LONDON (Alliance News) - Shares in Inmarsat PLC fell to the bottom of the FTSE 250 after a US rival made maritime industry history by ending the London-listed satellite communications company's monopoly.
Inmarsat shares were down 11% at 346.60 pence on Tuesday.
Iridium Communications Inc said on Monday the International Maritime Organization's Maritime Safety Committee has recognised that it meets the criteria needed to provide Global Maritime Distress and Safety System services.
"This is a significant achievement that ends a decades-long satellite industry monopoly in which only one company was authorized to provide satellite GMDSS service and for the first time will bring competition and truly global coverage, to mariners sailing any of the world's oceans," said Iridium.
McLean, Virginia-headquartered Iridium formally began the move to become a recognised GMDSS mobile satellite service provider in 2013 and found success following a five-year fight for approval. The process took three years longer than Iridium had originally expected. Iridium said it plans to begin providing GMDSS services in early 2020.
The move is particularly significant because UK-listed Inmarsat was the only company in the world to have provided GMDSS-approved satellite communication services.
Maritime is Inmarsat's largest division and posted revenue of USD564.3 million in the first quarter of 2018, accounting for around 40% of revenue at group level.
GMDSS is an international system which uses terrestrial and satellite technology and ship-board radio systems. It ensures rapid alerting of shore-based rescue and communications authorities in the event of an emergency.
"This had pitted the newer US government backed version against the near 30-year-old UK-backed service, and, at times, had become rather heated," noted Mike Van Dulken, head of research at Accendo Markets.
The news inflicted a further blow to Inmarsat after its shareholders rejected its remuneration report approval resolution following its annual general meeting earlier this month.
Inmarsat had said 58% of voting shareholders, effectively all of whom voted on the resolution, voted against its remuneration report. Last year, 49% of shareholders voted against the remuneration report.
"This is another blow for the company, hot on the heels of 41% shareholders rejecting the board’s remuneration proposal, something that may prove rather prescient in light of the potential impact of a monopoly loss on its business model," Van Dulken added.
