Text of WSJ McCaw / Iridium / ICO article
March 2, 2000
McCaw Will Fuse ICO and Iridium
With His Own Satellite-Phone Project
By SCOTT THURM
Staff Reporter of THE WALL STREET JOURNAL
Cellular-phone pioneer Craig McCaw plans to combine the ICO and Iridium
satellite-phone systems with his own proposed Teledesic project to create a
global voice-and-data network, according to interviews and documents he
filed.
Mr. McCaw has been hinting at the strategy for months, but the scope of the
plan is being revealed in documents filed in the bankruptcy-court proceedings
of ICO Global Communications Ltd. and Iridium LLC.
In short, Mr. McCaw hopes to acquire the two
systems for pennies on the dollar, then knit them into
a satellite network that would provide not just
telephone service, but also high-speed Internet access
-- the goal of his ambitious Teledesic vision with
Microsoft Corp. Chairman Bill Gates.
Mr. McCaw is leading a $1.2 billion bailout of ICO,
which had been valued at $4.7 billion. At the same
time, he is proposing to invest about $600 million to
take control of the $5 billion Iridium system.
In documents filed in U.S. Bankruptcy Court in
Delaware last week, Mr. McCaw said he planned to
transfer ownership of ICO to a new company,
temporarily dubbed New Satco. If he is successful in winning control of
Iridium, Mr. McCaw said he would merge Iridium into New Satco. Mr.
McCaw said it was "possible" that Teledesic, which has raised $1.5 billion of
an expected $10 billion financing, would be acquired by New Satco as well.
The plan would allow Mr. McCaw to use the best assets of each system.
Iridium's 66 satellites are in orbit, and the system has about 50,000 customers.
Iridium also has valuable licenses to operate in more than 160 countries and a
highly regarded billing system that can accommodate many currencies and
many languages.
ICO, meanwhile, is building a $900 million
network to link its 12 ground stations with
fiber-optic cables. Mr. McCaw plans to tweak
ICO's 12 satellites to transfer data at 144,000 bits
per second, or almost three times as fast as a
conventional modem. In last week's filing, ICO
said it had delayed the scheduled start of its
service until late 2002 to accommodate the
changes. As recently as December, ICO planned
to begin service in mid-2001. ICO said Monday it
plans to launch its first satellite March 12.
In last week's filing, ICO also said it expects to raise an additional $2.1 billion
in debt and equity, beyond the current bailout, to begin service.
Bob Ratliffe, a spokesman for Mr. McCaw's Eagle River Investments LLC,
said the recent filings "are an indication of our thinking," but he insisted Mr.
McCaw hasn't yet decided to merge ICO, Iridium and Teledesic.
But Tim O'Neil, a Wit Soundview analyst, said Mr. McCaw's plan made sense.
"He's treating [radio] frequencies like real estate," he said. "He looks at these
programs that just aren't working, so he'll buy it and figure out how to make it
work." He compared the ICO and Iridium rescue packages to Mr. McCaw's
1995 takeover of then-struggling Nextel Communications Inc., whose unusual
cell phones double as two-way radios. Under Mr. McCaw's guidance, Nextel's
subscriber base has grown enormously, along with its stock-market value.
Mr. O'Neil said Iridium's billing system and contacts with telephone companies
in other countries could be helpful to Mr. McCaw as Nextel begins its own
international push. He said Iridium's satellites could be reconfigured to
accommodate paging or the two-way-radio feature of Nextel's phones.
Copyright ¸ 2000 Dow Jones & Company, Inc. All Rights Reserved. |
