A US communications spectrum battle could have dire consequences for FTSE 250 UK satellites operator Inmarsat (ISAT).

Ligado Networks (formerly LightSquared) is in conflict with rival Iridium over a proposed terrestrial wireless network. Iridium claims the spectrum bandwidth Ligado plans to use could interfere with its own network, which broadcasts over adjacent spectrum.

Iridium has called on the US Federal Communications Commission (FCC) to step in, although Lidago believes it has satisfied regulatory concerns.

This matters to Inmarsat because it has a spectrum sharing agreement with Lidago. If Ligado’s strategy is blocked it could affect that partnership, worth more than $100m in annual payments to Inmarsat. The majority of that revenue is turned into profit.

Last year Inmarsat reported pre-tax profit of $299.2m and analysts anticipate that figure falling to $245.5m in 2017.

‘If Ligado does not get FCC approval by 2019 then these payments may stop,’ comments investment bank Berenberg. ‘This would obviously have negative impacts on both (Inmarsat’s) earnings and valuation, but could also have a material detrimental effect on leverage and thus dividend policy.’

Shares in Inmarsat enjoyed a strong rally from 605p at the start of February to 850p at the end of March. They’ve since started to fall back amid Ligado-related concerns. The stock currently trades at 733p.

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