Inmarsat dashes takeover rumours with contract announcements

Dashing hopes of takeover talks that had emerged earlier in the week, Inmarsat published two announcements on Friday, but these were to reveal two new satellite contracts.

The FTSE 250 mobile satellite communications provider has issued a contract to build another of its Global Xpress broadband satellites, which followed a "material commitment" from Qatar Airways as it signed up for Inmarsat's advanced new in-flight broadband service.

Construction of the very high throughput satellite (V-HTS) will cost Inmarsat $130m over the three years 2017 to 2019 and is within the company's existing capital expenditure guidance.

The satellite, which is targeted for launch in 2019 but the launch provider has not been agreed yet, will add to Inmarsat's existing GX high-speed global broadband network and provide internet capacity across the Middle East, Europe and the Indian subcontinent.

Inmarsat said the satellite will be able to deliver very low cost per bit thanks to the combination of the latest satellite technology and a focus on areas of high demand to drive high capacity utilisation.

The construction contract award has been made following the commitment by Qatar Airways announced on Friday to adopt GX Aviation for its in-flight connectivity, which will allow passengers to browse the internet, stream videos, check social media and more during flights, "with an on board connectivity experience on par with broadband services available on the ground".

GX Aviation technology has already been equipped on Qatar Airways' latest Airbus A350s and retrofit installation on the airline's remaining Airbus A350s and Boeing 777s will begin this summer.

The new satellite will also support the rapid adoption by other airlines of GX Aviation both in Europe and through the major Europe/Asia aviation traffic corridor and will enhance the delivery of GX services to other market segments in the region.

Inmarsat is due to carry out more than 1,000 aircraft installations under mandates won from airlines including Lufthansa, International Airlines Group, Air New Zealand, Singapore Airlines and Norwegian Air.

Softbank rumours

On Thursday, the satellite services group's shares had rocketed higher after reports emerged of it was in talks with SoftBank Group about a possible tie-up with the Japanese conglomerate's satellite startup OneWeb.

Following widespread reports that rival satellite firm Intelsat's bondholders have rejected a proposal to combine with OneWeb, news wires reported that the Japanese tech conglomerate has started talks with alternative satellite partners, including Inmarsat.

Analysts at RBC Capital Markets reckoned Inmarsat would be open to an approach, with its £3.8bn market cap affordable to SoftBank and providing significant ground assets to help OneWeb to hurdle barriers to entry in its plans to spread affordable internet connectivity around the globe.

"If Inmarsat has received an approach, or is in talks with SoftBank, it will be required under the UK listing rules to make a RNS disclosure," RBC said.

"In our view, since there has been a high degree of specificity in the press reporting and a material share price move, if Inmarsat makes no RNS announcement we should assume, by deduction, that there has not been any approach."