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Inmarsat Can’t Predict LightSquared Payments From Discussion

Inmarsat Plc, the biggest provider of satellite services to the maritime industry, said it’s in talks with customer LightSquared Inc. and can’t predict whether it will receive outstanding payments.

While the companies are talking, “investors should take a very conservative stance on payments being received,” Chief Executive Officer Rupert Pearce said on a conference call today. LightSquared’s business model faces “significant uncertainty” because of U.S. regulatory developments, London-based Inmarsat said in a statement.

Philip Falcone’s LightSquared, the U.S. company struggling to gain approval for a wireless service, failed to pay Inmarsat $56.3 million last month after making payments to the British company in line with contractual milestones. Inmarsat said today it “cannot provide any assurance that the outstanding payment or further payments” in relation to a spectrum-cooperation agreement with LightSquared will be received.

Inmarsat issued a notice of default, giving LightSquared 60 days to remedy the issue, it said Feb. 20. LightSquared said in a statement at the time that Inmarsat must fulfil certain obligations tied to the deployment of its terrestrial and satellite network and that “several matters” need to be resolved. It didn’t give more details.

Revenue from LightSquared was “the primary driver” of overall sales growth for 2011, Inmarsat said today. Full-year sales at the satellite operator jumped 20 percent to $1.41 billion. Revenue from other income, which includes LightSquared, soared to $238.1 million from $37.1 million.

Outlook for 2012

The LightSquared payment “is certainly owed,” Pearce said today. He added that the “current headwinds will not prevent underlying growth.”

Inmarsat shares fell 0.9 percent to 464.1 pence as of 11:41 a.m. in London. The stock has risen about 15 percent this year, giving the company a market value of 2.08 billion pounds ($3.28 billion).

Revenue from Inmarsat’s core mobile satellite services, or MSS, and Inmarsat Solutions businesses is “unaffected” by the LightSquared developments, the company said today. “We expect our 2012 revenue growth trends in our core MSS business to improve on 2011,” the CEO said.

U.S. Regulator

Average annual MSS revenue growth for 2012 and 2013 will be between flat and 2 percent, Inmarsat said in the statement. It predicted an increase of 8 percent to 12 percent in the 2014 to 2016 period, helped by revenue from its Global Xpress service.

Inmarsat said it’s “confident” in the growth prospects of new services including XpressLink and FleetBroadband. In the near term, it projected that “overall revenue growth will be constrained by reducing revenue from Afghanistan and service migration factors.”

Inmarsat is giving LightSquared access to part of its spectrum. LightSquared, backed by Falcone’s Harbinger Capital Partners hedge fund, wants to offer high-speed Internet service to as many as 260 million people using airwaves previously reserved mainly for satellites.

The U.S. Federal Communications Commission said last month that it would block LightSquared after finding that the wireless venture would disrupt navigation gear.

“There is no doubt that the spectrum is an important asset,” Pearce said. “We will continue to look for opportunities to leverage our spectrum.”

Inmarsat’s 2011 net income dropped 4.4 percent from a year earlier to $249.3 million as income tax expenses rose to $117.4 million from $72.4 million.

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