Equity prospects

Inmarsat

Theo Wyld, Research Analyst

Price£3.61

52 week high-low£8.65—£3.34

Net yield4.0%

Hist / pros per9.8—14.9

Equity market cap£1,837m

During the 1990’s, WiFi was invented and began to be commercialised. Those that made the WiFi transmitters were tipped to be the companies through which to play this leap forward in technology. Investment flooded into these manufacturers, however the real beneficiaries were elsewhere; the coffee industry.

The proliferation of WiFi turned coffee shops into destinations. Customers would spend considerably more time surfing the web in these shops, and subsequently spend more than their ‘to-go’ former selves, on a second cup or a bite to eat.

Inmarsat are one of the largest global players in satellite communications and their main growth area of late is in providing both bandwidth and the kit which enables planes to offer an in-flight WiFi service. The demand from consumers is clearly there, but both Inmarsat and the airlines have to be careful how they charge out this service, given the budget-focussed attitude of flyers.

Will the providers of the kit be the eventual winners? Or will we see a repeat of the 1990’s and commoditisation of the product as others move into the market? Perhaps the content providers such as Amazon and Netflix are the ‘coffee shops’ of this new technological advancement.

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