From the November 8, 1999, issue of Wireless Week
McCaw Throws Lifeline To ICO
By Monica Alleven
It's Craig McCaw to the rescue again.
The same billionaire cellular guru who led a $1.2 billion investment in Nextel Communications Inc. in April 1995 is stepping
forward to salvage ICO Communications Ltd.
With the $1.2 billion that McCaw and his associates will raise, ICO can build out its satellite system and launch services in
2001. If ICO is successful, it will be easier for McCaw's Teledesic LLC to enter the market early, establish a brand, raise
money and offer bundled satellite services.
Those who have watched the satellite telephony market crumble and capital markets dry up over the past year openly wonder
exactly what McCaw is up to. Why dig deeper into a market as precarious as satellite communications? Iridium LLC, the first
to launch commercial service, struggled for months to attract subscribers, and after Iridium filed for bankruptcy protection in
August, ICO, unable to raise enough financing to continue toward a network buildout, was soon to follow.
Here's what is known about McCaw's plan. Teledesic, which in September announced it was exploring early market
opportunities, remains very much in play despite McCaw's moves on ICO. However, the Bellevue, Wash., company's image is
changing. "Consider Teledesic as a brand as opposed to one specific satellite constellation," says Teledesic spokesman Roger
Nyhus. Teledesic's strategy, while still undefined, is to explore the possibility of offering a range of services, whereby "it could
be one-stop shopping for satellite communications," Nyhus says.
McCaw's stake in ICO also doesn't rule out an investment in Iridium on the part of McCaw and his associates. Teledesic is
continuing its technical and business review with equipment provider Motorola. It's likely that review is looking at ways
Teledesic can take advantage of Iridium's network system, and ICO's as well.
With ICO and possibly Iridium, Teledesic could brand everything under the Teledesic name so that customers would become
accustomed to it before Teledesic actually funds and builds the $9 billion "Internet-in-the-sky" network, which some analysts
estimate could cost up to $15 billion before all is said and done. Eventually, the brand would include voice, fax, data, Internet
access, Web casting or other services, both mobile and fixed.
Industry analysts don't pretend to know what's on McCaw's mind, but they say his investment in ICO and potentially Iridium
are clearly opportunistic. McCaw gets an important equity position in the struggling ICO for a relatively small amount of
money. "He's very savvy. It's opportunity knocking, and he's taking advantage of it," says Marco Caceres, analyst at the Teal
Group.
If the cellular industry and Nextel are any indication, that third knock could signal the start of another long life. |
