Inmarsat plc Reports Preliminary Full Year Results 2012 London, UK: 7 March 2013. Inmarsat plc (LSE: ISAT.L), the leading provider of global mobile satellite communications services, today reported consolidated preliminary financial results for the year ended 31 December 2012. Inmarsat plc – Full Year 2012 Highlights
Rupert Pearce, Inmarsat’s Chief Executive Officer, said, “We are making progress across a range of activities that strengthen our core franchise and bring us closer to addressing new markets with our Global Xpress services. We are pleased with the improved results from our core MSS business and we are confident in reiterating all of our existing revenue growth targets. At the same time, significant technical and commercial progress with our Global Xpress programme means we expect to begin network deployment in 2013 as planned.”
Growth in maritime data revenues was primarily driven by pricing and service package changes implemented in January and May 2012 and increased take-up and usage of our FleetBroadband terminals. During the year we saw significant migration of end users from usage-based pricing plans to subscription-based plans with higher monthly fees and inclusive usage.
At the end of the year we estimate that nearly half of our FleetBroadband revenues now come from recurring customer subscriptions. We have also seen strong terminal activations and increasing average revenue per user (“ARPU”). During 2012, we added 7,980 FleetBroadband subscribers of which 1,547 were added in the fourth quarter. Despite the overall revenue growth reported, customer migration to FleetBroadband from certain older services continues to be a constraint on our rate of revenue growth as the price of FleetBroadband services is typically substantially lower than the price of equivalent services on the terminals being replaced.
We have continued to see maritime voice revenues being negatively impacted by product mix changes as users transition from our older services to our FleetBroadband service where the price of voice services is lower and also by the substitution effect of voice usage moving to email and Voice Over IP.
During the year we also saw encouraging take-up of our XpressLink service, our hybrid L- and Ku-band maritime service that will transition customers to Global Xpress. While 2012 was the first year of availability, XpressLink has gained rapid market acceptance and has allowed us to increase our share in the maritime VSAT market. At the end of the year we had an installed base of 1,186 ships using our VSAT services, including more than 330 ships using XpressLink. Revenue generated by new XpressLink customers impacts revenue and margin reported at both the Inmarsat Global (wholesale) and Inmarsat Solutions (retail) reporting segments.
In the land mobile sector, the expected decline in data revenues is due to the combination of troop withdrawals from Afghanistan and the comparative impact of significant event revenue in 2011. We estimate that Afghanistan and events in North Africa and Japan in 2011 contributed US$30m more revenue year-over-year, compared with 2012, of which approximately US$4m more revenue was in the fourth quarter 2011. Underlying growth in land data revenue, excluding Afghanistan and other events was positive and driven by growth in the number of BGAN subscribers.
During the fourth quarter 2012 we added 1,326 BGAN subscribers. Voice revenue in our land mobile sector increased due to growth in revenues from our IsatPhone Pro service. Take-up of the IsatPhone Pro service has remained strong and we ended the year with over 84,000 active subscribers and saw net additions of over 13,000 subscribers during the fourth quarter. The increase in our installed subscriber base is driving overall traffic growth and is the primary contributor to our voice revenue growth.
Aviation and Leasing
The increase in aviation revenue was driven by strong growth in revenues from our SwiftBroadband service, offset by a decline in Swift 64 revenues, due to lower usage by certain government customers, including usage related to reduced activity in Afghanistan. Our aviation business continues to see take-up for passenger connectivity services and we ended the year with 236 aircraft equipped for such services, including 138 using SwiftBroadband.
The decrease in leasing revenue was in line with management expectations and predominantly due to a reduction in revenue from certain government maritime contracts. In addition and as planned, certain Inmarsat-B leases were not renewed in connection with our Cooperation Agreement with LightSquared. and predominantly due to a reduction in revenue from certain government maritime contracts. In addition and as planned, certain Inmarsat-B leases were not renewed in connection with our Cooperation Agreement with LightSquared.
The decrease in Inmarsat MSS revenue at the Inmarsat Solutions level was driven primarily by a combination of lower leasing revenue and by lower BGAN revenue arising from Afghanistan and other world events year-over-year. As Inmarsat Solutions has a disproportionately higher share of both our leasing and BGAN business, the lower revenues from these business lines gave rise to an overall decrease in revenue, even though Inmarsat Solutions benefited from strong growth in maritime revenues and other factors that contributed to an overall increase in MSS revenue at the wholesale level.
In addition, growth in maritime MSS revenue at Inmarsat Solutions lagged the growth reported at the Inmarsat Global level as effective wholesale price increases, resulting from the elimination of certain volume discounts in January 2012, were not wholly passed on by Inmarsat Solutions to end users. As a result, certain price increases at the Inmarsat Global wholesale level did not result in equivalent revenue increases at the Inmarsat Solutions retail level.
The increase in Broadband and Other MSS revenue was due to increased revenues in our Inmarsat Government business unit from growth in network services and equipment sales and the inclusion of our Ship Equip acquisition for the full year in 2012 compared to the period from 28 April to 31 December in 2011.
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