Inmarsat Share Discussion Threads

[eipgam] 26/3/2010 15:15

Its got 75 mins to put on 3p if it is to break 800.

Brewin Dolphin are recommending that their clients sell (or at least topslice)

[enami] 25/3/2010 13:49

Closed the dividend gap, 800 this week?

[philanderer] 16/3/2010 22:51

Daily Telegraph:

Questor believes Inmarsat's growth prospects are good, especially with the coming launch of its handheld satellite phone.

Inmarsat
779 1/2p -12

Questor says, BUY

[philanderer] 15/3/2010 12:04

Merrill Lych note this morning...(FT Alphaville)

Downgrade to Neutral

While the core business continues to motor, and the option value looks ever
closer, for us, the risk-reward means we would be unwilling to apply fresh money
at this point. Consequently, following a strong performance we are downgrading
Inmarsat from 'Buy' to 'Neutral'. We also raise PO from 750p to 800p.
Valuation: ISAT must crystalise option value to go higher
From a valuation perspective, the stock appears fully valued, trading at 10.4x
2010 EV/EBITDA and 27x 2010 P/E. While we can see a 'blue sky' upside as far
as 975p (if we include 100% payout on both spectrum options), our price objective is lower at 800p. In our view, for Inmarsat to go higher from here it must start to crystalise its spectrum options. We believe that is possible, but it is not guaranteed. We therefore downgrade to Neutral.

Spectrum options: European 'S Band'
Inmarsat is making progress with its S band JV with a mobile operator: Inmarsat's CEO stated it was "in early discussion with potential partners" and we also expect further terrestrial (CGC) licence approvals soon. However, we are lowering the 'blue sky' value of the European spectrum to 84p reflecting lower than expected spectrum auction prices in Italy and Scandinavia. A further unresolved issue is the March 2011 'use-it-or-lose-it' milestone that Inmarsat cannot meet in our view
(though we expect the EC to flex the terms of the licence due to legal issues).
US spectrum options: US 'ATC'

The US spectrum option also looks like it is making progress with comments by
the Chairman of the FCC saying it could give ATC licencees the option of new
flexibility or allow them to transfer/auction the spectrum. While the sale of
Inmarsat's spectrum is not possible because of international (ITU) rules, this is still positive. One outcome could be for Harbinger to sells its SkyTerra unit to a mobile operator. With a pre-determined financial 'roadmap' for ATC deployment, we see Inmarsat's upside from ATC limited to 109p per share, all in.

Update
We believe the recent increase in the Inmarsat share price is directly attributable to the comments by Julius Genachowski, the Chairman of the US FCC (Federal
Communication Commission). In a speech on Feb 24th he outlined the idea of making around 500Mhz of spectrum available over the next decade.

"Our Plan for mobile broadband will also recommend applying a flexible approach to other frequency bands, where our rules-technical rules, service rules-may be
holding back the broadband potential of large swaths of spectrum. We need to bring our spectrum policies into the 21st century. The Plan proposes resolving longstanding debates about how to maximize the value of spectrum in bands such as the Mobile Satellite Service (MSS) or Wireless Communications Service (WCS) by giving licensees the option of new flexibility to put the spectrum toward mobile broadband use-or the option of voluntarily transferring the license to someone else, who will." (Julius Genachowski, FCC Chairman).

Our view
On the face of it, this is good news as it increases the likelihood that the US could either:

1) Follow Europe's lead, and drop the requirement for all handsets using the spectrum to have satellite capabilities. (This makes the spectrum 'mainstream' rather than niche); or
2) Allow the spectrum to be sold/transferred

However, we do not believe Inmarsat/Sky Terra can sell or transfer the spectrum to another party as the spectrum is issued ultimately by the International Telecommunications Union (a UN body) for explicit use by mobile satellite operators. Selling the spectrum by itself would therefore be in contravention of the ITU rules. That said, it would be possible for the ATC licence to be set up in a similar way to the European 'partnership' we have outlined, alternatively Sky Terra could sell itself (including its satellite) to a mobile operator

[enami] 12/3/2010 18:01

No but I have always thought the Iridium was a better concept (72 Low Earth Orbit satellites). They just IPO'd last year after being saved form bankruptcy apparently.



Chartwise forming a nice cup ready for a handle.



Totally O/T you can see an "Iridium Flash" from their satellites as they cross into sunlight.

[eipgam] 12/3/2010 16:47

Such a friendly chap, Enami. Thanks.

Are you in any of them?

[enami] 12/3/2010 13:21

eipgam



IRIDIUM (NASDAQ:IRDM)

GLOBALSTAR (NSADAQ:GSAT)

THURAYA (not listed?)

[eipgam] 12/3/2010 12:55

Thanks again.... do you know who the 'other satellite operators' are?

[philanderer] 12/3/2010 12:19

Details from the Exane note today (FT Alphaville)

Inmarsat's satellite-based telecom services are crucial to helping governments, aid agencies and populations communicate when disaster strikes in vulnerable areas. As recent research has highlighted, the increase in the earth's temperature means that extreme weather conditions will be more frequent. It is likely that, if extreme weather events become more common, governments and aid organisations will preventively deploy more satellite-based telecommunications services, which can be used more quickly for emergency missions than if they are deployed after the event

Upgrade to Outperform with GBp910 TP

We have raised our estimates following the strong Q4 09 and increased confidence
that demand growth will remain solid (we also now include the recently acquired
Segovia). We have increased our 2010e EPS by 5% and 2011e by 8%. We have
raised our TP to GBp910 (+14%), also due to more favourable forex (GBP/USD at
1.55) and a higher probability for the ATC option (33% vs 20%). Inmarsat has unique assets and should ride the wave of increasing demand for anywhere/anytime
voice/data connectivity.

It also has the ability to increase its operating leverage tremendously since its capacity utilisation is only c.10%. We have upgraded Inmarsat to Outperform. We now rate all satellite operators Outperform.

[eipgam] 12/3/2010 12:16

Thanks for the notes.

[enami] 10/3/2010 15:28

Date Broker name New Price Old price target New price target Broker change 10-Mar-10 Nomura Buy 0.000p 700.00p 875.00p Reiteration

[dasv] 10/3/2010 14:27

Rolling PEG of 0.4 makes it a hold IMHO.

PE justified on earnings growth as in PFC, and smaller caps IDH, WCC, CMSH

[phillis] 10/3/2010 13:10

price looks well up with events ex Harbinger intentions

[enami] 09/3/2010 16:28

Results look fine.

Nice of them to pay the dividend a bit earlier this year, last year was end of May and this year XD 17 March and pay 1 April. Something to do with the tax increases for high earners in the next taxc year I think.

[dasv] 09/3/2010 10:46

Inmarsat plc - Full Year 2009 Highlights

· Total revenue $1,038.1m up 4.2% (2008: $996.7m)
· Inmarsat Global MSS revenue $682.8m up 10.4% (2008: $618.4m)
· EBITDA $594.2m up 11.9% (2008: $531.2m)
· Adjusted EPS(a) $0.38 up 26.7% (2008: $0.30)
· 2nd interim dividend of 20.63 cents US$, up 13.4% on 2008 final dividend
· Full year dividend increase 10%
· Free cash flow up 54% to $349.0m

[dasv] 03/3/2010 13:03

many thanks for that philander

[philanderer] 03/3/2010 12:34

Not invested but watching, thought this may be of interest.

UBS note this morning:

Big beneficiary of recent move in USD/GBP, comments on ATC supportive
Since the beginning of the year, the USD has strengthened by 7% versus the GBP. For
Inmarsat, this enhances earnings (revenues in USD, two-thirds of costs in GBP) and valuation due to the translation effect. We have raised our recurring profit estimates by 9% for 2009 and by 2-3% thereafter. Despite outperforming the FTSE by 35% since mid Oct, we see more upside potential and we raise our target 13% to 820p.

Q4 / full-year results due 9th March should be solid
We expect Q4 core revenue and EBITDA growth of 9%. Overall, including Stratos, we expect revenues for the full year of $1.05bn and EBITDA of $590mn. We believe the results should show the continuing momentum in Inmarsat's business, and believe our – and consensus – assumptions of a return to a more "normal" growth profile of 2-4% a year beyond 2010 may prove conservative.

Optionality means EPS continues to be biased to the upside
Inmarsat has inherent optionality, which could mean our EPS by 2013E has upside of up to 50%. These include: (1) we include only very modest medium-term assumptions for "phones on planes"; (2) some competitive satellite operators may find it hard to replenish their fleets, expanding the potential size of the handheld market that is open to Inmarsat; and (3) recent constructive comments from the FCC suggest an increased probability that Inmarsat can crystallise spectrum value.

Valuation – raising price target by 13% to 820p
As a result of the movement in the USD/GBP and an increase in our assumed probability of ATC (Ancillary Terrestrial Component) from 30% to 40%, we have raised our target (DCF-based SOTP) by 13% to 820p

[dasv] 02/3/2010 11:59

cheers Enami

[enami] 02/3/2010 11:46

Results next week 9 March.
Volume looks quite low.

[dasv] 02/3/2010 11:40

going rather well here... Any news I should know about?

[eipgam] 25/2/2010 10:16

No sooner said than done!

New ATH

[eipgam] 25/2/2010 09:38

Aye aye.... approaching a new ATH and accuonts out early March. (9th I think). Looking good.

[dasv] 19/2/2010 10:06

I have 761p on 60min P&F and underlying long term 810p on daily p&f as active upside targets.