While this was down on the $2.6 billion recorded the previous year, 2014’s net income of approximately $223 million was a major improvement on the approximately $266 million loss recorded for 2013.
For the year ended December 31, 2014, Network Services comprised 46 per cent of Intelsat’s total revenue at $1,149.5 million, a decrease of 4 per cent compared to the previous year. However, despite this decrease Intelsat has said in its commentary on the figures that it has generated new business in the mobility sector, including maritime, and that the decline is mostly due to depressed demand in Africa and consumer broadband in North America.
Intelsat is forecasting a further decline in its network services business of 7-10 per cent in 2015, though again this is based mainly on competitive pressures in Africa and on-going declines in the legacy channel and international trunking business.
“Intelsat continues to build its presence serving the growing aeronautical and maritime mobility sector, especially with respect to supporting network service providers with differentiated service delivered on a global basis,” the company said.
“For instance, Harris CapRock is using our IntelsatOne network broadband services to support passenger broadband connectivity for a major cruise line customer in the Caribbean.”
“Oil and gas networks on land and sea use satellite-based VSAT (very small aperture terminal) networks because of the ubiquity of service delivery and the ability to rapidly deploy and relocate broadband connectivity in the oil field or on a platform. RigNet, a leading global provider of managed remote communications dedicated to the oil and gas industry, renewed and expanded its services with Intelsat on six satellites, enhancing the global footprint for its operations.”
Intelsat also sees shipping as an area of likely continued growth in the future, expecting increased demand for maritime mobility applications which it aims to serve with the launches of its Intelsat 29e, Intelsat 34, Intelsat 32e and Intelsat 33e satellites, entering service over the course of 2015 and 2016.
Intelsat 29e will be the first Intelsat EpicNG high throughput satellite and is expected to launch in the first quarter of 2016, one of twelve satellite programmes the company currently has in development.
Intelsat also made a significant pay down of its debt during the 2014 financial year, reducing its net debt by some $475 million, though the company’s overall debt is still substantial – reports in late 2014 put the figure at approximately $15.3 billion.
“In 2014, we were able to deliver strong Adjusted EBITDA and cash flow in a challenging environment, meeting our guidance targets on all metrics. We also completed a debt pay down of $475 million and funded investments in our network,” commented Intelsat chairman and CEO, Dave McGlade.
“However, the continuation of the trends we experienced in 2014, such as pricing pressures in certain regions and applications, reduced US government spending, and rising geopolitical challenges, compounded with services nearing the end of lifecycle, is creating ongoing headwinds for our business in 2015 and into 2016."
“We are taking action to counterbalance these trends, focusing our resources on laying the groundwork that will position us to return to growth as our new media satellites and next generation satellites enter service in mid-2016 and 2017.”
Mr McGlade also outlined the focus points in the company’s strategy for the next couple of years, which will include building new satellite capacity, introducing further services based on its existing network capabilities, as well as developing new technologies to simplify access to its satellites.
“Through these initiatives, combined with supporting the growth of our core customers and optimising the use of our orbital rights and global presence, we will enhance our ability to address larger and higher growth applications,” he said.
“By executing on these priorities, we will be positioned for success once our new inventory becomes available.”
Intelsat is also optimistic about future cash flows, based on a contracted backlog up to the end of 2014 of $10 billion, four times its actual revenues for the year.