Inmarsat CEO Rajeev Suri Shares Thoughts on Viasat, IFC, Cybersecurity, and the Supply Chain

Inmarsat CEO Rajeev Suri Shares Thoughts on Viasat, IFC, Cybersecurity, and the Supply Chain

Inmarsat appointed former Nokia CEO Rajeev Suri as CEO. Photo: Inmarsat

Inmarsat has recently released a financial update showing encouraging signs from the air, sea and government market. Inmarsat is not publicly listed and does not normally publish financial results, but this statement comes when the company is in the middle of an agreement that will be acquired by Viasat. Aviation, in particular, was strong, showing growth of almost 50% in the first quarter of 2022 compared to the first quarter of last year. Public revenues grew 10% year-on-year. Overall, revenue of $ 348 million increased by 8% compared to the same period last year.

Rajeev Suri, CEO of Inmarsat, spoke By satellite on the results, as seen in the recent SpaceX / Hawaiian Airlines agreement and the latest on when the Viasat agreement will be reached.

BY SA satellite: Aviation increased by 45% year-on-year, a very strong increase. Did this growth exceed expectations? What does this mean for Inmarsat’s business?

Suri: If you look below, there was a 35% growth in booth communication services. There was 53% in the business jet and 34% in the IFC [in-flight connectivity]. Something is difficult to predict, as we did not know when the flights would resume. Business jets returned to service earlier this year. We could have predicted that one more accurately, since we knew the order book. The order book is strong in both business and commercial aviation aircraft. We have also been gaining new customers at IFC and the facilities have also grown. We closely monitor both the facilities and the order registration and both are robust. We saw a 23% year-over-year increase in business aircraft business facilities. With a good order book, we knew that this would start to turn into revenue if we executed our strategy correctly.

Part of the growth is just the resumption of flights. We have a good aviation business. Despite what we are seeing with Starlink and the noise around the LEO [Low-Earth Orbit] players, we remain strongly positioned, both in technology and in our business model. Customers need reliable services, an effective business model and global coverage. They need high speeds and capacity in downtown locations. We tick all these boxes and have good customer relations.

BY SA satellite: SpaceX / Starlink recently struck a deal with Hawaiian Airlines. Is this a bad signal for other satellite operators, including Inmarsat?

Suri: Our flow of agreements has strengthened. We are gaining new deals, our backlog is strong and our facilities are growing. All metrics point to strong growth in this business. We maintain a strong position, both in technology and in what we offer in terms of our business model, both what we can offer to commercial airlines and business jets.

That said, all competitors need to be taken seriously. I’m not one to fire anyone. I think competition makes us better. I still maintain that the most cost effective and superior way to build these satellite networks is a combination of GEO [Geostationary Orbit] and LEO, and 5G when needed. We are also multiband, with Ka band and L band. Get global coverage with Global Xpress. Insert the capacity where you need it, unlike everywhere else. It is very expensive to build a pure gaming LEO network. We believe in the directed constellations of LEO. The focus on a multidimensional, perfect and global network is the basis of Orchestra. We believe in hybrid networks. We keep winning. I don’t care. Our metrics are very good. When aviation customers offer us new deals, it’s not with a two-year perspective, it’s with a long-term perspective. When we win bids now, we are winning against new LEO players.

BY SA satellite: What do you think are the main results of these numbers?

Suri: The main result is that we grew substantially faster than the market last year. The global market, according to NSR, and other external projections, grew by about 3% to 3.5% annually. Last year we grew by about 9%. Our profits are growing faster than our revenue, which means we are getting operational leverage. I think a year ago, when I got into business, I said aviation had to grow, but we can’t forget about business jets. It’s not just about IFC. We need to give them fuel to grow.

The other thing I especially thought about when I joined was that the government business is fantastic. This is not only the business of the US government, but also the business of the non-US government. We gave them the resources to execute their strategy. We are seeing the results of this. We saw a 31% growth in the business of the non-US government. The U.S. government, while a bit slow, will get one-digit growth year-round. The big result is that the strategy works and the teams run well.

BY SA satellite: Which verticals perform better than expected?

Suri: Aviation is performing better than expected. When I say aviation, I mean the three segments of aviation: business jets, cabin communications, and IFC. The non-US government is really getting its way. The 31% growth is the fastest they have ever had, at least in a long time. Maritime must grow sustainably for Inmarsat to continue to grow. We have now seen the second consecutive quarter of sequential growth and the strategy has worked well.

We are paying attention to a couple of metrics. What is the delay for Fleet Xpress installations? This is at a record high. We are approaching this turning point between Fleet Xpress and FleetBroadband. It is now 60/40. Where the most recent service is 60 and the legacy is 40. This points to sustainable growth for this business, as long as we can continue to increase ARPU as well.

Do I want more maritime growth? Absolutely, but I think growth will be planned. We expected that we would start to grow from a declining revenue stream. The maritime sector has been declining for about five years, but began to grow again last year. It has experienced underlying growth in the first quarter of this year.

As for the company, we are suffering from supply chain problems due to the shortage of components, particularly when it comes to satellite phones. There, the pivot to IoT is important to us. We have global coverage. We have an end-to-end IoT wallet. We have a good partner ecosystem and the idea is to turn to this business, but that will take some time to make an impact on our revenue stream.

BY SA satellite: Are you concerned about business figures, which experienced a double-digit decline?

Suri: It’s all about the supply chain. It is very difficult to know when it will improve, but it is likely to be a headwind for the coming quarters. Luckily, the company is a small business for us. But it is profitable. The most important thing is to focus this business on IoT, focusing on railways, utilities, agriculture, key segments for IoT. I think it will be a while before the wind blows against me. It is across all verticals. I’m at a couple of tables, and I see it. I see it in the field of medical technology and terrestrial infrastructure communications. We are all struggling with this. But thank you to Inmarsat’s supply chain and acquisition teams for managing this so well.

BY SA satellite: What’s the latest on the acquisition of Viasat? Is everything still on track?

Suri: Our goal is to close the deal by the end of the year, and we’re pushing for it. The ultimate goal is for Viasat shareholders to vote on the transaction on June 21. We have some regulatory approvals. There is more to come. So far so good. We look forward to closing this at the end of the year.

BY SA satellite: Has Inmarsat been affected by the Russian war in Ukraine?

Suri: Our exposure to Russia and Ukraine is very low. Therefore, we have not been directly affected. But there is global uncertainty. We are most affected by global uncertainty, including flights, route changes, and so on. Other than that, we have very limited exposure.

BY SA satellite: With Viasat recently involved in a high-profile security incident, are you seeing more attacks on Inmarsat’s assets? Are you shifting your focus to cybersecurity?

Suri: I am interested in becoming a growing cybersecurity expert because it is an important area for CEOs of large companies. We haven’t seen any impact, but I can tell you that the rise of cyber events has been significant in recent years. The main threat has come from the supply chain. Supply chains are becoming more digital. There are more internal threats. There is more cleaner-type malware. This is not the basement geek trying to attack the critical infrastructure we are trying to protect.

We’ve seen an increase, like others, in terms of the dirty events we have. We have a very good cyber team. Perfect security does not exist, but the best security does. We are in the right field, and we want to improve and improve. The risks are always there. We are seeing more sophisticated forms of attack. There are many new things going on, such as malware as a service. It is now available and you can get it by subscription. Threats continue to evolve and grow and we must continue to improve and we are doing so.

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