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Inmarsat maritime revenue growth after price changes

Rupert Pearce, Inmarsat Rupert Pearce, Inmarsat

Inmarsat has reported an increase of almost nine per cent in maritime revenues for the first quarter of 2013, compared with the same period last year, partly as a result of the price rises it has introduced on its FleetBroadband and E&E services over the last year.

These results seem to suggest that fallout from the furore over the price changes that came into effect in May 2012 has been limited and has not resulted in high levels of customer churn.

"I think people are appreciating more now that the nature of the pricing changes that we made weren't all about pricing increases at all, in fact, as we've said before," said Inmarsat CEO Rupert Pearce, during the results conference call.

"The creation and enrichment to the different packages that we've created give people better value per megabyte than ever before and (are) creating environments in which they can control their costs, grab that efficiency and start to deploy solutions and applications over our network in a novel way that delivers real value to their enterprise."

"I think that bargain, that way of buying that facilitates that, is well understood now and we're seeing very strong growth and movement of our maritime revenues proportionally into these packages in a very pronounced way - which I think is good for the customer, good for our channel, and good for the resiliency of our own revenues and EBITDA as well."

The company said that during the quarter it added 1,924 FleetBroadband subscribers, including continued migration of customers to FleetBroadband from certain older services.

The increase in maritime revenue was attributable to the continuing general growth in data usage across the industry, with the approximately 15 per cent growth in data offsetting a 14 per cent decrease in voice revenues year-on-year.

The number of users of the company's XpressLink hybrid Ku-band/FleetBroadband package reached 1,229, with 85 net additions this quarter.

The XpressLink service is provided via the former Ship Equip part of the business, which had reported reaching 1,000 orders for its VSAT service in 2010 before it was acquired by Inmarsat in the first half of 2011.

Interestingly, Mr Pearce noted that the company has been adding capacity to its VSAT network - which presumably means making payments to rival satellite operators with existing Ku-band capacity.

Mr Pearce said that while this "impacts margin" he sees it as a measure which is "both temporary and (a) price worth paying" to strengthen Inmarsat's position in the VSAT market.

Despite this growth in maritime revenue however, overall Inmarsat PLC reported a decrease in revenue for the quarter of approximately 11 per cent compared with last year, and there does seem to have been some unrest among investors with regard to executive pay at the company.

A number of reports in the financial press in London have described a "shareholder revolt" at Inmarsat's May 2 annual general meeting (AGM), as almost 36 per cent of investors voted against a suggested pay package for company chairman and former CEO Andrew Sukawaty.

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