming into the quarter, given the protracted return to flight of Proton. They said the delay would cut their forecast for full-year revenue growth by $30 million to $40 million.

Fear and Loathing of Jordan Peterson
Suzanne Fields

"While we now see FY15 revenue coming down (no changes to FY16 onwards), this type of delay does not in the least derail the fundamentals of the GX proposition in our view," they said.

Inmarsat posted adjusted core earnings of $159.9 million for its main business in the second quarter, broadly in line with an average of $160.8 million expected by analysts.

Revenue of $196.1 million was up 1.9 percent.

(Editing by Jason Neely)