Sukawaty Says MSS Takeovers Are Different
Inmarsat’s proposed takeover of Stratos Global Communications differs from the suggested acquisition of Inmarsat by SkyTerra Communications and Harbinger because “it is a done deal,” Inmarsat CEO Andrew Sukawaty said in an interview. Inmarsat recently asked the FCC to approve its eventual takeover of Stratos Global Communications, making the request almost a year before the acquisition could close due to a ban on Inmarsat owning its distributors (CD July 16 p13).
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SkyTerra and Harbinger said last month that once they have needed approvals they expect to make a firm offer for London-based Inmarsat. This potential transaction was a key topic on Tuesday’s SkyTerra quarterly earnings call (CD Aug 6 p13), but wasn’t brought up during the Inmarsat call.
Inmarsat’s FCC request doesn’t resemble the pre-approval that SkyTerra/Harbinger seeks because Inmarsat financed a privatization of Stratos late last year, fully expecting to take control of the company when the distribution ban ends in April, Sukawaty told us: “We are not a bank, so we don’t normally give loans.”
Sukawaty hasn’t talked with SkyTerra CEO Alexander Good about the proposed takeover, he said. “I talk to him every couple of weeks about our co-op agreement,” he said, referring to a 2007 deal on use of the L-band. Inmarsat said July 21 that “a very preliminary approach” with Harbinger had broken off.
Inmarsat is profitable, Sukawaty said. He reiterated that Inmarsat has fielded no offer “and no merger has been proposed.” Sukawaty likes the path Inmarsat is on, he said: The “growth trajectory is right on track.”
Sukawaty long has endorsed consolidation in the mobile satellite services business, but wouldn’t comment on what specific benefit Inmarsat sees in joining with SkyTerra. Nor would he say if Inmarsat would make a play for SkyTerra before SkyTerra could make its formal offer for Inmarsat. But he said Inmarsat has considered buying another satellite company. There’s no prohibition on Inmarsat owning another satellite company, he said.
Harbinger last week briefed senior staff of the FCC International Bureau, a company official told us. Harbinger and SkyTerra believe it could take 18 months to get approvals from the FCC, the Department of Justice and the Committee on Foreign Investment in the U.S. The election is one reason for the lag. The companies have not briefed either presidential campaigns, sources said. “We plan to provide briefing materials to policy makers who express an interest in this matter.” said Jeff Kirshner, senior vice president at Harbinger Capital Partners.
During the Inmarsat earnings call, Sukawaty said he could not give a new launch date for Inmarsat 4F3. The launch was delayed last weekend when an electrical part on the Proton vehicle had to be replaced (CD Aug 5 p 13), Sukawaty said, calling the delay normal. “We had delays on the launch of our first two Inmarsat F satellites,” he said. “This is something that we have seen before.”
If Inmarsat 4F3’s launch goes awry, the craft is insured, Sukawaty said. Inmarsat has no contracts contingent on 4F3’s successful launch. Inmarsat 4F1 and 4F2 cover 85 percent of the landmass and 98 percent of the population, he said. Inmarsat’s next-generation satellite Alphasat is set for a 2012 launch that “could be somewhat accelerated” if Inmarsat 4F3’s launch proves problematic, he said.
Inmarsat saw more use of its broadband global area network service in China and to a lesser extent Burma as a result of disasters, Sukawaty said. Following those events, Inmarsat increased beam capacity, he said.
Inmarsat Q2 revenue was up nearly 71 percent over the year-ago period, it said. As a result it’s raising its interim dividend to 12.13 cents per share payable to stockholders of record as of Sept. 26, it said.