Inmarsat Rises After Winning IAG In-Flight Web Access Deal

(Bloomberg) -- Inmarsat Plc, the U.K. satellite operator, rose the most in four months after finalizing a contract with British Airways owner IAG SA to provide in-flight internet access on over 300 planes.

The order strengthens Inmarsat's joint push with Deutsche Telekom AG to provide web access on aircraft using satellites and the German phone company's towers. The service lets passengers use personal devices for internet browsing, video streaming, gaming and other online services.

“We look forward to rolling out this ground-breaking service with Aer Lingus, British Airways, Iberia and Vueling,” Leo Mondale, president of Inmarsat Aviation, said in a statement on Wednesday.

Shares of Inmarsat jumped as much as 7.5 percent to 735.5 pence, and were up 5.5 percent at 722 pence as of 12:31 p.m. in London. The stock had lost 26 percent in the past 12 months amid concerns that the industry's structural challenges will weigh on growth.

In an earnings release Wednesday, the company described business conditions as challenging, marked by increasing competition and excess capacity in some markets. Still, fourth-quarter revenue beat analysts' estimates, helped by contracts from airlines and governments.

Investors, who had been concerned about a weak forecast from Inmarsat, were also reassured by the company's projections, Berenberg analyst Robert Berg said by phone. Inmarsat forecast sales of $1.2 billion to $1.3 billion in 2017, and $1.3 billion to $1.5 billion in 2018.

“It's a sigh of relief from the market,” Berg said. “And it's positive that IAG has finally put pen to paper. Now we need to see conversion of their pipeline into more contracts.”

Inmarsat has been touted as a potential consolidation target as satellite companies consider combinations to save on costs and expand their coverage. Technology giant SoftBank Group Corp. is in talks to merge its satellite startup OneWeb Ltd. with Intelsat SA, and discussions have also taken place between OneWeb and Inmarsat, people familiar with the matter said last month.

Inmarsat would be for sale at “the right kind of price” and itself expects to explore acquisition opportunities in 2018 and 2019, Chief Executive Officer Rupert Pearce said in a phone interview Wednesday.

“We're an attractive acquisition prospect for lots of companies,” Pearce said. “We're a very successful company with tremendous diversified growth opportunities down the road, whose share price has taken a major hit in the last 12 months.”

To contact the reporter on this story: Joe Mayes in London at jmayes9@bloomberg.net.

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Ville Heiskanen, Kim Robert McLaughlin