The Wall Street Journal Interactive Edition -- June 16, 1998
ICO Global Plans IPO Valued at $100 Million
By QUENTIN HARDY
Staff Reporter of THE WALL STREET JOURNAL
ICO Global Communications Holdings Ltd., an international consortium that plans to offer satellite-based mobile communications starting in 2000, filed for an initial public offering of $100 million of ordinary shares.
The company, which is based in London, is in the process of building a $4.5 billion network based on 10 medium-orbit satellites, capable of providing mobile phone calls to or from any point on the planet. The first satellite is scheduled to be launched this December, and the other nine operational satellites, plus two spares, are supposed to be launched 6,200 miles up by mid-2000.
ICO didn't indicate the number of shares or the expected price of the shares to be offered in the IPO.
In a Securities and Exchange Commission filing, ICO said it is also offering, on a separate prospectus, $50 million of notes. Donaldson, Lufkin & Jenrette is lead underwriter of both offerings. An ICO spokesman declined to provide further details.
ICO grew out of the International Maritime Satellite Organization, or Inmarsat, an intergovernmental-communications group. Inmarsat is the largest investor in ICO, which has accumulated about $2.4 billion in private investments. Other investors include TRW Inc., British Telecommunications PLC, Deutsche Telekom AG, and VSNL of India.
ICO is considered to be the third major contender in a coming battle among satellite-based global mobile-phone companies, behind Iridium LLC and Globalstar LP. Iridium, which has 66 operational low-orbit satellites in place, plans to offer commercial service this September, while Globalstar has eight of its 48 low-orbit satellite network aloft and plans to begin commercial service in 1999.
Both Iridium and Globalstar have already issued shares to the public, and both offerings have moved significantly higher in price since their debuts. Questions remain, however, about the demand for mobile communications via satellite, mostly concerning the cost and quality of the services.
ICO's medium-orbit satellites appeal to some analysts over the low-orbit networks of Iridium and Globalstar. By flying about 12 times higher above the planet than Iridium or Globalstar, they say, the ICO satellites are capable of covering more of the earth from any single satellite. As a result, ICO needs less of the technology-intensive onboard switching technology than Iridium, or the large number of ground stations required by Globalstar.
"ICO has a very strong technology," said Thomas Watts, a satellite-communications analyst at Merrill Lynch. "If the demand is out there, it should do well." Despite ICO's late debut behind Iridium and Globalstar, he added, the first two companies' marketing campaigns will build awareness of global phone services.
--
The Wall Street Journal Interactive Edition -- June 26, 1998
ICO Global Communications to Award $130 Million Pact to Computer Sciences
By GAUTAM NAIK and QUENTIN HARDY
Staff Reporters of THE WALL STREET JOURNAL
ICO Global Communications Holdings Ltd., which is building an ambitious $4.5 billion satellite system to offer mobile-phone services anywhere on the planet, is expected to award a $130 million information-technology contract to Computer Sciences Corp.
The international consortium, based in London, plans to commercially launch the service in August 2000, competing with satellite-based carriers Globalstar LP and Motorola Inc.-backed Iridium LLC.
The $130 million contract, expected to be announced Friday, will help ICO save money by operating as a stripped-down "virtual corporation," an approach similar to those adopted by the company's rivals. To achieve this, ICO is handing over a good chunk of its daily operations to third parties. It currently has 260 employees, and says its work force won't exceed 420 even when the service is commercially launched. That is still a fraction of the manpower typically required to run a global business.
The carrier has already signed up Hughes Space & Communications, a unit of General Motors Corp., to provide the satellites, Sweden's Telefon AB L.M. Ericsson to provide switching systems, and British Telecommunications PLC and Deutsche Telekom AG to distribute its services to other phone-service providers and retail customers. Computer Sciences, El Segundo, Calif., will install and run ICO's entire billing, call-tracking and fraud-prevention systems.
"It's a model a lot of people have talked about -- running a huge business through a network of [third-party] organizations," said Jim Patience, a vice president at Computer Sciences. "Our participation is as a business partner, not just a systems integrator." Computer Sciences itself is outsourcing parts of the ICO contract to Hewlett-Packard Co., which is providing hardware, and Oracle Corp., which is supplying database systems.
ICO's pared-down approach is also evident in the satellite technology it plans to use. While Iridium and Globalstar birds circle in low-earth orbit, ICO's will fly 12 times higher above the planet than its rivals, enabling a single ICO satellite to cover more of the earth's surface. This means that ICO won't have to install as much switching gear on its satellites as Iridium will, or build the many ground stations needed for Globalstar's system.
But ICO's two big rivals are ahead in their plans. Iridium has already launched some 66 satellites and intends to offer commercial service this fall. Globalstar's launch is planned for 1999. Each of the companies will sell pocket-size mobile phones that can make and receive calls from anywhere in the world.
Separately, ICO awarded contracts to manufacture its phones to two Japanese companies, NEC Corp. and Mitsubishi Electric Corp. The value of contracts, for a total of 170,000 handsets, wasn't disclosed. ICO is expected soon to award contracts for another 100,000 phones to another manufacturer, most likely either Samsung Corp. of South Korea or Matsushita Electric Industrial Co. of Japan.
The ICO phones, due in mid-2000, will be about half the size of the first phones from Iridium and Globalstar, and at just under eight ounces, about half the weight, with longer talk time and battery life.
ICO spokesman Joseph Tedino said that even with the smaller size, his company's phones will send calls to satellites 6,200 miles away, compared with less than 800 miles for Iridium or Globalstar, because ICO's satellites are much bigger.
Iridium and Globalstar officials said they will be offering smaller phones by the time ICO starts commercial service.
--
|
