|Inmarsat: Between Restructuring and Decline in Business|
Earlier this year, Inmarsat implemented its shareholders’ desire for the roles of chairman and CEO to be split. Andrew Sukawaty became Executive Chairman and Rupert Pearce became Chief Executive Officer.
Many questioned this move for the satellite company who saw its shares losing more than 40% of their value over the past two years, as its core business has declined.
The recent economic crisis caused decline in Inmarsat’s maritime services, and customers were spending less as they migrate from traditional phone satellite services to sending emails over data networks. While total revenues for 2011 were reported up 20%, the main growth didn’t come from sales but it came from payments from LightSquared - the US mobile phone joint venture - which was renting radio spectrum from Inmarsat.
When it comes to business sales, the company saw recently a 17% decline in its core business of providing land-based satellite services. Many have linked that to the company’s military customers who began to pull out from Afghanistan. Revenues from Afghanistan have gone from about $50m a year two years ago, to nearly $10m this year. However, the company also added a good amount of revenue of the 2011 Arab spring in Egypt.
On the other hand, LightSquared payments have now ceased as LightSquared has run into regulatory issues for using Inmarsat’s spectrum.
The Financial Times reported in May that Inmarsat came under fire from its shareholders back as more than 40% of the votes at its annual meeting failed to back the company’s remuneration report. Investors were protesting at plans to pay Andrew Sukawaty, the executive chairman, the same amount of money as last year, even though he has since handed over the running of the company to a new chief executive.
Competition with its Distributors
Finally, recent reports have circulated that the company’s new maritime communications pricing policy is turning away customers and putting Inmarsat in competition with its global network of service distributors.