Inmarsat Share Discussion Threads

[the original goldbug] 20/10/2017 07:29

Not that the brokers are to relied upon but having had a perusal at the notes from Desutshe, Credit Suisse and RBS there is a consensus that capex remains at $550m per year for the next few years and EBITDA growth doesn’t pick up until 2020.

Therefore debt will still grow if both capex and dividends remain the same, which concerns me a bit as it is a non sustainable situation.

I should also add that it is difficult to classify ISAT as a growth company with a dividend, as all earnings are paid out and so the company is not growing its equity, at least from an accounting perspective.

We are left with a 6.5% yield and a company which makes a 17% ROE trading on 2.5x book. Returns on equity are flattered by the relatively high level of debt and returns on capital are more in the region of 12%. So it’s not without its risks even at this price.

[zcaprd7] 20/10/2017 00:31

They are at the inflection point for the capital spend, which drops off now... We are at peak debt, so it looks bad from a historic accounting appraisal, but I guess that's why we are at a three year low.

[the original goldbug] 19/10/2017 11:47

There is a healthy debate between the bulls and the bears on this page, which is in itself welcome and unusual.

I have to give the nod to the bears however as they seem more informed on the technical issues and the price action has proved them right.

However it does smell that the turn is near. I bought some because it’s an attractive entry point from the 5 year chart perspective and a friend is who is vaguely informed believes in the upside potential from aviation.

If you look at the BS you will notice that debt is growing as they can’t finance the dividend and capex from cash flows. That implies of course that management must be internally pretty bullish on increased cash flows in the future, but it can also be argued that they are throwing caution to the wind and increasing the financial risks.

If the bulls are right about aviation though...

[zcaprd7] 19/10/2017 10:50

Topped up. They've invested heavily, but now they sit back and wait for cash, hence the dividend and little concern about debt.Market doesn't see that, satcoms is quite counter cyclical as it takes 3 years to build and launch a new satellite!

[aleman] 19/10/2017 10:08

H1 operating cashflow pre working cap $387.4m. Net finance charge $50.2m (after interest on cash reserves). Interest cover 7.7 so debt does not seem too high at all. It looks like more could be safely assumed. Market cap looks very low to operating cashflow and very low to capex spending. Presumably, the capex spend should enhance operating cashflow further in the medium term, making market cap look even cheaper. Are bears assuming that there will be no return on this heavy capex or can they explain why existing operating cashflow might get squeezed in what is supposed to be a growing company? The cheap market cap seems to be discounting a lot of bad news/interest rate rises and there seems to be no threat to the dividend for now, despite the heavy capex, since there seems plenty of scope to increase debt in the short term with interest cover so high.

[undervaluedassets] 19/10/2017 08:56

"digging the whole"

shome mishtake here shurely

[w1ndjammer] 19/10/2017 08:30

okay rjc which company is this ISAT or VSAT

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At Boeing Commercial Satellite Services (BCSS), we take pride in having a deep understanding of our customers. Drawing from Boeing’s more than 50 years of designing, building, fielding and operating satellite communication (SATCOM) systems for the U.S. government, we know who our customers are and how they are required to operate.

Now, with Global Xpress, the world’s first global high-throughput wideband network from a single operator that complements military SATCOM (MILSATCOM) Ka-band systems, BCSS is bringing the throughput and interoperability government customers demand, anywhere, anytime, securely and reliably – available today.

The Global Xpress Mil-Ka High-Capacity Payload (HCP) steerable beams allow authorized military users to access complementary steerable wideband capacity as part of their own independent network, in the same frequency band as Wideband Global SATCOM (WGS). Communication networks can be established using WGS-certified SATCOM terminals as transponded networks in the same beam, reach-back networks through the Global Xpress Satellite Access Stations (SAS), or as a service from spot beam to spot beam. Users have the option to field specific technology and equipment in the Global Xpress secure enclave built at Inmarsat’s SAS locations placed in NATO and Five-Eye nations. To support the government’s unique needs, BCSS has established additional unique teleports designed with security and maximum functionality in mind.

Inherently agile, rapidly repositionable
Reliant either on machine-to-machine interfaces or a human in the loop, Global Xpress steerable beams are inherently agile and can be rapidly repositioned either to track fast-moving platforms, airborne or ground-based, or to support multiple geographically dispersed missions within a single coverage area – in real time. Beam repositioning to any geographic location within the satellite’s field-of-regard takes less than two minutes.

In addition, Global Xpress Mil-Ka bandwidth can discriminate against jamming or other ground-based interference, thereby allowing continued coverage by moving the beam slightly, so that it still covers their area of need while avoiding the jammer

[rjcpinto] 19/10/2017 06:57

I am not optimistic about the outlook for ISAT. They have been spending heavily chasing the aviation market - if you add the Lufthansa deal, the S band satellite and the EAN, you are talking USD 1B. They still have a good USD 300M+ to go for their so-called 5th GX, which has limited capacity and was bought to secure the Qatar Airways deal. They have very little to show for it, and most of their current revenues are still with L band services, with very little coming from Ka band and nothing from S band. Competition is intense, and buying customers like they did with Lufthansa and Qatar will only make the whole bigger. Their President Inmarsat Aviation, Leo Mondale, was fired by the Board, and while that was great news as he was the guy digging the whole, recovering from it will be hard.

[the original goldbug] 18/10/2017 23:27

What do people know about VSAT?

Will they be the ones to clean up in aviation?

Why does ISAT have such low market share in aviation?

The dividend situation is unusually and I think unsustainable. Unusual in the sense growth companies retiring earnings to finance growth and unsustainable in that the payout requires an expansion of the debt side of the balance sheet to finance the dividend payout.

If returns on equity fall his stock could still fall by at least 50% given the debt.

However if they can demonstrate growth in aviation the stock could be very interesting at this level.

So please, anyone, give some insight as to what is happening in the aviation market.

Thanks!

[undervaluedassets] 18/10/2017 08:11

Well suddenly everyone on this board is talking. .

Price is back to 2012 levels.

Is this a better company with better prospects than it was in 2012 that is the question.

[w1ndjammer] 18/10/2017 07:50

Our satellites
We launched the world’s first global mobile satellite communications system to enable merchant ships to stay in touch or call for help in an emergency.

Today we own and operate a total of 13 spacecraft flying in geostationary orbit 35,786km (22,236 miles) above the Earth. We remain a pioneer and industry leader in space communications with the launch of Global Xpress and the development of our unique European Aviation Network.

Inmarsat-5 and Global Xpress
We have launched the world’s first global Ka-band mobile satellite system, delivering high-speed broadband to compact user terminals on land, at sea and in the air, through a single operator.

We call this pioneering network Global Xpress.

Global Xpress is delivered through our next-generation Inmarsat-5 (I-5) satellites, built by US manufacturer Boeing and based on its powerful 702HP platform.

The first Global Xpress satellite – I-5 F1 – entered commercial service in July 2014, serving Europe, the Middle East, Africa and Asia. The second satellite successfully launched from the Baikonur Cosmodorome in Kazakhstan in February 2015 to deliver regional GX services for the Americas and Atlantic Ocean Region and the third satellite in the constellation (I-5 F3) launched in August the same year to cover the Pacific Ocean Region. Global commercial service started in December 2015.

As part of Inmarsat’s US$1.6 billion programme commitment, a fourth Global Xpress satellite (I-5 F4) was launched in May 2017 to provide additional GX capacity.

European Aviation Network
Our S-band satellite will provide multi-beam coverage over Europe as part of the European Aviation Network (EAN).

The first of its kind worldwide, the EAN will combine high capacity satellite coverage with a complementary 4G LTE ground network, developed by Deutsche Telekom, to provide high-speed passenger Wi-Fi on flights across all European Union states.

The EAN payload is part of a ‘condosat̵7; constructed by Thales Alenia Space, which incorporates a second payload for Hellas-Sat. The satellite was launched by Arianespace from the Guiana Space Center in Kourou, French Guiana on 28 June 2017 is on course to commence commercial service in the second half of this year.

Alphasat and the award-winning I-4 series
With the launch of Alphasat in July 2013, Inmarsat became the commercial operator of one of the most technically advanced communications satellites ever flown into space.

The size of a London double-decker bus and with a total mass of more than 6.6 tonnes at launch, Alphasat is the largest European telecommunications satellite ever built.

Alphasat now supplements our ground-breaking Inmarsat-4 (I-4) series, which in 2010 was awarded the Royal Academy of Engineering’s prestigious MacRobert Award for innovation after all three I-4s established the world’s first global 3G network.

The Inmarsat-4 fleet is expected to support our L-band services without the need for replacement until the early-2020s.

The I-3 satellites: workhorses of the L-band fleet
The Inmarsat-3s – the first generation to use spot-beam technology – were launched between April 1996 and February 1998.

Four of the five Inmarsat-3 satellites are currently in service. They were developed by prime contractor Lockheed Martin and payload provider Matra Marconi Space.

With an end-of-life power rating of 2,800W, each I-3 can deliver an EIRP (radiated power) of up to 48dBW, and can dynamically reallocate both RF power and bandwidth among a global beam and five spot beams, allowing greater reuse of the available spectrum.

Each I-3 also carries a navigation transponder designed to enhance the accuracy, availability and integrity of the GPS and Glonass satellite navigation systems.

The Inmarsat-3s are expected to remain in operation, providing communication and safety services in the L-band, until around 2018.

Decommissioned
Inmarsat-2: first off the launchpad
Our first wholly owned satellites, the Inmarsat-2s, were built by an international consortium led by British Aerospace. They were launched in 1990-2 and, despite a planned design lifespan of 10 years, our final I-2 satellite continued in active service until December 2014, more than two decades later

[shoobmeister] 18/10/2017 07:41

I know this sector well and i'll tell you that you aren't buying the same Inmarsat, relative to the satellite market, as 5-7 years ago.Too much competition and their failure (in broad terms) in the airline market is testament to that. Its a solid company on the maritime front because of GMDSS but aero and enterprise? Fuggedaboutit!!

[steeplejack] 18/10/2017 06:21

"We have announced that we increased our dividend for the 11th consecutive year, delivering dividend increases every year since we listed on the Stock Exchange in 2005. We have determined that this is the right level of dividend having regard to the medium-term outlook for the business and our annual and longer term financial planning supports this."AGM statement 4 May 2017I'd be surprised if we see increases in the dividend going forward but I don't see a cut on the horizon.

[the original goldbug] 17/10/2017 23:34

Having just read the half year statements I have to wonder how the dividend is sustainable given the capex increase, or can I assume the capex was a one off?

In this business do you need to keep launching new satellites when capacity gets filled?

Who competes with these guys?

[the original goldbug] 17/10/2017 23:00

Can anyone give any insight as to why this stock has been in such a strong bear trend since its highs?

[undervaluedassets] 17/10/2017 15:50

This company's tech is the future.

Never bought a stock that did not dip below my buy price. Picking bottoms is a mugs game but this is cheap enough and we will see higher prices down the road..

The story of satellite communications (and satellite broadband in particular) is one that has a long way to run and this outfit is well placed.

[w1ndjammer] 17/10/2017 15:05

Back on board best price i ever bought at, lets hope this is a keeper.

WJ.

[mrthomas] 17/10/2017 13:59

just brought in today as feel should do well if does not go too much lower i.e. below 6

[wad collector] 17/10/2017 13:41

Well I clearly added too early there ; what a depressing chart. Joining my long list of recent lemons that I am sitting on in hope...

[steeplejack] 17/10/2017 12:42

LLC 2.49% -0.09% 5 Oct 2017BlackRock Investment Management (UK) Limited 0.79% -0.01% 22 Sep 2017Marshall Wace LLP 1.30% 0.08% 8 Sep 2017OLD MUTUAL GLOBAL INVESTORS (UK) LTD 0.70% 0.09% 12 Sep 2017Total 5.28% Chart - changes in disclosed short position over timeShort positions at 5.28%.Something of a cap on optimistic sentiment.Blackrock and Old Mutual might be simply playing a technically weak chart but it's not encouraging.

[undervaluedassets] 17/10/2017 12:24

Well the broker targets are way north of this (averaging £9.00 +)

Directors have recently bought reasonably large amounts.

And it has a 6% yield .

New markets opening up everywhere for broadband on planes.

happy to wait.

[zcaprd7] 17/10/2017 11:59

Did you get more? I'll top up at sub £6

[wad collector] 13/10/2017 14:11

Think I will have some more if it touches 635 again. There seems a fair bit of uncertainty priced in.

[undervaluedassets] 13/10/2017 11:05

FT article an interesting read.

Interesting the envisioned size of the airline broadband market.

"The stakes are high with HSBC predicting the in-flight broadband market, including private jets, will grow to $5bn in size by 2025 from $700m in 2015."

That is one large pie.

This could go into orbit (do you see what I did there?)

[zcaprd7] 13/10/2017 01:18

Oh, and suing ofcom isn't going to make you many friends!