Inmarsat warns on Russian rocket problems

Inmarsat has warned that it is struggling to get its latest satellites off the ground, following the failure of a Russian Proton rocket and concerns over the impact of economic sanctions on future launch attempts.

On Tuesday, the UK company - which came to global attention in March for its role in tracking missing Malaysia Airlines flight MH370 - said the launch of its two remaining Global Xpress (GX) satellites, to complete a global broadband network, was likely to be delayed.

Inmarsat had been aiming to use three satellites to complete the first high-speed broadband network to span the world - and the first, covering Europe, the Middle East, Africa and Asia, entered commercial service at the end of June. It had planned to launch the other two by the end of this year, to establish global coverage in the first half of 2015.

However, while announcing the group's first-half results, Rupert Pearce, chief executive, said: "Following the recent Proton launch failure, the launch of our remaining GX satellites is likely to be delayed."

Inmarsat also warned that any broadening of US and European economic sanctions on Russia, over its involvement in the conflict in Ukraine, could further threaten the launch programme.

At present, sanctions do not affect launches of the Russian-built Proton rocket from Kazakhstan, but the company added: "There is a risk that further erosion in the Ukraine situation or a broadening of Russian trading restrictions could cause unspecified launch delays and delay global coverage of our Global Xpress services - which could adversely affect our revenues, profitability and results of operations."

Mr Pearce said while sanctions were not affecting Inmarsat, the company was watching the "evolving situation with great interest". He explained that Inmarsat already has a back-up plan, which would involve using the commercial space company SpaceX in California for launches.

"If the Proton delays extend to beyond the first quarter of next year, we have options to launch our Inmarsat satellites with other launch providers, such as SpaceX," Mr Pearce told investors.

But even if the Proton problems are quickly fixed, the current delay will result in lower revenues than Inmarsat had previously forecast for 2014-16 - although Mr Peace added that compound annual revenue growth in global mobile satellite services (MSS) would be within the 8-12 per cent range given in previous guidance.

For the six months to June 30, the company reported a 1.9 per cent increase in revenues to $652.3m, but a fall in pre-tax profits to $168.3m, from $185.5m a year earlier.

Analysts at Credit Suisse, who have an "outperform" rating on Inmarsat's shares, said that the results were in line with consensus expectations but, more importantly, the company had reiterated its revenue growth guidance despite the Proton problems.

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Shares in Inmarsat were 1.9 per cent lower at 707.50p in midday trading.

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