The UAE's Inmarsat, which provides mobile satellite communications services, has signed a $1.2 billion contract with The Boeing Company for the delivery of three 702HP Ka-band satellites to provide a high-speed mobile broadband service. 

With operations expected to start in 2014, Inmarsat-5 constellation will support a next generation global service, Global Xpress, which will target a $1.4 billion incremental market opportunity in VSAT services. 
 
Global Xpress will address the established, growing markets for VSAT services in the maritime, energy and government sectors, with further growth potential in developing markets such as the aeronautical sector.  The service will deliver global coverage and mobile broadband with speeds up to 50MB/s to customer terminals from 20cm to 60cm in size. 
 
Inmarsat will target $500m of annual Ka-band revenues five years after the global service launch.  Under a separate arrangement, Boeing has agreed to become a distribution partner for both Inmarsat’s Ka- and L-band services and has pre-committed to capacity purchases representing more than 10 per cent of Inmarsat’s target Ka-band revenues in the first five years after its global service launch.
 
Inmarsat estimates that the total cost of Inmarsat-5 and Global Xpress will be $1.2bn over four-and-a-half years, incorporating the fixed cost of the satellites, as well as the cost of additional ground network infrastructure, product development, launch services and insurance.
 
Andrew Sukawaty, Chairman and CEO of Inmarsat, said Global Xpresswould be faster and less expensive than current Ku-band market offerings, delivered to smaller and cheaper terminals to be the first offered on a seamless, global, end-to-end basis.  
 
Rick Medlock, Inmarsat’s Chief Financial Officer, said: “We expect the Inmarsat-5 programme to be largely funded from our internally generated cash flows and, with significant available liquidity today, we see no immediate financing needs. 
 
“In connection with the Boeing contract, we are seeking Export Credit Agency financing support from the US Ex-Im Bank, which could provide an attractive source of long-term debt.  Given the multi-year build phase and the strong free cash flow from our existing business, we believe the peak impact on our ratio of net debt to EBITDA will be less than 0.5,” Medlock said.
 
“As a result of our investment in Inmarsat-5, we will move to a more gradual replacement of our L-band network, resulting in a deferment of more than $500m of our previously planned replacement expenditure over the next 11 years.”