More Conservative Congress May Lower Government Sales in Short-Term, Says Intelsat
The Republican gains in Washington create both risk and opportunity for Intelsat as the government looks to cut back on spending, said Intelsat CEO Dave McGlade during the company’s Q3 conference call Monday. The Congressional focus on lowering costs in general could “adversely affect” government capacity sales for the short-term, he said. But the move toward more cost-effective solutions may be a positive for Intelsat General, Intelsat’s government contracting operation, which can offer better prices than many competitors, he said. Government customers made up 19 percent of the companies’ revenue, up about 20 percent from Q3 last year, the company said. Intelsat revenue grew 4.3 percent to $644.3 million. Intelsat reported a net loss of $106.4 million for Q3, compared to a net loss of $94 million in the same quarter last year.
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There’s increased stability in capacity leasing around the world, said McGlade. Latin America continues to be an area with strong demand, though growth in the region is hampered by a lack of available capacity, he said. The 2012 launch of the IS-27 satellite will help the situation, he said. Mideast demand is also still strong, while satellite demand in Sub-Saharan Africa has softened, said McGlade. The company’s fill rate on its 2,125 transponders was 80 percent.
The company has nine satellites in development, with three launches scheduled through 2011. The launch of one, IS-18, was pushed back to 2012 due to manufacturing delays, the company said. Network services made up the largest percentage of Intelsat’s revenue, accounting for 49 percent, or $318 million, in Q3. Media brought in $196 million in revenue and government customers accounted for $123 million, the company said.
Meanwhile, Inmarsat CEO Andy Sukawaty said it won’t see any major effects from Harbinger Capital Partner’s large sell-off of Inmarsat stock. Harbinger recently said it would sell about 13 percent of Inmarsat’s stock, about half of Harbinger’s total stake. Harbinger, which owns LightSquared, has never held a seat on the Inmarsat’s board and remains one of the company’s largest shareholders, he said. Inmarsat revenue increased 18.8 percent to $308.8 million compared to Q3 2009, it said. The company’s EBITDA grew 18.4 percent to $189.5 million. About $9.8 million of Inmarsat’s revenue came from its spectrum sharing agreement with LightSquared.
Inmarsat reported a 7.2 percent decrease in revenue from its land mobile sector, which is highly susceptible to circumstantial swings, said Sukawaty. Major disasters can drive up quarterly numbers, he said. There has been some slowdown in government purchases of land mobile services in Afghanistan, though it’s unclear if that is a longer-term trend, he said. Total mobile satellite services revenue grew 6.2 percent to $185.1 million. Sukawaty declined to give much detail on sales of the recently launched mobile phone IsatPhone Pro, saying it was much too early to extrapolate how successful it has been.