Inmarsat surges after its US partner signs major contract
SATELLITE communications firm Inmarsat surged five per cent yesterday after a deal between its US partner LightSquared and network operator Sprint was announced.
The deal means LightSquared is almost certain to honour a deal to pay Inmarsat $115m (£71m) a year over the next five years, which some analysts had questioned. Inmarsat has been enlisted by LightSquared to help it prepare radio waves for a new 4G mobile network. Analysts had cast doubt on the partnership, with some asking whether the US firm would be able to extend the venture without more financial backing.
However, a source close to Inmarsat told City A.M. yesterday’s contract announcement means Sprint will effectively rely on Inmarsat to roll out part of its hybrid satellite and terrestrial network. This means that even if LightSquared were to fail, the deal would probably still be honoured by another party. Inmarsat’s shares have fallen more than 11 per cent since April.
LightSquared also said it has been forced to use a different block of wireless airwaves than it had originally planned because of interference problems with GPS systems.