LONDON, March 7, 2011 /PRNewswire-FirstCall/ -- Inmarsat plc (LSE: ISAT.L), the leading provider of global mobile satellite communications services, today reported preliminary consolidated financial results for the year ended 31 December 2010.
Inmarsat plc - Full Year 2010 Highlights - Total revenue $1,171.6m up 12.9% (2009: $1,038.1m) - Inmarsat Global MSS revenue $727.0m up 6.5% (2009: $682.8m) - EBITDA $696.1m up 17.1% (2009: $594.2m) - Profit before tax $333.5m up 69.4% (2009: $196.9m) - Final dividend of 22.69 cents (US$) up 10% - Global Xpress investment programme launched and on track - LightSquared agreement triggers new revenues Inmarsat Group Limited - Q4 2010 Highlights - Total revenue $292.1m up 8.4% (2009: $269.4m) - EBITDA $171.8m up 18.2% (2009: $145.3m)
Andrew Sukawaty, Inmarsat's Chairman and Chief Executive Officer, said, "We delivered a strong performance in 2010 with total revenues up 12.9% driven by growth of 6.5% in core MSS revenues and by a second half contribution from our Cooperation Agreement with LightSquared. While a slowdown in growth in the last quarter of 2010 and early 2011 has resulted from lower usage levels for some of our products, continued growth in new terminal activations and positive market reaction to our new services mean that we remain confident in future MSS growth prospects and in our 5-year growth target. In addition, in 2011 we will recognise substantial revenue in connection with our Cooperation Agreement with LightSquared."
Inmarsat plc Revenue Increase % (US$ in millions) 2010 2009 Inmarsat Global 764.1 694.8 10.0% Stratos 716.8 644.1 11.3% 1,480.9 1,338.9 10.6% Intercompany eliminations and adjustments (309.3) (300.8) Total revenue 1,171.6 1,038.1 12.9% Inmarsat Global Revenue Increase/ (decrease) % (US$ in millions) 2010 2009 Maritime sector Voice services 98.1 104.7 (6.3%) Data services 262.5 252.3 4.0% Total maritime sector 360.6 357.0 1.0% Land mobile sector Voice services 7.3 8.5 (14.1%) Data services 146.4 138.0 6.1% Total land mobile sector 153.7 146.5 4.9% Aeronautical sector 101.0 75.8 33.2% Leasing 111.7 103.5 7.9% Total mobile satellite communications services 727.0 682.8 6.5% Other income 37.1 12.0 209.2% Total revenue 764.1 694.8 10.0%
Although demand for FleetBroadband terminals remained strong throughout the year with over 10,000 terminals added, maritime revenue growth underperformed our expectations. As FleetBroadband pricing is typically lower than older services being replaced, the pace of migration has impacted revenue growth. Over time we expect to offset this effect as usage grows in response to the increased service capability. In addition to the impact of challenging economic conditions in the shipping industry, we are also seeing contraction in demand for voice services due to email substitution and greater competition from other providers. Although a lesser factor, competition from VSAT service offerings has also increased since the announcement of our Global Xpress service.
We are introducing pricing packages with our FleetBroadband service that have already proved successful with AP Moller-Maersk, the world's largest ship operator. We believe these packages will continue to gain customer traction and help retain FleetBroadband's market leading position. In addition, increasing market awareness of our planned Ka-band services is incentivising customers to remain with our existing services until our Global Xpress service enters the market.
Growth in our land mobile sector revenue was driven by demand for our BGAN service, which during the first half saw a positive contribution from global events offset by lower usage levels from Afghanistan and Iraq. During the second half of 2010 we continued to add new BGAN subscribers and maintained a steady monthly ARPU. Although our handheld satellite phone service, IsatPhone Pro, was launched in June and has been well received by the market, the early stage of this service meant that the contribution to revenue was not material in the year. In addition we continue to advance our presence in the satellite low data rate market where we expect to benefit from new products in 2011.
Strong aeronautical revenue growth was driven by particularly high usage of our Swift 64 service by government customers for much of the year, before usage levels normalised during the fourth quarter. However, SwiftBroadband additions remained strong throughout the year and, in response to this demand, we added a lower cost variant called SwiftBroadband 200 in October.
Although we saw strong leasing business growth for the year as a whole, the anticipated end of a significant aeronautical lease and a reduction in a maritime lease during the fourth quarter resulted in lower total lease inventory at the end of the year.
Stratos Revenue Increase/ (decrease) % (US$ in millions) 2010 2009 MSS revenue Inmarsat MSS 433.7 427.1 1.5% Other MSS 123.7 125.9 (1.7%) Total MSS revenue 557.4 553.0 0.8% Broadband (including Segovia) 159.4 91.1 75.0% Total revenue 716.8 644.1 11.3%
In January 2010 we completed the acquisition of Segovia, a provider of managed communications solutions principally to US government agencies, and report revenue from this business within our Stratos segment. Revenue growth in our Stratos Broadband business predominately resulted from the newly recognised Segovia revenue.
In our Inmarsat Global maritime business, we expect the ongoing strong growth of FleetBroadband to continue to constrain our revenue growth given the lower price of data services as usage levels build. In addition, we expect maritime voice revenue to continue to be impacted by email substitution and increased competition.
While land mobile revenues will remain susceptible to volatility, both BGAN and IsatPhone Pro are attracting new users and traffic to our network which will drive growth. Overall growth in the early part of 2011 will be impacted by comparability due to non-recurring event revenues in the early part of 2010.
In our aeronautical business, we expect increasing demand for SwiftBroadband from existing and new users to drive incremental revenues. However, the high government customer usage levels seen in 2010 have normalised and we expect our aeronautical growth in 2011 overall to be affected by the continuation of a lower level of activity and by budget constraints.
Our pipeline for new leasing business is encouraging and therefore we expect to rebuild our total leasing inventory during the year.
Overall we expect growth in our core MSS revenues for 2011 to be between 2% and 4%, with growth weighted to the second half of the year due to comparability affected by the high level of event revenue seen in early 2010. In addition we expect to recognise between $187m and $207m of revenue in connection with our Cooperation Agreement with LightSquared.
We expect some limited incremental operating costs in relation to our Global Xpress programme and up to $20m of operating costs in relation to Phase 1 of our Cooperation Agreement with LightSquared.
Our Alphasat and Global Xpress investment plans remain on track as to schedule and total capital costs. We expect that cash used for capital expenditure in 2011 will be between $450-550m.
We see no change in our dividend growth commitments and therefore expect dividend growth of at least 10% for 2011 compared to 2010.
At 31 December 2010, the Inmarsat plc group had net borrowings of $1,139.2m, made up of cash and cash equivalents of $343.8m and total borrowings of $1,483.0m. Taking into consideration our cash on hand and available but undrawn borrowing facilities of $300.0m, the group had total available liquidity at 31 December 2010 of $643.8m.
Our Financial Reports
While Inmarsat plc is the ultimate parent company of our group, our subsidiary Inmarsat Group Limited is required by the terms of certain of our debt securities to report consolidated financial results. We expect that a copy of the full year 2010 results for Inmarsat Group Limited will be posted to our website on or before 30 April 2011.
To assist analysts and investors in their understanding of the results announced today, the following unaudited tables for Inmarsat Group Limited for the fourth quarter are provided below.
Inmarsat Group Limited Fourth quarter ended Revenue Breakdown (unaudited) December 31, 2010 2009 % Difference Revenues (US$ in millions) Maritime sector: voice services 24.7 25.7 (3.9%) data services 66.6 65.5 1.7% Total maritime sector 91.3 91.2 0.1% Land mobile sector: voice services 1.9 2.0 (5.0%) data services 36.0 35.7 0.8% Total land mobile sector 37.9 37.7 0.5% Aeronautical sector 24.2 20.6 17.5% Leasing 25.6 27.4 (6.6%) Total MSS revenue 179.0 176.9 1.2% Other income 16.1 4.6 250.0% Total revenue 195.1 181.5 7.5% Stratos Revenue Breakdown (unaudited) Fourth quarter ended December 31, 2010 2009 % Difference MSS Revenue (US$ in millions) Inmarsat MSS 105.6 110.0 (4.0%) Other MSS 29.3 34.6 (15.3%) Total MSS revenue 134.9 144.6 (6.7%) Broadband 40.1 22.2 80.6% Total Stratos revenues 175.0 166.8 4.9%
A webcast recording of our results presentation to be held on 7 March at 9:30am will be posted to our website after the event. To access the webcast please go to the investor relations section of our website at www.inmarsat.com. Inmarsat management will also host a conference call on Monday, 7 March at 2:00pm London time (United States 9:00am EST). To access the call please dial +44(0)20-7031-0088 and quote conference id 887406. A replay of the call will be available for one week after the event. To access the replay please dial +44(0)20-7031-4064 and enter access code 887406. The call will also be available by webcast accessible via the investor relations section of our website.
Certain statements in this announcement constitute "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks, uncertainties and other factors that may cause our actual results, performance or achievements, or industry results, to be materially different from those projected in the forward-looking statements. These factors include: general economic and business conditions; changes in technology; timing or delay in signing, commencement, implementation and performance of programmes, or the delivery of products or services under them; structural change in the satellite industry; relationships with customers; competition; and ability to attract personnel. You are cautioned not to rely on these forward-looking statements, which speak only as of the date of this announcement. We undertake no obligation to update or revise any forward-looking statement to reflect any change in our expectations or any change in events, conditions or circumstances.
SOURCE Inmarsat plc