Inmarsat delayed the launch of the third satellite for its Global Xpress broadband network following yet another failure of a Proton rocket launch at the weekend, and said the delay will have a "small negative impact" on its revenue and earnings in 2015.
The UK-based satellite services company also said it is suspending its guidance for an 8-12 per cent CAGR in wholesale mobile satellite service (MSS) revenues over 2014-16 because of the uncertain situation.
The launch of the third satellite--the Inmarsat-5 F3 (I-5 F3)--for the Global Xpress network had been scheduled for June, but a failure to launch Mexsat's Centenario satellite at the weekend means that all upcoming Proton rocket launches will now be delayed.
According to an announcement by Inmarsat's launch partner, ILS, the Proton Breeze M rocket carrying the Centenario satellite suffered a disabling anomaly during the operation of the third stage, approximately eight minutes after lift-off on May 16, resulting in the loss of the satellite and rocket. The location of the launch was the Baikonur Cosmodrome in Kazakhstan.
ILS will now set up a failure review oversight board (FROB) to investigate the cause. Analysts from Jefferies International noted that all operators with an upcoming launch on a Proton rocket will be given visibility into the process and FROB findings. "This takes time to complete…precedent suggests an 80-130 day delay," the analysts added.
Inmarsat is likely to be hardest hit by the delay, Jefferies said. The satellite company is investing $1.6 billion (€1.4 billion) in the development of Global Xpress, which it describes as the "first high-speed broadband network to span the world".
The service requires three satellites for full global operation and two are already in orbit. A fourth is also scheduled for launch in 2016. Full commercial launch of the global service had been scheduled for the third quarter of 2015, but could be delayed until the last quarter of this year or the first quarter of 2016.
However, Jefferies analysts commented that Inmarsat "is likely to retain enough breathing space to sustain its first-mover advantage and, clearly, a later launch date does nothing to diminish Inmarsat's structural advantages."
The company is still maintaining its medium-term expectation for Global Xpress to deliver "no less than $500 million of additional revenues" by the fifth anniversary of the global commercial launch.
Rupert Pearce, CEO of Inmarsat, noted that this is the third time the company's Global Xpress programme has suffered launch delays because of Proton launch failures.
"Although in the past, Proton has returned to flight within a few months of a launch failure, it will not be possible to determine the length of the delay in the launch of I-5 F3 until the cause of the Centenario launch failure is established," Pearce said.
For the Russian Proton rocket launch system, the situation could not be more damning.
"This is the fourth Proton failure since December 2012, a catastrophic record of failure that will surely precipitate a seismic shift in the launch landscape," Jefferies analysts said.
Alcatel-Lucent to supply Inmarsat with LTE kit for EU in-flight broadband network
Inmarsat plans 'compelling' in-flight passenger broadband service in Europe
EchoStar buys struggling MSS operator Solaris Mobile
Inmarsat hands satellite deal to Telecom NZ
O3B takes on Inmarsat in marine