Satellite Industry Is All at Sea

Satellite operator Inmarsat was founded 40 years ago to let ships communicate with land so rescuers could aid sailors. The maritime business, which still provides half of sales and operating profit, set it apart from rivals who were focused on broadcasting and broadband. As a result, the British company had lower margins than peers but was insulated from the competition and macro-economic storms that buffeted others.

Now, amid the tumult of a capacity glut in the sector, even Inmarsat is getting dragged under water. Advances in high-throughput satellites are bringing more bandwidth online than ever. This oversupply, which might triple capacity by 2020, will pressurize sales and margins for all the big satellite players. Since Eutelsat issued a profit warning in May, investors have punished the sector.