Inmarsat Plc Euro.0005 (ISAT)

Company overview

Inmarsat is the world's leading provider of global mobile satellite communications. The company provides voice and high-speed data services to almost anywhere on the planet - on land, at sea and in the air and operates 11 satellites in geostationary orbit 35,786km above the Earth, controlled from its HQ in London via ground stations located around the globe.

HL Comment (9 March 2010)

Satellite communications company Inmarsat recently (9th March 2010) unveiled a 12 per cent rise in full-year operating profit. Total revenue rose to $181.5 million from $160.6million in the fourth quarter of 2008, with the group’s maritime sector growing sales by 10 per cent and the land mobile sector growing turnover by 8 per cent. The aeronautical sector grew revenue by 13 per cent while the leasing division saw an  improvement of 29.2 per cent. Revenue was boosted by strong demand for broadband in remote areas. About 40 per cent of Inmarsat's business is derived from government and long-term contracts, which are less affected by the performance of the wider economy and more resilient in a downturn. The company expects to be able to grow revenue at a sustainable pace over the coming years through a series of new product launches and a new broadband service through its Por Constellation satellites that were launched over the course of 2009.

Negative Points:

• The US communications regulator recently outlined a national broadband plan which would allow satellite operators to use their radio spectrum for internet traffic. A protracted delay in deregulation in the US could prove a hindrance to new growth opportunities.
• A significant share stake held by US hedge fund (Harbinger Capital) could provide a drag on the share price if sold to traditional investors.

Positive Points:

• Data services now represent almost 90 per cent of Inmarsat’s volume and 80 per cent of its revenue.
• Demand for satellite technology is consistent in good and bad markets.
• The group anticipates high demand for broadband services and its entry into the handheld satellite phone voice market in 2010.
• Inmarsat declared a second interim dividend of 20.63 cents a share.

Consensus
On balance, market consensus indicates a buy.

All yield figures are variable and not guaranteed.

Fundamental Data

Year Ending	Revenue (m)	Profit Before Tax (m)	EPS ($)	P/E Ratio	PEG	EPS Growth (%)	Total Dividend	Dividend Yield
31-12-2009	1,038.10	196.90	0.33	28.10	1.00	27.00	0.33	3.10
31-12-2008	996.70	193.80	0.78	24.30	0.60	43.00	0.30	4.20
31-12-2007	576.50	124.70	0.21	40.00	1.70	24.00	0.29	3.40
31-12-2006	500.10	89.80	0.28	34.70	n/a	n/a	0.27	4.50
31-12-2005	491.10	95.50	0.17	31.40	0.20	183.00	0.16	3.10