Inmarsat Plc (ISAT), stuck in a stalled project with Philip Falcone’s LightSquared Inc. to create a satellite-based, high-speed Internet network in the U.S., aims to pursue the plan even if its partner is liquidated.
LightSquared filed for bankruptcy in May, following a February decision by the Federal Communications Commission to block the service, citing interference with global-positioning devices used in navigating everything from fighter jets to minivans. London-based Inmarsat had contributed U.S. airwave licenses to the project, which would serve as many as 260 million people.
Should LightSquared, majority-owned by Falcone’s hedge fund Harbinger Capital Partners, go into liquidation, others may step in as partners to use Inmarsat’s airwaves, Chief Executive Officer Rupert Pearce said yesterday in an interview. Otherwise, the agreement will terminate, and the largest provider of satellite services to the maritime industry could later decide whether to attempt the project itself, he said.
“LightSquared doesn’t have the luxury of a 10-year view or even a five-year view -- we do,” said Pearce, who was attending a conference organized by Morgan Stanley in Barcelona. “It’s perfectly possible that even after the demise of LightSquared, there might be opportunities to re-partner or even for us to move forward ourselves when the regulatory environment matures to a point where this GPS issue isn’t an issue anymore.”
Ashley Durmer, a spokeswoman for Lightsquared, declined to comment. Pearce didn’t specify whether Inmarsat would need to acquire additional airwaves to offer its own wireless Internet service in the U.S.
LightSquared, based in Reston, Virginia, has offered remedies to the FCC, including sharing airwaves with federal- government users. Pearce said he’s supporting LightSquared and prefers it to succeed in the FCC discussions.
Inmarsat last received a payment from LightSquared in April and said at the time that no other payment was due until April 2014. That schedule still stands, Pearce said yesterday.
Inmarsat climbed 1.2 percent to close at 562 pence in London trading today. The stock has gained 39 percent this year, the second best performer on the 23-member Bloomberg Europe Telecommunication Services Index (BETELES) after TalkTalk Telecom Group Plc. (TALK)
The company may consider acquisitions that would help “supercharge or de-risk” Inmarsat’s Global Xpress fast mobile data service, through which it seeks to gain business with government, maritime and energy clients, Pearce said. The service will start next year, with full global coverage available by late 2014, he said.
The company’s acquisitions of Segovia Inc. in 2010 and of Ship Equip International AS last year are examples of the kind of assets that would interest Inmarsat, Pearce said. The company sets “very high targets for return on invested capital,” he said, adding that “prices are still very high” for private companies compared with the value assigned by the stock market to publicly traded ones.
“If we don’t see alluring opportunities like that, our duty is to return cash to shareholders,” he said. “We should be able to continue to improve the rate of return of cash to shareholders pretty much whatever the future holds.”