Inmarsat surges on SoftBank tie-up report

Shares in Inmarsat rocketed on Thursday following a report that the satellite communications services provider is in talks with Japan's SoftBank about a possible tie-up.

Bloomberg cited a person familiar with the matter as saying that Intelsat plans to announce that its bondholders have rejected a proposal to combine the satellite operator with SoftBank's OneWeb, making a deal unlikely.

It was understood that SoftBank has already started talks with alternative satellite partners, including Inmarsat.

RBC Capital Markets reckoned Inmarsat would be open to an approach. It said that at £3.8bn market cap, it is affordable to SoftBank and would be able to provide significant ground assets, such as command and control, thereby helping OneWeb to hurdle barriers to entry.

On the downside, though, it pointed out that Inmarsat uses low-frequency L-band and high-frequency Ka-band, whereas OneWeb uses Ku-band, as does Intelsat. RBC also noted that Intelsat retains exclusivity in certain key verticals with OneWeb as it was a round-one investor in OneWeb, ahead of SoftBank.

These key verticals include connected cars, which is a key area of focus for Softbank. "Owning Inmarsat instead of Intelsat would not resolve this issue as Intelsat would retain exclusivity," it said.

"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."

At 1040 BST, Inmarsat shares were up 5.1% to 840.50p.