Inmarsat Surges on RigNet Deal for Energy Sector: London Mover
Inmarsat Plc, (ISAT) the largest provider of maritime satellite services, rose the most in three months after forging a distribution partnership with U.S. communications company RigNet Inc. (RNET) and reporting growth in adjusted revenue.
“What makes the deal significant is that RigNet is one of the two gorillas that dominate the distribution of satellite communications services into the energy sector,” Giles Thorne, an analyst at Jefferies, said in a note to investors today. The London-based company’s stock jumped 6.5 percent, the biggest advance since May 10.
RigNet will distribute Inmarsat’s Global Xpress broadband and other services and will buy its retail energy business for $25 million, Inmarsat said in a statement late yesterday. Revenue from Inmarsat Global MSS, or maritime satellite services, climbed 3.7 percent to $380.5 million in the first half, the company said in a separate statement today.
“There has been strength across all of our franchises,” Inmarsat Chief Executive Officer Rupert Pearce said in a phone interview. The company is “on track to achieve the top end of our two-year wholesale MSS revenue growth target, which is what people use to judge the robustness of our core business.”
Inmarsat closed at 720 pence in London, taking the advance to 23 percent this year and giving the company a market value of 3.23 billion pounds ($4.94 billion).
Total sales fell 6.4 percent to $640.3 million in the six months, while underlying revenue, which excludes the contribution from LightSquared Inc., rose 0.9 percent.
Inmarsat said U.S. budget cuts and troop withdrawals will continue to pare demand for services in Afghanistan and Iraq.
Wholesale revenue from operations in Iraq have fallen from about $60 million in 2010 to $10 million this year, Chief Financial Officer Rick Medlock said in a phone interview. “What’s difficult to call is when the next step down will be,” Medlock said.
In the long term, the U.S. government presents “a real growth opportunity for us,” with Global Xpress arriving next year, said Pearce.
The company launched its Alphasat satellite on July 25 and its delayed Proton satellite launch should take place later this year, assuming no further setbacks, said Pearce.
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