MUNICH — Mobile satellite services operator, in a bid to secure an early market for its next-generation satellite system aimed at maritime markets, on March 31 announced it has purchased Norwegian maritime communications services provider Ship Equip for $159.5 million including Ship Equip’s outstanding debt.
London-based Inmarsat said Ship Equip currently serves some 850 vessels with Ku-band VSAT, or very small aperture terminal, satellite data links, or about 10 percent of Inmarsat’s estimate of the global fleet now using VSAT terminals that communicate with conventional Ku-band satellites in geostationary orbit over the equator.
These VSAT networks have encroached on Inmarsat’s home turf with a service that the longtime maritime satellite operator cannot match, in terms of price per delivered megabits, with its current fleet of L-band satellites. That is why Inmarsat is investing $1.2 billion in Global Xpress, a constellation of three large all-Ka-band satellites slated to enter service starting in 2013.
Jim Parm, chief executive of satellite service provider Stratos Global, which is owned by Inmarsat, said in a statement that Inmarsat expects Ship Equip “to be in the forefront of the transition to Global Xpress services … to help us ensure that Global Xpress is a compelling proposition for the maritime community. This acquisition demonstrates our clear determination to prepare the way for a fast and successful take up of Ka-band services via Inmarsat Global Xpress.” How quickly Ship Equip will outfit its customers’ vessels with Ka-band gear for Global Xpress is unclear. Two weeks before accepting Inmarsat’s takeover bid, Ship Equip signed a five-year deal with satellite fleet operator Telenor Satellite Broadcasting of Norway for Ku-band VSAT services using Telenor’s Thor 5 and the10-02 satellite, both located at 1 degree west.
The Telenor contract with Ship Equip covers vessels in the North, Norwegian and Baltic seas. NewWave Broadband of Britain will be responsible for providing the services to Ship Equip customers.
“The increased capacity comes at a time when we experience a surge in demand for our high bandwidth SEVSAT service especially in the shipping segment,” Ship Equip Chief Executive Ivar Nesset said in a statement announcing the Telenor lease. “Ship’s crew in general, and especially young seamen going into shipping, are accustomed to using the internet, e-mail and social media to do their job and handle their personal life. They will consistently choose employers with ships that are connected through high speed satellite communication.”
Telenor is building its own mixed Ku- and Ka-band satellite, called Thor 7, for launch in 2014 and expects to use its Ka-band capacity to compete directly with Global Xpress in its home region.
One industry official said Ship Equip will not be canceling its five-year agreement with Telenor, but as an Inmarsat subsidiary it will be more aggressive in transitioning its customers to Global Xpress once the Telenor contract expires.
Inmarsat said Ship Equip reported revenue of 312 million Norwegian kroner ($56 million) in 2010. The transaction, which needs regulatory approval in Norway, is expected to close by midyear and will be financed from Inmarsat’s available cash reserves.