Satellites network operator Inmarsat (ISAT) saw its share price plunge by more than 12.5% on Tuesday 22 May after losing its decades-long monopoly over international shipping lanes communications.
The news broke overnight via a statement from satellites rival Iridium Communications, claiming ‘Iridium makes maritime industry history.’
FORCED TO SHARE THE HIGH SEAS
The announcement states that the International Maritime Organization’s (IMO) Maritime Safety Committee (MSC) has agreed to recognize that the Iridium network meets all the criteria of the IMO needed to provide mobile satellite services in the Global Maritime Distress Safety System (GMDSS).
The implication is that stiff competition is coming for mariners sailing the world’s oceans and that Inmarsat will no longer have communicating across the high seas to itself.
Inmarsat has not put out a response itself but this is more bleak news for a company already struggling to keep investors onside.
SHARE PRICE AT A 10 YEAR LOW
At 340p, the stock is now trading within a whisker of a decade low.
Maritime is Inmarsat’s biggest division by revenue, worth approximately 40% of last year’s $1.4bn overall. But this part of the business has been declining for several years.
‘This is another blow for the company, hot on the heels of 41% of shareholders rejecting the board’s remuneration proposal, something that may prove rather prescient in light of the potential impact of a monopoly loss on its business model,’ says Accendo Markets’ head of research Mike van Dulken.
The company was forced to slash its dividend last year as hefty debt and investment requirements eat into cash resources.
