tele.com. ICO To Get Cash Infusion [Interesting references to G*]
teledotcom.com
?October 21, 1999 ?
By John Blau
SEVERAL KEY shareholders of ICO Global Communications Ltd.
(London)agreed this week to give the bankrupt satellite venture a
second chance. The group has pledged $225 million in non-binding
letters of intent In a first fund-raising tranche since the satellite
company filed Chapter 11, the bankruptcy code that protects distressed
businesses from their creditors, earlier this year.
A company spokesman said ICO expects the letters of intent to be
converted into binding contracts within the next few weeks. The troubled
satellite phone provider hopes to raise the remaining $975 million it
requires to stay in business with two additional rounds of financing
scheduled in the months ahead. ICO has already raised some $3 billion
from more than 60 strategic investors as well as another $120 million on
the Nasdaq market. The financial upheavals have forced ICO to delay its
first satellite launch from this month to January or February next year,
with commercial service slated for 2001.
Initially, ICO planned to launch 12 satellites enabling customers to
make phone calls virtually anywhere in the world. But the company said
this week that it may consider scaling back the number, possibly to 10.
Two satellites had been planned as backups. Two fewer satellites would
save around $600 million in construction, launch and maintenance
costs. The fall of ICO followed an earlier failure by Iridium LLC
(Washington, D.C.),which also filed for Chapter 11.
News of ICO?s cash injection comes as a surprise to many skeptics in
the industry. Philip Kendall, senior industry analyst at Strategy
Analytics Ltd. (London), calls the satellite phone service "a very niche
market," which essentially "is trying to walk outside the GSM footprint."
The footprint covered by cellular networks based on the global system
for mobile communication (GSM) is big and growing. There are currently
390 GSM operators offering service in 141 countries. And many of their
customers are already easily roaming between and among local
networks. There were 400 million roaming calls in August, up from 300
million just three months earlier, according to the GSM Association
(Dublin), which represents the interests of GSM mobile operators.
The ICO announcement comes just days after Globalstar L.P. (San
Jose, Calif.) launched a commercial global mobile satellite service and
amidst rumors that ICO and Iridium are considering merging. Whether
or not Teledesic LLC, the planned "Internet-in-the-sky" venture, will buy
into one or more of these satellite ventures remains to be seen. Bill
Owens, Teledesic?s co-chief executive officer and vice chairman,
doesn?t rule out such an investment, although it doesn?t appear to be
one of the company?s first choices. Owens was quoted incorrectly in an
earlier interview saying that Teledesic had definitely decided against
investing in one or more of the satellite phone ventures. He said the
company isn?t "particularly sure" it would invest in these satellite phone
ventures.
"We are seriously considering early-entry opportunities that involve both
non-geostationary systems as well as geostationary systems," a
company spokesman said. "It?s possible that we?ll end up pursuing
more than one system in more than one category."
In an interview at the Telecom 99 trade show in Geneva, Owens said
Teledesic "the planned $10 billion, 288-satellite high-speed wireless
Internet venture "does not intend to scrap its strategy but, instead, is
looking at opportunities to enter the market sooner than 2004, when the
venture plans to begin offering commercial service. Owens said "recent
satellite failures have changed the market significantly," creating "a
range of opportunities" that the company is currently exploring. Those
opportunities, he said, included doing "something with the legacy GEO
satellites operating in the KU band."
Speaking at Telecom 99 in Geneva, Pekka Tarjanne, former ITU
secretary-general and now with Project Oxygen, the group that is
building a global bandwidth network, said continuous growth of
bandwidth does not "obliterate the need" for satellite projects, such as
Globalstar and Teledesic.
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