When he became CEO of satellite communications company Inmarsat on January 1, Rupert Pearce immediately had a full inbox. After taking on the role of CEO on January 1, Pearce will oversee the company’s restructuring, which aims to consolidate the company’s recent acquisitions.
Inmarsat announced a new corporate structure at the start of the year. As part of the process, some of its biggest recent acquisitions, including Stratos Global and Ship Equip, are now being integrated into the main company and will start to use the Inmarsat brand.
“With me coming on board as CEO I think it was the right time to start thinking about integrating the businesses more powerfully,” Pearce says. He adds that when Inmarsat made the acquisitions, it allowed them to continue to run as separate entities for various reasons.
Stratos, a global provider of mobile and fixed satellite communications solutions and one of Inmarsat’s two largest distributors, was acquired in April 2009. This was followed with the purchase in January 2010 of Segovia, a provider of secure IP-based managed solutions to the US Government, and leading VSAT provider Ship Equip last year.
The biggest of the acquisitions was Stratos. Prior to this acquisition, all of Inmarsat’s sales had been made through channel partners, including Stratos, and it was keen to convince its partners that the deal did not signal a change of strategy away from working with channel partners.
“Stratos was a business that basically doubled us in size in terms of headcount and we left it well alone because we wanted to convince the channel that any steps we were going to take were going to be gradual and incremental, and we wanted to show them that this wasn’t a first step towards going predominantly direct, and I think we have achieved that over the last 2-3 years,” Pearce says.
Inmarsat acquired Ship Equip International, a provider of VSAT maritime communications services to the shipping, offshore oil and gas and fishing markets, in March last year. “We did that for strategic reasons,” Pearce says. He add Inmarsat “wanted a bridge” into maritime VSAT which it sees as an exciting area for its fifth generation of satellites, Global Xpress, which are due to be launched in 2013. Global Xpress, which will operate on the Ka-band, will offer downlink speeds of up to 50Mbps, and up to 5Mbps over the uplink, from compact user terminals.
“We wanted access to knowledge, skills, intellectual property to help us design Global Express maritime, which we got. They [Ship Equip] have 1000 ships under contract and those ships will be migrated to Global Express…to ensure the launch is very powerful,” he says.
“What we are doing through the restructuring is taking all of the market facing capabilities around the Inmarsat Group – sales, marketing and delivery, everything from the early product marketing through to installation and customer service and support – and bringing it together in one place under the name Inmarsat Solutions.
Under the restructured organisation, Inmarsat Solutions becomes responsible for all global direct and indirect sales, marketing and delivery, through four new market-facing business units: Maritime, focusing on worldwide commercial maritime opportunities; Government US, focusing on US government opportunities, both military and civil; Government Global, focusing on worldwide non-US civil and military government; and Enterprise, focusing on worldwide enterprise, energy, media, carriers, commercial aviation and M2M opportunities. Pearce says that the enterprise division is effectively an “amalgam of smaller but high growth business units” that fall under enterprise. He expects that some of these business units could experience rapid growth and eventually be spun out under their own business units. “We don’t expect those business units to sit within enterprise forever. We expect them to be high growth,” he says. “As a rule of thumb, once one of those sub business units gets to $100 million revenue a year, we will probably spin it out in its own business unit.
“We are creating market facing business units and we are trying to make them as entrepreneurial as possible, so we are putting one person in charge of each of those business units.”
Pearce says the idea behind the restructuring is best summed up by three words: “proximity, agility, efficiency”. “Because we haven’t integrated these acquisitions, when we look at what we do across the group, we find that there is quite a lot of duplication, in terms of going to market, technology infrastructure and we feel it makes sense to be as efficient as possible,” he says.
“The other two are more profound. By proximity I mean proximity to the markets we serve and to the customers we serve, and we wanted to create an organization that is focused in a laser-like way on the customer and the markets we serve,” he adds.
Investing for growth
Inmarsat’s collaboration with channel partners is “natural” according to Pearce, not least because the company tends to invest “very large amounts” in infrastructure about every five to 10 years. “In 2005 we came to the end of a $1.5 billion investment in our fourth generation satellites, which will last us deep into the 2020s, bringing internet protocol technology to the satellite market and bringing broadband services for the first time to the world in the form of a laptop sized device that is completely portable and delivers 500 kbps up and down. That was a revolution that happened in 2005,” he said.
Inmarsat’s fifth generation satellite programme, which is called Global Xpress, is also coming close to fruition. These satellites, which are due to be launched in about 18 months, will take Inmarsat into KA band. “This will deliver another step change in services,” Pearce says.
Stressing the importance of Inmarsat’s channel partners, Pearce says that these companies also add flexibility and value to its services “in a very powerful and agile way”.
“They actually take that service and turn it into a customer solution and in doing that they can add value, differentiate themselves in the market and align a capability to the needs of the customer in a very tailored way which adds value to everyone, particularly the customer,” he says.
The channel partners competetence also helps to give customers greater choice and better value. “When you are a customer for our services, you want to make sure you have got best value and if you see people competing for your custom, you realise that you are going to get best value through that competitive process. We are very happy to see that whole retail network taking our service and adding value to it and positioning it powerfully in the market. That has been our model for 30 years.”