Inmarsat plc Reports Preliminary Full Year Results 2007

06-03-2008 - Inmarsat plc, the leading provider of global mobile satellite communications services, today reported unaudited consolidated financial results for the year ended 31 December 2007.

Following our announcement on 11 February 2008, these consolidated results for Inmarsat plc include the financial results of CIP UK Holdings Limited and its subsidiaries, including Stratos Global Corporation ("CIP") for the period 11 December 2007 to 31 December 2007. Please note that where we refer to "Inmarsat Core" we include only the results of Inmarsat plc and subsidiaries and exclude CIP. It should be noted that Inmarsat plc does not control CIP, but has a call option to acquire CIP which is exercisable from 14 April 2009.

Inmarsat plc - Full Year 2007 Highlights

* Total revenue $576.5 million up 15.3% (2006: $500.1 million)
* EBITDA $388.1 million up 17.0% (2006: $331.7 million)
* Profit before tax $124.8 million up 39.0% (2006: $89.8 million)
* Final dividend increased by 8.3% to 17.33 cents (US$) per share

Inmarsat Holdings Limited - Q4 2007 Highlights

* Q4 revenue up 6.7% to $133.4 million (2006: $125.0 million)
* Q4 EBITDA up 7.6% to $85.4 million (2006: $79.4 million)
* Q4 BGAN revenue $11.3 million up 10.8% sequentially on Q3
* BGAN subscribers reach 15,817 (1,943 additions in Q4)
* Broadband platform extended to aeronautical and maritime sectors
* Cooperative spectrum agreement signed with MSV for the Americas

Andrew Sukawaty, Inmarsat's Chairman and Chief Executive Officer said, "2007 was a very good year for Inmarsat. Our operating performance in terms of both revenue growth and cash flow generation was strong and exceeded our growth targets. Importantly, we also completed the key new product launches that further cement our market leadership. We now offer our customers mobile broadband connectivity on sea, land and in the air. We are well positioned to deliver another year of continued growth in 2008 and we are therefore raising our final dividend for the year by 8.3%".

Inmarsat Core - Mobile Satellite Services
Increased demand for data connectivity from the maritime industry was the primary driver of revenue growth from our maritime sector of 9.0% year over year. Maritime data revenue grew by 13.0% while voice revenue grew by 1.7%. Growth in our base of active maritime terminals was 5.6% for the year, including growth of 40% in our base of Fleet terminals. During the fourth quarter we launched our FleetBroadband service, providing our maritime customers with a broadband upgrade path, ensuring we keep pace with the industry's expanding demand for data connectivity at sea.

A successful year for our BGAN service saw land mobile sector revenue growth of 8.4% for the year. Land data revenue saw year over year growth of 14.6%, while voice services declined 22.9%, primarily due to competitive erosion on a small base of revenue. Revenue for our BGAN service continues to be driven by take up by new customers, which has consistently outstripped the impact of migration to our BGAN service from older services. Although our base of active terminals in the land sector as a whole was down 4.5% year over year, this reflected contraction in our base of lower value voice and telemetry terminals, while the services that drive land data revenues (GAN, R-BGAN and BGAN) recorded net growth in active terminals of 21.2%.

During the year we launched a portfolio of Satellite Phone Services, including our first handheld service, to increase our penetration of the voice market. We are encouraged by the early results and we reiterate our plan to achieve a 10% market share in this sector by 2010.

Year over year growth in our aeronautical sector of 44.3% was primarily the result of sustained demand and high levels of usage for our Swift 64 service, which mainly serves government aircraft and business jets. During the fourth quarter, we introduced broadband speeds to our aeronautical customer base with the launch of our SwiftBroadband service. Prior to the end of the year one of the first SwiftBroadband terminals was in service supporting a trial of in-flight mobile GSM services with Air France.

Although revenue from our leasing business grew 9.8% year over year, we experienced lower leasing revenue during the fourth quarter as a result of lower demand from a key customer.

Impact of volume discounts
The volume discounts we offer to our distributors have an increasing impact on our margins as the year progresses. As our distributors reach certain volume targets we reduce our wholesale prices and this process progressively reduces our margins until the end of the calendar year when our rates are then reset to their pre-discount level. Total volume discounts in 2007 were $51.3 million, an increase of 21.9% compared to $42.1 million in 2006. The total amount of volume discounts is affected by our overall revenue growth and by consolidation among distribution partners. As a result of the merger of Vizada Satellite Communications (formerly France Telecom Mobile Satellite Communications) with Telenor Satellite Services in September 2007, we expect the merged entity to earn higher volume discounts for the remaining term of our distribution agreements, which expire in April 2009.

Liquidity
At 31 December 2007, the Inmarsat plc group (including CIP) had total net external debt of $1,440.5 million. Inmarsat Core had net external debt of $1,131.1 million, made up of cash of $51.1 million and total external debt of $1,182.2 million. Inmarsat Core also had a revolving credit facility with an amount available but undrawn at the end of the year of $230 million. CIP had net borrowings at 31 December 2007 of $309.4 million, including cash of $63.9 million and total borrowings of $373.3 million.

Inmarsat Plc, press release