Inmarsat Regulatory News (ISAT)

INMARSAT PLC - ANNUAL GENERAL MEETING: 5 MAY 2016

ANDREW SUKAWATY: CHAIRMAN

It's 10 o'clock. Good morning, ladies and gentlemen, and welcome to Inmarsat plc's 2016 Annual General Meeting.

I would like to start today's meeting by welcoming our board of directors:

· Dr Abe Peled, our senior independent non-executive director who joined the Board in 2013 and became SID in November 2015. Stephen Davidson, Sir Bryan Carsberg, Kathleen Flaherty and Janice Obuchowski, our independent non-executive directors who are well known to our shareholders.

· Simon Bax joined the Board in 2013; retired General Robert Kehler joined in 2014 and our two remaining board members Dr Hamadoun Touré and Rob Ruijter were appointed early in 2015;

· Rupert Pearce, our Chief Executive Officer; and

· We also have Tony Bates, our Chief Financial Officer and Alison Horrocks, our Chief Corporate Affairs Officer and Company Secretary.

While welcoming our current board of directors, I would also like to thank John Rennocks who retired from the Board in November 2015 for his significant contribution as Deputy Chairman, SID and Chairman of the Audit Committee. As I've mentioned, Abe assumes the SID responsibilities and Rob Ruijter has become Audit Committee Chairman.

With several of our non-executive directors reaching their 10th year of service on the Board, we have purposefully expanded the size of the Board to accommodate a period of time to allow a transfer of knowledge and experience from the longer serving directors to the more newly- appointed ones. This will allow us then to have an orderly retirement process without reducing the knowledge of the overall Board to the smooth running of the Company. We have already announced that Stephen Davidson will retire from the Board by the time of the 2017 AGM.

I'm going to ask Rupert Pearce, our CEO, to provide some commentary of how our business performed in 2015 and, as we announced our first quarter results for 2016 this morning, he will also provide some key highlights from these results as well. Before he does, let me make a few comments on your company.

2015 was a year of transition, preparation and investment in what we firmly believe will be the next phase of growth in the global mobile satellite sector. While we were disappointed in the delays in the final deployment of our Global Xpress constellation, and in the continued spending constraints that our government, oil and gas and maritime customers have experienced, we were at the same time quite pleased with the resilience of our diversified business and the progress that we've made in moving our customers to higher bandwidth data services overall.

We have continued our focus on safety services, building upon the reason for our creation by the UN 37 years ago - as the only approved provider by the International Maritime Organization to provide GMDSS, the global maritime distress safety services system; and also committed to the provision of International Civil Aviation Organization approved satellite safety services.

We have announced that we increased our dividend for the 10th consecutive year, delivering dividend increases every year since we listed on the Stock Exchange in 2005. We remain focused on delivering sustainable dividend increases to our shareholders. Our annual and longer term financial planning supports this despite a slower start to 2016 which we announced this morning in our Q1 2016 results.

We are well positioned in markets on land, at sea and in the air, which are business sectors market analysts expect to grow over the long term. Our business requires us to plan ahead, to execute satellite programmes which take 4-5 years to build, to provide flawless reliable global communications services to our partners and customers who will remain using our services for years to come. This continued demand for data supports our investment and planning strategy, allowing us to deliver increasing shareholder returns in future through capital growth and increased dividends.

Before I hand over to Rupert Pearce, our CEO, I want to pay tribute to Inmarsat's staff. We value them for their dedication and hard work for the business; they have tremendous loyalty to Inmarsat and for what we do as a business to offer mission critical communications services on a worldwide basis.

RUPERT PEARCE - CEO

Good morning ladies and gentlemen. I will summarise some of the key elements of our performance in 2015 and then provide a few comments on our Q1 results announced this morning.

2015 was a time of concerted effort and achievement in a transitional year en-route to the establishment of our new global Inmarsat-5 network which we continue believe will help deliver new growth prospects and new sector opportunities. We had a global Inmarsat-5 constellation operating at the end of 2015, a key inflection point as many of our customers will not commit to the new service until it is global. We already had some US government revenues from our Global Xpress services at the end of 2015 and we have now moved into a period where we expect GX revenues to start to build during this year. We announced the start of our Fleet Xpress services, which is the maritime version of our GX services, at the end of March 2016, as well as initial services for our Enterprise customers with Global Government CSI planned by end May. We expect to introduce GX services for Aviation later this year. Through Q2 and Q3 this year, we will be bedding in our new GX services, effecting further service enhancements (including the delivery of Inmarsat Gateway, our new solutions platform), conducting trials and demos to customers, and beginning to ramp up the new GX revenue stream. The fourth Inmarsat-5 Ka-band satellite is nearing completion and as already indicated, we will launch and bring it into operational service, generating additional revenues which will be advised to shareholders later this year.

While it is naturally taking time to bed down and de-bug the new GX services, customer interest in GX remains strong. In Maritime, we have already won several large fleet commitments to FX and XpressLink instals are running at record rates. In Government, we are seeing strong interest from a diverse customer base globally and early sales to thought-leaders. In Enterprise, we are working closely with RigNet to introduce GX to the resources sector. And finally in Aviation, we were thrilled to win fleet contracts from Deutsche Lufthansa and Singapore Airlines and remain in advanced discussions with several further potential customers. We are encouraged by this range of customer interest in GX and, although some expected 2016 GX revenues are drifting into 2017, we nonetheless remain confident of hitting our medium term target annual revenue for overall GX revenues of a run rate of $500m of GX revenues by the end of 2020, the fifth anniversary of the global launch of GX services.

We also announced at the end of 2015 an investment in two Inmarsat-6 satellites which will offer both L- and Ka-band services and be available in the early 2020s, when they will enter service to replace the then-ageing Inmarsat-4 series. As Andy mentioned earlier, our planning for ongoing satellite constellations will allow us to secure the provision of services for decades to come.

2015 delivered some good progress in our plans to deploy our European Aviation Network which is a hybrid, integrated satellite/air-to-ground network operating in the S-band satellite frequency band. This very exciting opportunity will bring high-speed broadband to the European commercial and business aviation markets. The acquisition of licences from EU Member States and other European countries, necessary to deploy the EAN, is progressing as anticipated and we remain confident that delivery of all necessary regulatory approvals for the EAN will be completed in time to support full pan-European commercial deployment to plan, around the middle of 2017.

We continue to be very confident in the medium and long term growth and diversification prospects that GX and the EAN bring to Inmarsat.

When we announced our first quarter 2016 results this morning, we flagged that many of our markets continue to face headwinds which intensified in the first quarter, leading to a softer revenue performance than expected, although we remain highly competitive in each of our core markets. Sustained recession in global maritime and energy markets continues, and in maritime in particular good growth in our newer products continues to be more than offset by the decline of our older products and by lay-ups and scrappage of ships which carry our products. However, once again our results showed the strength of our highly diversified business as Aviation delivered another strong quarter of double-digit growth and Government provided a brighter spot, as revenue grew and the underlying negative growth trend slowed appreciably, particularly outside the US.

In Maritime, our XpressLink and FX order book is expanding as hoped. In Aviation, discussions with several large airlines continue to progress well and our Deutsche Lufthansa and Singapore Airlines wins are now moving into implementation, with installations expected to commence in the second half of this year.

We were also pleased to announce this morning that we have agreed transitional arrangements with Ligado Networks, which used to be called LightSquared. Ligado exercised an option right at the end of the first quarter, under our long-standing Cooperation Agreement with them, to implement a joint spectrum plan under which they can deploy up to 30MHz of L-band spectrum for terrestrial mobile services. The transitional arrangements confirm approximately $337m of payments from Ligado to Inmarsat over 2016 to 2018, postpone transition to the new plan and provide Inmarsat with enhanced spectrum usage rights until Ligado receives its FCC license and meets certain other conditions. As part of these arrangements, Inmarsat has agreed to defer certain contracted payments, providing Ligado with the best opportunity to establish a successful and sustainable long-term business to the benefit of both parties.

Overall, softer trading conditions in the first quarter, combined with a modest slippage in the ramp of our GX revenues in the year, as we bed the new service down, combined to cause us to revise our forecast of 2016 revenues by $50M. But while in the near term business growth will continue to be challenging in choppy markets, the relative strength and diversity of our business means that we are nonetheless performing very well against our competitors in what is a difficult trading environment and, with GX and the EAN arriving imminently on the scene, we remain very well positioned for future growth and further diversification in our business and we remain confident that the foundations that we are establishing will deliver our expected medium term growth over the coming years.

ANDREW SUKAWATY - CHAIRMAN

Before we move to the formal business, I welcome any questions you may have for me, Rupert, or indeed, for any of the directors present here today.

Thank you for your investment in Inmarsat. We appreciate your support of our business.