MSS carriers gaining momentum in worldwide market
rcrnews.com
March 1, 1999
By Elizabeth V. Mooney
NEW YORK—Despite certain recent technical and financing difficulties,
satellite voice and data providers are gaining momentum as one response
to growing worldwide demand for telecommunications services, speakers
at a recent conference said.
‘‘Mobile satellite systems will account for about 1 percent of the total
telecommunications market, as measured by users, by 2008. They are one
answer to one part of worldwide demand,'' said Manish Thakur, vice
president and chief financial officer of Ellipso Inc., Washington, D.C.
Ellipso will use a patented orbital architecture to deploy
medium-earth-orbit satellites for voice and data communications, which it
plans to offer commercially in 2001.
‘‘The market can easily support multiple MSS players, but only at
affordable price points,'' Thakur said last week at the Satellite
Conference, co-sponsored by Bear Stearns & Co. Inc. and the Satellite
Industry Association.
While 1 percent of the global telecommunications market may seem small,
C.J. Waylan, president and chief executive officer of Constellation
Communications Inc., said, ‘‘Satellite systems will be constrained only by
their capacity, not by demand.''
CCI's low earth orbit system plans to begin offering wholesale mobile and
fixed voice communications to terrestrial-based telephone carriers in
Equatorial regions in 2001.
The services segment of the satellite industry posted $19.2 billion in
revenues in 1997, said Clay Mowry, executive director of the SIA. By the
end of 2007, those revenues are projected to skyrocket to $95 billion,
according to a Futron Corp. survey conducted for the association.
Today, there are 20 pure-play satellite companies that are public, 18 of
which trade on stock exchanges in the United States, according to Bear
Stearns. Those 18 had a combined total equity value of about $41.2
billion as of Feb. 19. They are off their peak of $57 billion reached last
July, but they have rebounded from their low of $29 billion, hit last
November.
‘‘The current equity market views the satellite sector as attractive in the
long term but as having significant risks ... highlighted over the last nine
months,'' said a Bear Stearns' analysis distributed at the conference.
‘‘The sector seems to have been re-priced, with stocks subject to higher
volatility and tending to react to events in the industry ... Satellite stocks
have tended to trade down immediately after going public, with this trend
reversing as companies reach stated milestones and execute their business
plans.''
At least one satellite services company, Inmarsat, is likely to go public
within the next 18 months. By mid-April, the intergovernmentally owned
data carrier will be privatized into a limited liability corporation
incorporated in the United Kingdom, said Ramin Khadem, chief financial
officer.
The debt markets have been and continue to be receptive to satellite
financings, according to Bear Stearns. Until those capital markets felt the
ripple effect of the third- quarter stock market correction, satellite
borrowers were on track to break records set in 1996 and 1997 for high
yield bond financings. That short-term reversal of fortune has changed
rapidly in 1999, with more than $2.3 billion in high yield debt raised for
satellite companies through mid-February, an amount slightly more than
was raised in total during 1998.
This year also is likely to herald the arrival of several new satellite players
offering commercial service, as well as service territory expansions by
other carriers.
Orbcomm Global L.P. began offering its narrowband data services in
Europe in February and expects to ‘‘go commercial in South America and
Japan in March,'' said Scott L. Webster, chairman and chief executive
officer.
Pasifik Satelit Nusantara, based in Jakarta, Indonesia, hopes to begin
commercial service in December of a geosynchronous satellite-based rural
public phone system, said Adi R. Adiwoso, CEO and president director.
Globalstar Telecommunications Ltd. is on schedule to begin offering in
September its LEO satellite version of ‘‘plain old mobile phone service
anywhere needed and not available at terrestrial cellular rates,'' said
Nicholas C. Moran, vice president and treasurer.
Copyright 1999, all rights reserved.
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March 4, 1999
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