When a devastating earthquake hit china’s Sichuan province in 2008 the majority of the foreign companies operating in the region fled for safety. As in many natural disasters the area’s telecommunications – one of the most essential pieces of infrastructure required to help emergency services during relief efforts — was destroyed, making it nigh on impossible for those affected to get in touch with family and friends or for rescue effects to find those in urgent need of help.
Days later, the British satellite company Inmarsat was sending and receiving critical information via some 600-700 of its broadband global area network (BGAN) terminals. In fact the company became renowned locally as one of the only firms operating in the days that followed the earthquake.
Less than five years later China is the British satellite company’s fastest growing market and it is one of only three mobile service providers that operate satellite beams over the Asian powerhouse.
“The Sichuan earthquake was a real catalyst for us because we were virtually the only service operating and the Chinese government recognised the vital role we played. Once that happened the investment into our services by the Chinese ministries increased, which allowed us to really expand dramatically,” Inmarsat executive chairman Andrew Sukawaty tells Arabian Business.
“We’re not an everyday consumer service,” he adds. “We’re not branded because we’re a global backbone but when people need us in these remote environments and disasters we are there and people realise that and then they plan for us. That’s what we saw happening in China,” he adds.
As the Sichuan earthquake exemplifies, Inmarsat’s satellite devices do more than simply provide communication tools. They enable journalists in war zones to send their videos and reports back to office, aid agencies to provide vital emergency services and airline passengers to surf the internet and call home. As such the British firm — which was originally founded as a non-profit satellite communications network for the maritime community but has since been privatised — boasts clients ranging from governments to aid agencies, media outlets and businesses.
Today, roughly 40 percent of Inmarsat’s overall business is generated through its governmental operations, which offer telecommunications for defence, public safety, emergency services and disaster response services (the US government accounts for twelve percent of its overall business) while 60 percent comes from its maritime business, which provides end-to-end service availability and global coverage for operational communications and safety services. Other smaller areas of the business include land and aero services with telecommunications to the airline industry one of its fastest growing divisions.
“We are a quiet behind-the-scenes kind of company. A lot people don’t know us as we’re often branded as other things but that’s fine with us. We’re a global infrastructure company that supports a variety of applications so land, sea, air and remote environments,” explains Sukawaty.
In the Middle East, the company’s second fastest growing market, accounting for around 15-20 percent of its overall business, clients include regional governments and airlines such as Emirates. “We project that from 2013-2015 we will grow 8-12 percent [overall]. Probably the Middle East will be a little bit higher than that because the region is rapidly growing area. That’s on the back of both our existing services and our new Global Xpress (GX) broadband as well,” says Sukawaty.
Article continued on next page
The Arab Spring, he adds, is likely to help boost business in the region as local governments become more aware of the services Inmarsat provides. “I think it’s had a positive impact on our business in trying times for many. Why is that? Satellites sit 630,000 km above the earth so can’t be taken out by terrestrial means, which drives our use from government and non-government [entities]. We cooperate with governments because we comply with the law in each country as to how those services get accessed and licensed.
“Yes, we play a role there is no doubt in the Arab Spring,” he adds. “I think certainly, much like the Sichuan earthquake the Arab Spring has had a similar impact on awareness of our services,” he adds.
Much of Inmarsat’s future growth globally will be reliant on the successful roll-out of its GX service, a $1.2bn investment that will include new Inmarsat-5 satellites and offer the first global mobile broadband coverage.
The service, which is set to launch this year with full global coverage available in late 2014, will offer downlink speeds of up to 50 megabits per second (mbps), and up to 5mbps over the uplink, from compact user terminals. GX will support connectivity for almost everyone from business and commercial aircraft to government aircraft, ships, and news agencies.
“Our new constellation of satellites is truly revolutionary,” says Sukawaty. “We call it Global Express, which is in a different radio frequency band that gives us much more radio spectrum that allows us to transmit at an even higher data speeds.
“Everyone is moving into broadband and this allows us in remote environments globally to deliver up to 50mbps — which most people don’t have in their homes today — to a terminal 60cm [in size] and in the future they’ll be 20cm so smaller than an iPad,” he adds.
Critically for the Middle East and its aspirations to become a global aviation hub, GX will enable greater connectivity on aircraft from broadband to mobile phone services. The firm has already signed 24 global carriers through OnAir, a joint venture between Airbus and SITA that enables airline and cruise ship passengers to use mobile phones and laptops for calls, text messages, emails and internet.
“It is commercially sensitive as to who they’ve signed up but most of the major Middle East airlines have jumped onboard for at least trials,” says Sukawaty. This technology, he adds, will revolutionise the way we travel. “You are going to see a whole new set of services arrive on airplanes.
“Our existing service is used by almost all of the airlines in some way,” he adds. “We’ve been using Inmarsat floor services, which goes up to about 400KB but they sometimes put two to three of these on a plane. This new service will step it up in terms of bandwidth to much higher speeds so we’re in the stages of signing people on. It’s early days but in the next two to three years you’ll see these broadband services appear,” he adds.
Article continued on next page
While Inmarsat’s new service will ensure the company’s growth looking ahead, Sukawaty admits that its maritime unit has struggled in the wake of the economic downturn, despite posting better than expected financial results in the second and third quarter of 2012 on the back of increased business to maritime companies.
“The world maritime market for shipping companies is very difficult right now. There is overcapacity and shipping rates are at a low point and financially that’s a challenge for them. We’ve had to sharpen our pencils and make the service more attractive in terms of what we charge and we are starting to see signs of the business coming back, which is why we had a good quarter,” he explains.
“The growth has been there and we’ll see how the global economy does because that’s really what it comes down to in the end. We don’t drive that but we play into that and we are optimistic to the extent that the world is optimistic,” he adds.
Inmarsat’s wide geographical reach and the importance of it during times of both political instability and natural disasters help protect the firm during economic uncertainty. “We truly are global and diversified so that’s a good thing,” he continues.
“Our highest growth for any individual country is China and we’re very active in India right now getting new services licensed. We’re fairly diversified that way. The satellite constellations [for GX] cost up $1-1.5bn each so it is important that you have multiple sources to fill out these satellites. It protects everyone because then you are assured of having a good robust sound service for a long period of time.”
Whether its providing relief for emergency services or internet and mobile to passengers on airlines, Inmarsat looks set to flourish.
Inmarsat — The early years
Inmarsat was originally founded in 1979 as the International Maritime Satellite Organisation, a non-profit organisation established as the request of the UN body, the International Maritime Organisation, to establish a satellite communications network for the maritime community.
“We were created because lives at sea could be saved with satellite,” explains Andrew Sukawaty. “In fact satellite is the only technology that could get into the middle of the ocean. 46 countries contributed financially to setting up centres throughout the globe for landing Inmarsat services so we’ve had a long tradition in the Middle East in around seven countries including the UAE and Saudi Arabia where we have a physical presence with all services,” he adds.
The firm was converted into a private company and listed on the London Stock Exchange in 1999. Services were split into two parts; a commercial company and a regulatory body, IMSO. Today, in addition to its commercial services, Inmarsat also provides a global maritime distress and safety service (GMDSS) to ships and aircraft as a public service.
Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.