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Inmarsat plc Reports Interim Results 2012
Rupert Pearce, Inmarsat's Chief Executive Officer, said, "The results for the first half and second quarter show that we have returned our core MSS business to growth, fuelled by continuing strong subscriber take up and the benefits of pricing initiatives. In light of on-going momentum in subscriber additions, we are making further progress towards meeting our expectations for the full year."
Growth in our maritime data revenue resulted primarily from the impact of pricing initiatives, in particular as a result of the elimination (with effect from January) of volume discounts previously available for older services and the implementation of certain price changes (with effect from May) in relation to our FleetBroadband service. We continue to see strong take up of our FleetBroadband service. During the half year 2012, we added 4,305 FleetBroadband terminals, of which 2,295 were added during the second quarter. At the end of the half year we had more than 30,000 active FleetBroadband terminals. In addition, the migration of certain leasing business to our maritime sector also contributed to our maritime revenue growth.
Although customer migration from older maritime services continues to have a negative impact on our rate of revenue growth in the maritime sector, we believe that this effect is now more than offset by usage increases we have seen from our FleetBroadband subscribers and by the impact of the price changes we have implemented. Although maritime voice revenue was down year over year, this is largely due to the impact of voice price reductions implemented in April 2011 and the on-going effect of voice to email substitution that we record as data revenues.
Interest in our XpressLink service has continued to gain momentum following the appointment of a number of leading maritime communications specialists as dealers which has increased market awareness. XpressLink is now a highly competitive alternative to traditional VSAT services and we continue to believe that XpressLink will gain meaningful market traction during 2012.
In our land mobile sector, while our BGAN and IsatPhone Pro services continue to attract new customer revenue to our network, this growth has been more than offset by the on-going decline in revenue from government users in Afghanistan. Lower revenue from Afghanistan, in connection with reduced military activity, remains a material headwind to our overall rate of growth in 2012. We estimate that Afghanistan and events in North Africa and Japan in the first half of 2011 contributed $18.2m more revenue year-over-year, compared to the first half of 2012. While revenue from North Africa and Japan has now largely normalised, our annualised land mobile revenue from Afghanistan remains material, but is expected to decline further in the remainder of the year.
Our IsatPhone Pro service continues to see strong subscriber take up. At the end of the quarter we had over 65,000 IsatPhone Pro subscribers, being the primary contributor to growth in our land voice revenues.
Aviation revenue growth for the first half was driven by the combination of strong take up and growth in revenue from our SwiftBroadband service, offset by lower usage from Swift 64 mainly due to lower military and government usage. In July, we announced the deployment of SwiftBroadband by two leading airlines in the Asia Pacific region to support in-flight passenger services. Leasing for the first half was in line with expectations.
Lower revenue recorded as Other Income was primarily driven by lower revenue from LightSquared partially offset by increased equipment sales in relation to our IsatPhone Pro service.
Growth in our Inmarsat Solutions division was primarily driven by recognition of new VSAT service revenues resulting from the acquisition of Ship Equip completed in April 2011, and by growth in our Inmarsat Government business unit, both primarily reported within Broadband and other MSS. Lower Inmarsat MSS revenue at the Inmarsat Solutions level was driven primarily by lower revenue from Afghanistan and lower event-related revenue year-over-year.
During the first half 2012, despite a poor macroeconomic environment and a continuing loss of revenue from government users in Afghanistan, we have made solid progress in returning our Inmarsat Global MSS business to growth. Furthermore, we are seeing sustained take-up and usage growth for our key services, FleetBroadband, IsatPhone Pro, and SwiftBroadband. In the medium term, we remain confident in the prospects for our XpressLink service and in our Global Xpress investment programme. As a result, the outlook statement provided in March 2012 continues to reflect our expectations for the performance of the group and our medium term revenue targets remain unchanged.
At 30 June 2012, the Inmarsat plc group had net borrowings of $1,468.0m, made up of cash and cash equivalents of $376.9m and total borrowings of $1,844.9m. Including cash and available but undrawn borrowing facilities, the group had total available liquidity of $1,479.6m. We remain fully funded as to all our capital needs for the foreseeable future.
Our Financial Reports
Inmarsat Group Limited, our wholly-owned subsidiary, today reported unaudited consolidated financial results for the three months ended 30 June 2012. A copy of the full financial report for Inmarsat Group Limited can be accessed via the investor relations section of our website.
Inmarsat management will discuss the results announced today and other financial and business information in a conference call on Friday, 3 August at 2:00pm London time, (United States 9:00am EST). To access the call please dial +44 (0)1452 555 566. The conference id for the call is 10246633. The call will be recorded and available for one week after the event. To access the recording please dial +44 (0)1452 550 000 and enter the access number 10246633#. The call will also be available via a webcast, to access the webcast please go to www.inmarsat.com/webcast.
Inmarsat will be holding a meeting for analysts and investors on Tuesday, 9 October 2012. The meeting will contain a series of presentations focusing on our Global Xpress programme.
The meeting will be held at Inmarsat's offices, 99 City Road, London, EC1Y 1AX and will start at 8.30am. To register to attend, please email firstname.lastname@example.org.
Certain statements in this announcement constitute "forward-looking statements". 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 or 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.
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