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Norway. Marlink facilitates a first for Stena Line
Stena Line, one of the world’s largest ferry operators, has renewed and upgraded its contract with Marlink, the global provider of maritime satellite communications. As part of the renewed contract, Marlink will provide fully integrated satellite telephony access to 34 vessels and Internet access to 27 vessels. The system will position Stena Line as one of the first ferry operators to offer free WiFi Internet access for passengers.
Signing this important milestone contract with Niclas Ingeström, CIO, Stena Line IT services, Tore Morten Olsen, CEO, Marlink commented, “To provide free WiFi Internet access puts Stena in a strong competitive position. To achieve this they have purchased a significant upgrade of the system bandwidth, with access to 8 Mbps satellite closed user group capacity, which will give their passengers total contact throughout their voyage. We have worked with Stena for some years breaking new ground as we have developed unique services. They were our first customer to provide pay-per-use on our Internet@Sea Prepaid Surf service. We are delighted that we can continue to innovate with our partners and look forward to more exciting developments in the future.”
Marlink will upgrade the ship-to-shore network on the entire Stena Line fleet of fast ferries, traditional combi ferries, RoPax freight and passenger ferries and its pure cargo ships operating in Scandinavia and the North and Irish Seas. The fleet includes the world’s largest Superferry, Stena Hollandica, which sails between Hoek van Holland and Harwich. Marlink’s Sealink(TM) service will provide administration of LAN-LAN services between ships and land, TV reception in the Nordic region and company ship-to-shore networking with terrestrial back up and rerouting functionality at Marlink’s Eik Teleport. The service will offer 3rd party bandwidth access and IP management, SealinkT Prepaid Talk and Eik Internet access.
Stena Line carried over 15 million passengers in 2009 together with 3.3 million cars and 1.6 million freight units. The company has already commenced promotion of its latest market leading offering: Free WiFi Internet access and can now provide mobile coverage for the entire crossing between its busy Harwich (UK) to the Hook of Holland route. The new contract with Marlink is effective for the next 4 years.
Inmarsat’s profits are booming.
During an economic downturn most companies’ profits will take a beating whilst their managers have to batten down the metaphorical hatches to pull through what is a period of great uncertainty.
The few businesses which prosper during a recession are those whose characteristics are particularly well suited to hard times such as debt collectors, insolvency practitioners and discount retailers like Poundland.
So it is a bit of a surprise to find a high-technology business which has positively thrived during the recent global recession. In the last two years Inmarsat (LSE: ISAT), the provider of satellite telecommunications services, has managed to increase its turnover by 80% whilst its earnings per share have risen by two-thirds.
Recession. What recession?
Inmarsat’s performance is no fluke; the company is still growing strongly as its results for the first half of 2010 showed, with earnings per share increasing by over 40% compared to the same period in 2009.
If Inmarsat can produce this sort of performance during a recession, a big question is much better might the company’s performance be when the world economy starts to power ahead?
Naturally this means that Inmarsat’s shares aren’t cheap and this is reflected in a PE ratio of 31. But since Inmarsat’s sales, profits and dividend have doubled since it floated on the stockmarket in 2005, realistically you its shares wouldn’t be sitting in the bargain bin!
The business
Inmarsat owns and operates a network of eleven geostationary satellites through which its customers make satellite telephones calls and access the internet from almost anywhere on the surface of the Earth. Consequently its main customers are organisations which operate in what the company describes as “the remote environment market” such as the military, mining and oil companies, aid agencies and shipping (both commercial and recreational).
You can find more background information on Inmarsat in my article from last December.
In June Inmarsat started selling its first global handheld satellite telephone, the IsatPhone Pro, to good reviews. Intriguingly commentators on sailing websites have remarked that the IsatPhone Pro’s calling costs can sometimes be cheaper than those of some conventional mobile phone networks.
While the current range of satellite phones won’t replace most people’s mobile phones, if only because they won’t fit into your jeans or shirt pocket, it’s quite possible that they may directly compete with mobile phones one day.
Inmarsat’s satellite network represents a considerable barrier to entry for potential competitors as they would need to establish a similar network, or lease space on other satellites, which would take a lot of time to establish (and cost a lot). Consequently Inmarsat and its major competitors, Globalstar, Iridium and Thurya, have a big foothold in the market which makes it difficult for newcomers to dislodge them.
When comparing 2009 with 2008 you should bear in mind that Inmarsat’s 2008 after-tax earnings received a massive boost thanks to a deferred tax rebate which meant that the company ended up with a net tax receipt of $161.6 million. To get a clearer picture of the underlying business for 2009, it’s better to look at the adjusted diluted eps which increased from 39c from 32c
Inmarsat’s results for the first half of 2010 were released on 6 August and these were excellent, with sales up by 12% whilst diluted earnings per share rose by 41% and the interim dividend was increased by 10% to 14c.
Inmarsat’s shares performed well in the first half of 2010, rising from 700p in January to over 820p in July but they have fallen back with the rest of the market to the current price of about 670p, which is roughly where they stood last December.
The prospects
To keep its network up-to-date Inmarsat has to regularly launch new satellites to replace its older models. Its three earliest satellites, the Inmarsat-2 series, are expected to cease operating within the next two years, but Inmarsat is planning three more launches to complement its most recent satellite, Inmarsat-4 F3, which came into service in 2009.
A dilemma for investors is that Inmarsat’s shares have never been cheap. The historic P/E ratio (diluted eps) of 31 tells us that the stock market expects to see a substantial improvement in profits over the next few years (merely adequate results will not be enough for the market).
However the demand for satellite telecommunications should continue increase as the world becomes ever more interconnected, which means that Inmarsat’s profits are likely to grow substantially in the next few years. Consequently some investors are perfectly happy to pay up for what looks to be a very full share price and no doubt deters many others.
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Lufthansa eyes in-flight Internet for short-haul fleet
Lufthansa is looking closely at bringing in-flight communications to its short-haul fleet to address what it believes is a growing need for passengers to be connected all the time, including in the air.
Company vice-president product management and innovation Christian Körfgen tells ATI and Flightglobal that the German flag carrier envisages offering broadband on everything from intra-European flights of four to fives hours in duration to even “half-hour flights”.
A former customer of defunct Connexion by Boeing (CBB), Lufthansa is poised to re-launch its FlyNet-branded in-flight Internet service on overseas flights. The carrier is working in partnership with Panasonic Avionics, which has also been tasked to fit its high-speed Ku-band satellite-based eXConnect service to the long-haul aircraft that are not presently fitted with CBB antennas in Lufthansa’s fleet. Lufthansa will also offer mobile connectivity to passengers via Panasonic partner AeroMobile.
Körfgen says Lufthansa expects to offer the same type of services on its narrowbody aircraft as it will offer on its long-haul fleet, although the carrier has not picked a provider as yet. “There are different possibilities, such as satellite or possibly terrestrial. We are looking at it quite sharply,” he says.
The carrier is open to partnering with a company other than Panasonic, but also sings the praises of the in-flight entertainment and connectivity (IFEC) manufacturer as well as its work on reigniting CBB for Lufthansa.
“Up until now, it has been an impressive job that Panasonic did in that area, regarding the complexity of the whole system. We are quite confident of being out there quite soon,” says Körfgen.
The carrier is currently testing in-flight Internet on four aircraft – two Airbus A340s and two A330s.
“We hope as soon as we finish our testing we hope that [the re-launch] is going to be still this year, but we want to be sure that it’s working correctly, that we have the right upstream and downstream volumes, and that the satellite connection is working properly without any interruptions at all,” says the Lufthansa executive.