Inmarsat revenues up 4.3%, beating expectations

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Revenues at Inmarsat rose 7 per cent in the final quarter of the year and 4.3 per cent overall in 2016, beating analysts’ expectations as strong growth in the satellite telecommunications company’s government and aviation divisions outweighed a fall in maritime business.

Group revenue at the British company hit $1.329bn in 2016, ahead of expectations of $1.307bn, while earnings before interest, tax, depreciation and amortisation rose 9.5 per cent over the year to $794.8m and rose 9.2 per cent in the fourth quarter to $221.8m.

Profit after tax took a hit, however, falling 23.9 per cent in the fourth quarter to $67.1m and 13.7 per cent over the year to $243.3m, driven by a rise in net financing costs.

The company said it “remained confident” about the medium to long term outlook for the business but warned that its markets “continued to be challenging, with sustained pressure on customer expenditure, increasing competition and the arrival of new satellite capacity in some of our markets”.

As a result, Inmarsat said there was “an unusually wide range” of possible outcomes for the performance of the business in 2017 and 2018, but made no changes to its guidelines for 2017 and 2018 revenue of $1.2-1.3bn and $1.3-1.5bn respectively and excluding an agreement with US wireless company Ligado.

The company has been striking deals with major airlines such as Air New Zealand and British Airways to provide in flight wifi services as well as increasing government contracts. A key issue for Inmarsat has been whether in-flight broadband can grow enough to offset disappointing performance in its maritime division.

Revenues in its aviation division were up 12.5 per cent over the year while government revenues rose 15.3 per cent. This helped to offset a fall in the maritime division – Inmarsat’s largest, accounting for two-fifths of revenues – of 3 per cent.

The telecoms company has been the subject of takeover buzz recently, with shares rising in February after the head of US pay-television provider Dish Networks predicted sector consolidation. Analysts believe Dish sister company EchoStar is a logical potential buyer of Inmarsat.

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