Private Investor: The satellite business that sent its shares into high orbit

It's funny how you can have your head turned. I'd read a bit about the recently floated satellite company Inmarsat and put it to the back of my mind when I found myself in Old Street in London to pick up a car from the Classic Car Club (who run a sort of time-share on old Rolls-Royces and Ferraris and the like). And there was this enormous obelisk-like building with the word "Inmarsat" emblazoned down the side. Ah, I thought, maybe this company is a bit more substantial than I thought.

Well, it was foolish of me to presume otherwise. The partial float of Inmarsat last year was the the biggest in two years, at £1bn. Its market cap is now £1.75bn and, while it would take another 50 per cent growth in that to see it into the FTSE 100 (other things being equal), it is still a "proper" business.

Originally, Inmarsat was part of the International Maritime Organisation (hence its name), an agency of the United Nations. Its strength is still in the more difficult end of the satellite communications market - maritime and military - and it seems to come into its own in times of war and natural disaster when other forms of telecoms are not available. It's also expanding its broadband coverage. So that's all the growth side of the business.

The yield side comes in about now in the life cycle of the satellite industry. Every 15 years or so, the company has to spend a fortune getting the satellites into the air; then it can just sit back and watch the money flow in, with big margins helping to ensure a decent return for investors of 5 per cent plus.

There are risks. Apart from the huge investment and the expertise Inmarsat has developed, there aren't that many other substantial barriers to entry, and there are other businesses in the field. Then there's the risk associated with operating such fancy technology. I don't know how difficult it is to fix a wonky satellite, but I hope that Inmarsat doesn't find itself having to do so very often.

There's also the risk that I really I don't understand this market quite as well as I should. It ought to be a warning sign that the shares have come on to the market via a placing by private equity groups, who have sold their stake down from 40 per cent to 25 per cent. However, the fact that they still have a chunk of the business ought to be encouraging. They have doubled their money, anyhow.

I saw that one fund manager described Inmarsat as being in roughly the same position as Vodafone was in in the early 1990s, so I suppose it's appropriate that I've used the proceeds of the sale of Vodafone to fund this purchase. By the way, I notice that the honorary president of Vodafone, Chris Gent, quit the day after my column last week condemning the play-pen activities of Vodafone execs. I don't think I tipped the balance, but it was an amusing coincidence at any rate.

Before closing, I can't help mentioning a small fragment from the undergrowth of the world of mutuality. According to the Hinckley & Rugby Building Society's summary financial statement, the society spent £613,000 on their board last year. That's against a profit for the society of £1.9m, or about one-third. The mighty Britannia Building Society, for example, spent more on its board - almost £2m - but not that much more considering that it made a profit of £32m last year and Britannia directors are responsible for assets of £32.4bn against the Hinckley's £649m.

The Hinckley chief executive, Barry Hunt, is paid £230,000, while Neville Richardson, the boss at Britannia - a much larger business, remember - gets not that much more; £603,000. Either Mr Hunt is very expensive or Mr Richardson is very cheap, you might think. I reckon they're both doing very nicely.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at

Finacial products from our partners
Property search
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    SThree: Trainee Recruitment Consultant - Swiss Banking and Finance

    £20000 - £25000 per annum + Uncapped commission: SThree: Can you speak German,...

    Ashdown Group: Marketing Executive - 6 month FTC - Central London

    £25000 - £30000 per annum + benefits: Ashdown Group: An exciting opportunity f...

    Ashdown Group: Junior Project Manager (website, web application) - Agile

    £215 per day: Ashdown Group: Junior Project Manager (website, web application ...

    Guru Careers: Software Engineer / Software Developer

    £40-50K: Guru Careers: We are seeking an experienced Software Engineer / Softw...

    Day In a Page

    Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

    Fishing is on Nigel Farage's mind

    Ukip leader casts a line to the disaffected
    Who is bombing whom in the Middle East? It's amazing they don't all hit each other

    Who is bombing whom in the Middle East?

    Robert Fisk untangles the countries and factions
    China's influence on fashion: At the top of the game both creatively and commercially

    China's influence on fashion

    At the top of the game both creatively and commercially
    Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

    The man known as GOD has a reputation for getting the job done

    Lord O'Donnell's three principles of rule
    Rainbow shades: It's all bright on the night

    Rainbow shades

    It's all bright on the night
    'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

    Bread from heaven

    Dutch survivors thank RAF for World War II drop that saved millions
    Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

    How 'the Axe' helped Labour

    UK will be 'run for the wealthy and powerful' if Tories retain power
    Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

    The price to be paid for challenging the rule of extremists

    A revolution now 'consuming its own children'
    Welcome to the world of Megagames

    Welcome to the world of Megagames

    300 players take part in Watch the Skies! board game in London
    'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

    Charlotte Gainsbourg on 'Nymphomaniac'

    Starring in one of the most explicit films ever
    Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

    Robert Fisk in Abu Dhabi

    The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
    Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

    Vince Cable exclusive interview

    Charging fees for employment tribunals was 'a very bad move'
    Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

    Iwan Rheon is returning to his Welsh roots

    Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
    Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

    It's time for my close-up

    Meet the man who films great whites for a living
    Increasing numbers of homeless people in America keep their mobile phones on the streets

    Homeless people keep mobile phones

    A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before