The headline raises a salient question about Inmarsat (ISAT) given the company’s share price steep two-and-a-half year decline from north of £11.00 to around half that today.

US satellites firm Echostar was keen on a takeover but its lowball offer was firmly rejected by Inmarsat’s board in July. Those raised hopes that the UK firm might get taken over were what led the share price to nearly double during June.

Since European rival Eutelsat has also said it isn’t interested, takeover candidates are quickly thinning out, even if a successful offer cannot be completely ruled out.

So where does this leave investors in terms of Inmarsat’s operating performance? On a pretty sticky wicket, with massive debt, huge capex demands down the line, limited growth and doubts over part of the UK firm’s cash flows.


Today’s largely in-line second quarter 2018 announcement shows earnings before interest, tax, depreciation and amortisation (EBITDA) down 1.8% despite a 4.9% rise in revenues, to $717m. That works out at a 2.5% fall to $308m on a 5.2% sales increase ($652m) if you strip out its take from US partner Ligado.

Aviation is about the only part of the company that’s growing, revenues up 39% to $116m because airlines are increasingly queuing up to get planes retro-fitted for inflight broadband access. But the bigger Maritime and Government units are both still declining, albeit slowly.

With annual capex still being steered toward the $500m to $600m through to 2020, investors may well conclude that Inmarsat remains a financially stretched business with limited reasons for that to change near-term. That’s what today’s 5% share price slump to 550.4p appears to be telling us. Unless bidders do re-emerge, of course.

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Issue Date: 02 Aug 2018