PARIS — Mobile satellite services operator Inmarsat is in final negotiations with Boeing Space and Intelligence Systems to purchase three or four large satellites as part of what is likely to be a $1 billion investment to position the London-based operator in the growing market for mobile broadband, particularly for Inmarsat’s core maritime business, industry officials said.
Signaling a dramatic new direction for Inmarsat, the satellites would operate in the Ka-band portion of the radio spectrum. Inmarsat has built a 30-year business using L-band frequencies to deliver voice and, increasingly, data transmissions to airborne, maritime and land-mobile customers.
If negotiations with Boeing conclude as expected, the El Segundo, Calif.-based satellite builder will have found a second major customer for its new line of 702MP satellites, which were introduced in 2009 in a Boeing win of a $500 million, four-satellite contract with Intelsat of Luxembourg and Washington.
One industry official said the Inmarsat contract is likely to include a requirement that Boeing agree to purchase a part of the Ka-band payload and take responsibility for its subsequent sale. The U.S. Defense Department is the most likely customer, although Boeing may have difficulty securing a firm commitment from any U.S. government agency for capacity that will not be available until 2013.
It was unclear whether the Inmarsat satellites would carry civilian Ka-band only or would include military Ka-band frequencies as well.
Boeing has made the ability to accommodate so-called hosted payloads from the U.S. government as a key selling point for its 702MP product line. The first of the four Intelsat satellites is carrying a UHF-band payload for the Australian Defence Force.
Inmarsat also is looking for a partner to agree to a prelaunch commitment for part of the Ka-band payloads’ coverage of landmasses, according to one industry official.
Inmarsat Chief Executive Andrew Sukawaty has been saying for several months that the company was crafting a strategy to keep ahead of a market that increasingly wants high bandwidth at relatively low prices, neither of which plays to the strengths of Inmarsat’s current L-band spacecraft.
Already, companies best known for providing satellite bandwidth for television, including SES, Intelsat and Eutelsat, are nibbling at the perimeter of Inmarsat’s market to provide broadband to maritime users using Ku-band.
Whether these Ku-band terminals placed on ships pose a near-term threat to Inmarsat’s business is a subject of debate in the industry.
Paris-based Eutelsat and the two principal U.S. providers of satellite-delivered broadband — Hughes Communications of Germantown, Md., and ViaSat Corp. of Carlsbad, Calif. — are all building Ka-band satellites for mainly land-based customers, but the satellites will have at least some Atlantic Ocean coverage.
Industry officials said the contract negotiations with Boeing followed a competitive bidding round that included Astrium Satellites of Europe, which built Inmarsat’s current fleet of Inmarsat-4 satellites and is building the large AlphaSat spacecraft for Inmarsat, to be launched in 2012, which will provide additional L-band spectrum to Inmarsat; Space Systems/Loral of Palo Alto, Calif., which is building the ViaSat and Hughes all-Ka-band satellites; and Thales Alenia Space of France and Italy, which had been scheduled to build Inmarsat’s S-band Europasat mobile communications satellite before that project was put on hold.
One industry official said Inmarsat had selected Thales Alenia Space and Boeing as finalists for the contract before entering “preferred bidder” negotiations with Boeing. The contract is for three satellites — enough to provide global coverage except for the polar regions — with an option for a fourth satellite to be built as a spare. Each spacecraft is expected to weigh at least 5,000 kilograms at launch, with a four-satellite deal to be valued at between $500 million and $600 million.
Launching and insuring three of the satellites would bring the program’s total value to around $1 billion.
Inmarsat spokesman Christopher McLaughlin said July 2 that the company would have no comment on “market speculation.”
