Inmarsat suffers meltdown
November 20, 2011
Inmarsat had three catastrophic days last week if investor sentiment is any guide. Inmarsat, which supplies satellite-based services and communications mainly to the maritime and aircraft industries, was within the past year trading at a buoyant 724p per share. Last Monday (November 14) its price stood at 470p, already massively depressed. But from Wednesday to Friday, a near-meltdown in confidence saw the stock price tumble from around 460p to 418p. Inmarsat now faces being dropped from the influential FTSE 100 market index.
At least part of the problem are anxieties over its relationship with LightSquared, a company that is looking to roll out super-fast broadband by satellite to North American users. LightSquared is backed by billionaire hedge-fund boss Phil Falcone. Three weeks ago, Inmarsat’s CEO Andrew Sukawaty told investors that it was LightSquared’s revenues that were offsetting a slowdown in its maritime revenues.
However, on Thursday, US Senator Pat Roberts urged his colleagues to prevent the US Federal Communications Commission refusing LightSquared permission to use frequencies already reserved for satellite operators. The LightSquared signals threaten the use of GPS signals, especially those used by aircraft.
LightSquared plans on using Inmarsat capacity plus thousands of ground-based re-transmission towers operating in the L-Band to supply services to customers. LightSquared’s original FCC licence was drafted to ensure the company based its services on satellites, using the terrestrial repeaters only as back-up. Recently, the FCC granted LightSquared permission to sell terrestrial-only handsets, a concession the company said would help it raise the financing it needs.