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To: Geoff Goodfellow who wrote (3687)4/2/1999 2:36:00 AM
From: Geoff Goodfellow  Respond to of 29987
 
Inmarsat Readies Satphone Services To Take On Competition
(Newsbytes; 03/25/99)

LONDON, ENGLAND, 1999 MAR 25 (Newsbytes) -- By Steve Gold, Newsbytes. Inmarsat
has announced plans to offer mini-M aero (satellite telephone) services for
small corporate aircraft and general aviation users from May of this year
onwards. At the same time, the firm is also planning to develop high speed
(64,000 bits per second) data services across its satellite network.

According to company officials, the mini-M aero service will be based on
technology first developed for land-mobile satellite communications users, and
features sensibly-priced lightweight aircraft equipment offering a single
channel which can be used for voice, fax, or data communications.

Inmarsat says that the light aircraft for which the mini-M aero service is
intended do not operate in airspace using satellite communication for air
traffic management. Therefore, the firm says that the system will not need to
be certified for aeronautical safety services applications, so minimizing on
development costs.

According to Inmarsat, since the provision of mini-M aero services by
Inmarsat partners requires no additional investment in ground earth station
facilities beyond that already made for the mini-M land mobile service, calling
tariffs are expected to be attractive for the light aircraft market.

David Featherstone, head of Inmarsat's aeronautical operations, said that at
least two aeronautical equipment manufacturers will soon begin marketing mini-M
aero avionics and the service will be available as soon as the first of this
equipment is granted Inmarsat space segment access approval.

"Mini-M aero services will be attractive to a sector of the aeronautical
market that previously found satellite communications unaffordable," he said.

According to Inmarsat, it is also planning to develop a mobile ISDN
(integrated services digital network) high speed data technology for the
aeronautical business.

The satellite communications company says that the development will be
dependent upon a firm commitment from one of Inmarsat's ground earth stations
to offer global services, as well as from at least one avionics manufacturer to
produce the necessary airborne equipment.

The development of the mini-M aero and high-speed mobile ISDN services is
being made possible, Newsbytes notes, by Inmarsat's third generation satellite
system, already launched and in service, which uses spot beam technology.

According to Inmarsat, each satellite produces spot beams up to eight times
more powerful than previous Inmarsat satellites, allowing access to faster data
transmissions using smaller aerials.

Inmarsat's Web site is at inmarsat.org .
Reported by Newsbytes News Network, newsbytes.com .
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Copyright Phillips Publishing, Inc.
This article was sent to you by an Inquisit subscriber who thinks you
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To: Geoff Goodfellow who wrote (3687)4/2/1999 2:40:00 AM
From: Geoff Goodfellow  Respond to of 29987
 
SATELLITE FINANCING: ARE DOORS OPENING IN 1999?
by Peter J. Brown
(Via Satellite; 03/25/99)

Mar. 25, 1999 (VIA SATELLITE, Vol. 14, No. 3 via COMTEX) -- In the closing
moments of this century, the global satellite sector has come to a crossroads.
The search for new opportunities in the developed markets of Europe and North
America intensifies as many if not all major infrastructure projects in Asia
are on hold, and as questions about the economic fragility of Latin America and
Russia remain. The satellite sector is not abandoning developing markets
altogether, but it seems to be refocusing its efforts and awaiting what amounts
to a sharp increase in new capacity worldwide.

The concept of the satellite fleet with all of its operational advantages is
not obsolete by any means; however, the emphasis is shifting as constellations
emerge. As a result, Iridium now commands the lead role in terms of the number
of satellites deployed, and in terms of setting the tone in financial markets
for almost everyone following in close pursuit.

Fingers are crossed as Iridium exits the theoretical realm, and begins to fly
in the real world with all the anxiety that is attached to a business plan
entering an execution phase. The satellite industry sees Iridium's ability to
carry out its well-publicized mission as critical to the next requisite round
of confidence-building in the financial sector.

"All eyes are fixed on Iridium. After taking 11 years and spending $5 billion,
Iridium's ability to launch within 45 days of their projected target date is
truly remarkable," says Sarah L. Porter, managing director of Ascent
Communications Advisors, L.P. in New York. "Iridium's early success will also
affect other satellite projects, and not just the telephony projects."

The promoters of the high yield market, the public equity market and private
funding sources as well now seem to be aggressively scouting satellite ventures
and displaying a degree of receptivity that have been absent for much of 1998.
Vendor financing remains a key support mechanism as well.

"You have to be very case specific," says Robert Berzins, high yield media
analyst at Lehman Brothers in New York. "No generalizations apply. What we have
right now is a market environment where people are quite skittish about
developmental companies. People are demanding higher rates of return than just
a few months ago."

CD Radio captured everyone's imagination in November when CD Radio-a unique
mobile entertainment concept a la satellite-revived the notion that millions of
dollars are preparing to leap from the sidelines into hands of the right
players with the right degree of business savvy. More on this in a moment. Will
others share in CD Radio's good fortune? That remains to be seen.

A quick scan of the skies indicates that the Clarke Belt is brimming with GEO
satellite capacity. And more satellites will start arriving quickly in 1999.

"There is an enormous amount of new GEO capacity coming on line in the next
two years," says satellite communications analyst J. Armand Musey at C.E.
Unterburg Towbin in New York. "Loral is more than doubling its capacity. And,
the same is true for Panamsat and GE Americom. It is hard to see demand
increasing in a manner such that it has the ability to absorb that capacity.
The introduction of HDTV, which is seen as a transponder hog, may act as a
savior, but it is not going to save everything.

"At the same time, we are going to see a surge in data services. It remains to
be seen if a spurt of new Internet applications can offset the additional new
fiber that will be installed over the next two or three years," Musey adds.
"The spike in transponders will drive transponder pricing down worldwide, which
will lower expectations on the earnings side accordingly. However, the
overcapacity will not be evenly distributed. Some regions will be affected more
adversely than others."

The global market has an enormous appetite for capital. In this regard, the
infinite boundaries of space and the boundless dreams of numerous aspiring
satellite entrepeneurs are not necessarily synchronized with the finite
resources and the fairly predictable cycles of the financial world.

"There is a real crunch coming in 1999 and extending on into 2000. This past
year was a wash, and the whole market has been delayed. As a result, the number
of IPOs in 1999 will expand to incorporate those that have been postponed,"
says Teal Group Corp. Space Analyst Marco Caceres in Fairfax, VA. "In the
coming months, systems that everyone is betting on, like Teledesic and Hughes'
Spaceway, will be revealing their updated cost estimates and capital
requirements. In 2000, Teledesic could grow its projected total cost from $9
billion to $15 billion or more. These higher projections, combined with
Teledesic's need or desire to diversify away from a dependence on private
capital alone, could almost dry up the IPO market, creating a shortage of
capital with negative consequences for smaller start-up companies in particular
that are planning their own IPOs."

Teledesic LLC announced in April that Prince Alwaleed Bin Talal Bin Abdul Aziz
Alsaud of Saudi Arabia was investing $200 million in Teledesic. Alwaleed is the
nephew of Saudi Arabia's King Fahad. The largest individual shareholder in
Citicorp, he made a profit of more than $6 billion when Citicorp was acquired
by Travelers Group Inc. in 1998. Teledesic declines to discuss this and other
relevant financial information.

"Teledesic currently is privately funded. Teledesic successfully raised more
than $1 billion in equity during 1998, including $200 million from His Royal
Highness Prince Alwaleed Bin Talal of Saudi Arabia and $750 million from
Motorola. Plus, Teledesic's founding investors-telecommunications pioneer Craig
McCaw and Microsoft Chairman Bill Gates-are investors with long-term vision,"
says a Teledesic spokesperson. "Further, we do not consider raising capital to
be one of our significant challenges. Beyond that, as a private company, we
don't provide detailed information on our financing or plans."

1998: not the best year to engage the market

Satellite companies that ventured out in the financial sea in 1998 found the
waters to be very bumpy indeed. Telesat Canada, Orbcomm Global LP and ICO are
among those that probably would have preferred to have stayed firmly tied to
the dock.

Telesat Canada plans to finance its Anik F program through a combination of
public/private debt and banking facilities, according to Ted H. Ignacy,
Telesat's vice president of corporate development in Gloucester, Ontario. In
June, Telesat Canada finalized a loan agreement with a syndicate of Canadian
lenders providing a revolving five-year term credit facility for $250 million
Canadian dollars ($166 million). Telesat's construction of its Anik F satellite
is on schedule for a launch in early 2000, according to Paul D. Bush, Telesat's
vice president of corporate development, and Telesat's Nimiq satellite, which
will be used by BCE's Expressvu DBS service, among others, is slated for launch
in early 1999.

In August, the company decided to postpone its $150 million note issue due to
adverse conditions in the credit market. This unsecured note issue had been
assigned a rating of "BBB" by both Dominion Bond Rating Service and S&P.
"Though early indications of investor interest were strong, the markets
deteriorated significantly during the week of our road show," Ignacy said in
late January. "Telesat may access the Canadian dollar market when conditions
return to a more favorable environment. In the interim, short-term financing
has been arranged through incremental banking arrangements."

Virginia-based Orbcomm Global LP withdrew its IPO in July due to the adverse
conditions in the market.

Orbcomm's partners, Orbital Sciences and Teleglobe, have been and continue to
be quite firm in their support. "We pulled the IPO last July, but expect to
come back when conditions are better. The company has made terrific progress
and its partners are funding the business," says Scott Moskowitz, senior
managing director at Bear Stearns.

On December 1, 1998, Teleglobe Inc. paid approximately $65.5 million for the
15 percent stake in Orbcomm held by Technology Resources Industries Bhd (TRI)
of Malaysia. This makes Teleglobe a 50- 50 partner in Orbcomm with Orbital
Sciences.

London-based ICO Global Communications Services Inc. went forward with its
simultaneous IPO and high yield debt offering. ICO plans to deploy 12 Hughes-
built mobile communications satellites, 10 operational and two in-orbit spares,
for C-band and S-band transmissions. According to Caceres, ICO's biggest
obstacle is its lack of an FCC license.

As of October, ICO had raised $2.8 billion in equity and debt and projects a
total cost of $4.6 billion. TRW's decision to invest $50 million after settling
its patent suit with ICO is also noteworthy, according to Caceres.

The IPO that ICO completed in July came up short of expectations. The company
hoped to raise $380 million at $16 to $19 per share, but ended up selling at
$12 per share. However, ICO has a unique structure and is in good shape,
Caceres says.

The closed market for IPOs and high yield debt financing, in the summer and
fall of 1998, has been the most significant factor when the state of satellite
project financing over the past year is examined. As the curtain was coming
down, ICO and Orbcomm became victims, Porter says. Now, the high yield market
is showing signs of opening up. And on the equity side, satellite users such as
Iridium and Globalstar are coming back to market, and Internet-related IPOs are
being completed.

CD radio wears a crown in 1998

On November 16, 1998, CD Radio Inc. announced that affiliates of New York-
based Apollo Management L.P. would purchase $135 million of newly issued
preferred stock. At CD Radio's option, Apollo could purchase an additional $65
million of preferred stock.

"However, with our stock at around $35, we may seek more opportunistic
financing, said Andrew J. Greenebaum, CD Radio's executive vice president and
chief financial officer. "For now, we are just going to let the dust settle. We
have enough cash to get through next year. Of the $900 million we have raised
to date, approximately $500 million is now equity. This gives us the
opportunity to do the balance in the high yield market.

"We've been successful in financing because we have a very complete and
focused business plan that holds together under a lot of different scenarios,"
Greenebaum adds. "The market recognizes this."

With an objective of airing 100 channels of satellite-delivered programming to
U.S. motorists, CD Radio is scheduled to launch in early 2000 with a monthly
subscription fee of $9.95. The first of three Space Systems/Loral-built
satellites is scheduled for launch in November 1999 with the launch of all
three satellites completed by January 2000.

"As a rule, satellite companies fall into two categories," says Moskowitz.
"For an early stage venture with no revenues and no satellites deployed, the
public markets are simply not available. As for the later-stage or mature
satellite companies like Loral or Panamsat, there is a market for these
companies. CD Radio is now past the financing hurdle. The time pressure is
clearly off, and they can focus on executing their business plan."

"Fall of '98 was a difficult environment for any satellite company to raise
money," says Musey.

Earlier in November, CD Radio Inc. announced that Prime 66 Partners L.P., a
Texas limited partnership, which includes Sid R. Bass of Fort Worth, TX,
completed its purchase of five million shares, or approximately 20 percent, of
CD Radio's common stock for $100 million. The Federal Trade Commission
immediately approved this transaction. A Texas-based attorney for Prime 66
indicates this investor group does not comment on its investments.

This partnership is involved in at least one other satellite project. On
September 14, 1998, Prime 66 made an initial 13G filing for 8.46 million shares
of Bermuda-based Globalstar Telecommunications Ltd. (GTL). To be eligible for a
13G filing, one has to be a passive investor and not involved in a potential
takeover. An attorney representing Prime 66 informed us of a Form 4 filing
completed in early November, which indicates that Prime 66 holds 11.7 percent
of GTL, or 9.63 million shares. George Soros holds a 4 percent stake in
Globalstar as well.

Other CD Radio shareholders include Loral, which obtained $25 million in CD
Radio stock in 1997 at $13 per share, or 1.92 million shares. This represents
approximately 8 percent of the 23.1 million shares of CD Radio. Loral also
holds a security interest in CD Radio's terrestrial repeater network.

"CD Radio has done a fantastic job of executing its business plan," says
Robert B. Kaimowitz, satellite communications analyst at ING Baring Furman Selz
in New York. "Here you can see what happens when a great strategy comes
together with a great management team."

"CD Radio is very attractive, and the two most attractive elements of their
business plan involve the size of the market and the quality of the team they
have assembled," says Apollo partner Andrew D. Africk. "That includes their
industry partners, Loral and Lucent Technologies which is building the chipsets
for their radios.

"Are we interested in other satellite deals? Yes," Africk adds. "We're a large
fund interested in quality business plans. We started this $3.5 billion fund,
our fourth, in 1998. Since we opened our doors in 1990, we have put $4 billion
to work. We try to segment as best we can, looking at the markets served and
who is serving those markets."

Loral: skybridge and cyberstar

New York-based Loral Space and Communications Ltd. is buzzing with activity
these days. In addition to a new financing campaign from Globalstar to fund its
revised launch schedule, other GEO and LEO projects, including the $4.2 billion
Alcatel-led Skybridge system with 80 LEO satellites, are moving ahead quickly.
Cyberstar, however, no longer involves the creation of a dedicated satellite
network.

"Cyberstar and Skybridge represent two different strategies, although both are
based on the emerging demand for broadband capability on demand," says Nick
Moren, Loral's senior vice president and treasurer. "Cyberstar can be funded
internally, and it is well within our capability to do so. If the demand
develops the way we hope, then we can develop the infrastructure. Skybridge
starts with the infrastructure and ultimately comes together with Cyberstar.
Interoperability is where we're heading."

While four Loral GEO satellites are scheduled for launch in the next seven
months, Moren indicates that Loral is always open to new satellite-based
opportunities.

"Acquisitions and Asian resources fall into that category," Moren says. "If
the appropriate opportunity arises in other parts of the world, and not just
Asia, we will remain open. Space assets are worth accumulating, and we have
resources in hand. The industry has grown tremendously, and yet we do not
expect to see the same pace over the next few years. We are improving Space
Systems/Loral's position and industry share. We've grown it from $400 million
to $1.4 billion in annual sales since we acquired Ford Aerospace."

Loral also has two DBS satellites in storage from the now defunct ABCN venture
in Asia.

The view from colorado

Colorado has emerged as a staging ground for all sorts of satellite
projects, large and small. Among other things, it is home to Echostar
Communications Corp., Primestar Inc. and Kastar Satellite Communications Corp.
The view from Colorado is upbeat, although Primestar, with more than two
million DTH subscribers, fell on hard times and now has been acquired by
DirecTV. This deal is still subject to approval.

Rick Westerman, Echostar's treasurer, already had his hands full when word
came in late November 1998 of a $1.1-billion stock deal with News Corp. and
MCI/Worldcom Corp., which resulted in Echostar taking control of the now
defunct ASkyB DBS frequencies at 110 W along with two ASkyB DBS satellites-now
designated as Echostar 5 and 6-and the former AskyB uplink facility in Gilbert,
AZ. According to Westerman, this deal will be subjected to a three-stage
approval process involving shareholders and government regulators, including
the FCC, due to the DBS license transfer.

Among other things, Westerman has just completed a major, $2 billion
refinancing of Echostar's entire capital structure. Echostar has more than 1.9
million DBS customers, and closed out 1999 with 100,000 new subscribers in each
of the last three months.

"We will likely be increasingly active in the acquisition market as our recent
acquisition of News Corp. and MCI/Worldcom's ASkyB assets suggest. The high
yield market has changed dramatically in November. It is open to repeat
issuers, including Echostar and other established companies that the market is
familiar with."

Westerman believes "the market is not quite there for less well- established
companies," as far as high yield and bank or institutional markets are
concerned. "We are launching data services by the second half of next year, he
says. "We have a working model of an advanced WebTV-type box here in our
offices. Our deals with OpenTV and EMNetwork are just the beginning, and they
look great. We will be rolling out a dual 110 -119 DBS service, which will be
available to Dish Network customers using a single 18-inch elliptical dish with
an additional LNB."

A replacement program for Echostar 3 and Echostar 4 has been revised
considerably. The acquisition of the two DBS satellites from News Corp. opens
the door to new and expanded programming opportunities involving the combined
DBS slots at 110 W and 119 W. Westerman indicates that insurance proceeds from
Echostar 4 can be added to Echostar's discretionary cash, although much of it
will cover an estimated $125 million in dish repointing costs. Plans for the
construction of Echostar's fifth DBS satellite have been scrapped, according to
Westerman.

"All the data suggests that Echostar 3 and 4 can probably operate for their
intended useful lives of 12 years," Westerman says.

A Positive Start To 1999

The satellite-related activity on Wall Street during the week of January 18
alone suggests that the market is much more willing to support the needs of
well-established companies, as Westerman and others suggest. This series of
positive or supportive indicators is a welcome change from 1998. The fact that
these transactions are preceeding in the absence of any news or updates from
Iridium may be a non-issue. However, the capital markets may be quite open to a
revised Iridium rollout with more conservative projections from Iridium.
Iridium had not released any subscriber numbers as this article was going to
press.

On January 19, just as Echostar's wholly owned subsidiary, Echostar DBS Corp.,
was moving its $2 billion debt offering as a private placement, Loral Space and
Communications announced its plans to sell $350 million of 9-1/2 percent senior
notes with the intent of using the proceeds to buy $150 million of Globalstar
Telecommunications Ltd.'s convertible preferred stock, among other things.

On the following day, Gilat Satellite Networks Ltd. announced that it had
filed with the U.S. Securities and Exchange Commission for a public offering of
4.745 million common shares. And, the week ended with Globalstar announcing
that it had entered into an agreement to sell $350 million of 8 percent
convertible preferred stock due 2011, while also noting the above-mentioned
stock purchase by Loral, which owns a 42 percent stake in Globalstar.

Add it all up and it looks like things are getting back on track fast in 1999
as far as satellite financing is concerned. Hopefully, we will see an even more
upbeat response from Wall Street in the coming months.

Peter J. Brown has been tracking the satellite and DTH sectors in the United
States and Canada as a freelance writer since the mid- 1980s. He lives on Mount
Desert Island, ME.
-0-
Copyright Phillips Publishing, Inc.
This article was sent to you by an Inquisit subscriber who thinks you
may be interested in subscribing to our service. To find out more about
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To: Geoff Goodfellow who wrote (3687)4/2/1999 2:46:00 AM
From: Geoff Goodfellow  Respond to of 29987
 
SETTLING NEW TERRITORY: KA-BAND UPDATE
by Mark Williamson
(Via Satellite; 03/25/99)

Mar. 25, 1999 (VIA SATELLITE, Vol. 14, No. 3 via COMTEX) -- In 1995, a clutch of satellite operators sought approval to operate so-called broadband satellite
systems using a part of the frequency spectrum known as ka-band. Since then,
broadband multimedia applications have received much publicity. But what
progress have the operators made towards providing those services?

When the wagon trains of the early American settlers trundled west toward a
land of promise and prosperity, their occupants' minds were focused on a single
goal: the acquisition of new territory, which they could own and profit from in
a way that had not been possible before. The satellite companies of the 1990s
that have recently embarked on a quest to develop a new tract of the radio
frequency spectrum known as Ka-band have much the same goal.

But developing a new and innovative satellite system is not easy at the best
of times, so why bother developing one that operates in the virgin territory of
a new frequency band? The answer lies in the term "broadband," sometimes called
"wideband," a reference to the width of the band of frequencies available for
communications services. With the lower allocations for C and Ku-band already
congested, many service providers are looking to the frontiers and the
unclaimed resource of Ka-band.

KA-band technology

When a dozen or so satellite organizations filed for FCC approval in 1995 to
operate broadband satellite systems, the frequency of interest for some was 28
GHz, located in the upper part of Ka-band.

For convenience, Ka-band is often referred to as 30/20 GHz, where 20 GHz is
the approximate downlink frequency and 30 GHz is the uplink, in the same way
that C-band is 6/4 GHz and Ku-band is 14/12 GHz, for example (the higher
portions of Ku-band are used for DBS services). The uplink is almost always the
higher of the two figures. Since it is more difficult to put large antennas on
satellites than in earth stations, the satellite is given the easier job and
allocated the lower frequency.

It is mainly the technical difficulties, and associated cost, of developing
higher frequency radio equipment that has constrained the industry to the lower
bands. The first communications satellites used C-band because radio equipment
was readily available at that frequency. Europe's first communications
satellites used Ku-band, partly in an attempt to leapfrog the by-then outdated
C-band technology.

Following this philosophy, the European Space Agency (ESA) began the
development of Ka-band systems in the late 1970s, culminating in the launch of
its Olympus technology demonstration satellite in 1989. Among other things,
Olympus carried a 20/30 GHz communications payload and a Ka-band beacon payload
to quantify rain attenuation at those frequencies. Its successful operation
proved the potential of Ka-band and led to the development, by Italy, of the
Italsat 1A and 1B satellites, designed to demonstrate the operational
capabilities of an advanced Ka-band payload and provide a pre-operational
service within the Italian telecommunications network. The Italsat spacecraft
were launched in 1991 and 1996 respectively, while research into Ka-band was
further progressed by NASA's Advanced Communications Technology Satellite
(ACTS), launched in 1993, and Japan's Communications Engineering Test Satellite
(COMETS), launched in 1997.

KA-band applicants

The first companies to apply to the FCC for Ka-band capacity for operational
broadband systems were Hughes Communications Galaxy Inc. (for its Spaceway
system); Kastar Communications Corp. (for a single satellite); Loral Aerospace
Holding Inc. (for its Cyberstar system); Panamsat (for PAS 9); and Teledesic
Corp. (for its then 840-satellite, now 288-satellite, constellation).

A number of others subsequently jumped aboard the bandwagon, ensuring they met
the FCC's application deadline. They included GE Americom with GE*Star,
Lockheed Martin Corp with Astrolink, AT&T Corp. with Voicespan, Motorola Corp.
and Vebacom GmbH of Germany with Millennium and a number of single-satellite
applicants. Since then, Voicespan and some of the smaller systems have been
disbanded, while Millennium, and another Motorola proposal called Mstar, have
been combined to form Celestri, which, in turn, was merged with its erstwhile
competitor, Teledesic, in 1998.

It was always expected that many of the original applicants would fall by the
wayside, but the departures have left a significant number to forge ahead with
their technical, organizational and financing programs. The applicant that
started the bandwagon rolling was Teledesic LLC, famously backed by Microsoft
chairman and CEO Bill Gates and telecommunications pioneer Craig McCaw, who is
also Teledesic's chairman.

Teledesic is developing what the company calls a global, broadband "Internet-
in-the-sky." Using a constellation of 288 low earth orbiting satellites, it
will be the first satellite communications network to enable "affordable,
worldwide access to 'fiber-like' telecommunications services such as broadband
Internet access, videoconferencing and interactive multimedia," according to
the company.

Teledesic's Steve Hooper, who has shared the title of co-chief executive
officer with Craig McCaw since December 1997, is upbeat on the system's status.
"We're making great progress behind the scenes on our system and partnering
efforts," he says. "We've been working closely with our prime contractor,
Motorola, to finalize all aspects of our system and formalize the roles of all
our major subcontractors and other partners."

According to Hooper, quality of service will be the "fundamental
characteristic" that differentiates broadband satellite networks from the
others, just as it is with terrestrial broadband networks. "Teledesic's ability
to provide guaranteed end-to-end quality of service anywhere in the world will
continue to set us apart," he says. "Our ability to execute our plans in 1999
will bring us closer to realizing the world's first Internet-in-the-sky."

Another leading contender for the broadband market is Hughes Communications'
Spaceway system. Having made an initial application for a 15-satellite system,
the company announced, in December 1997, an enhancement to increase overall
system capacity and add higher data rate transport services. Its dual FCC
filing covered Spaceway EXP for an eight-satellite system operating in
geostationary orbit, and Spaceway NGSO for a 20-satellite system in non-
geostationary orbit. Five NGSO satellites would orbit in each of four planes
inclined at 55 degrees to the equator at an orbital altitude of 10,352 km.

According to a company statement, both systems are designed to operate in the
Ka-band frequency range (17.7 GHz to 30.0 GHz). Spaceway EXP will focus on the
high data rate transport market using satellites in four orbital locations (117
W, 69 W, 26.2 W, and 99 E were requested), while Spaceway NGSO will add
broadband capacity at a wide range of data rates.

The satellites themselves are intended to incorporate multiple- beam antennas,
digital processors for switching traffic among beams and intersatellite links
(ISLs) to interconnect satellites. This means that a signal received by one
satellite can be relayed directly back to the same beam, switched to another
beam or relayed by ISLs to other satellites.

At the time of the announcement, Ed Fitzpatrick, HCI vice president for
Spaceway, stated that the company hoped "to move out as planned with the
original Spaceway architecture as licensed by the FCC in May 1997." Once
licenses for the two new filings were received, he added, "we expect to use
them to expand our service offerings as the market demands."

As proposed, the global Spaceway system would be able to provide coverage in
four main regions: North America, Asia Pacific, Latin America and Europe,
Africa and the Middle East. Its "bandwidth-on- demand" capability would provide
businesses and consumers with fast access to terrestrial networks, such as the
Internet, Intranets and local area networks (LANs). The system would use a
family of receive/transmit antennas as small as 66 cm in diameter and provide
uplink speeds of up to 6 Mbps.

The company puts data rates in perspective by comparing the capabilities of a
384 kbps Spaceway link with a conventional telephone line. Whereas a 1 Mbit
digitized photograph can be transmitted down a phone line in about 34 seconds,
the satellite link would transmit it in just 0.7 seconds. Comparable times for
The Washington Post Sunday edition would be nine minutes and 10.4 seconds,
respectively-figures that speak for themselves.

As of January 1999, Hughes was refining a forthcoming statement regarding the
Spaceway system, but confirmed that the company had "removed all doubt
regarding its commitment to the broadband, Ka-band market" by announcing that
its board of directors had approved a $1.35-billion-dollar investment to create
the business in North America. As a result, the company expects to launch two
satellites, which will allow it to begin service in North America in 2002.

Interestingly, Hughes entered the Ka-band arena in October 1998 with the
launch of the U.S. Navy's UHF Follow-On satellite, UHF 9, which incorporated a
Global Broadcast Service (GBS) operating at Ka- band. According to Hughes, the
satellites are among the first operational systems, government or commercial,
to carry Ka-band payloads.

According to Spaceway, its North American business development is "a synergy
among all Hughes units, with Hughes Space and Communications Co. building the
satellites, Panamsat providing satellite operations, and Hughes Network Systems
and DirecTV ultimately providing key end-user marketing and distribution
outlets."

From Panamsat's point of view, considering the ever-increasing need for extra
bandwidth, Ka-band is an important resource. The company's chief technology
officer, Robert A. Bednarek, says although the digitization of content has made
it easier to transmit information, "we still need the space for it, [so] the
development of Ka-band spectrum is very important." The additional spectrum
will aid in the further advancement of satellite service offerings, he says,
while the higher frequencies "theoretically allow for smaller antennas on the
ground and can lead to a more ubiquitous service."

Bednarek believes that it is important to remember, "Ka-band is not a product
but part of a spectrum." As with C-band and Ku-band, "which support multiple
applications like video, business communications and Internet access, there are
a variety of uses for Ka-band," he says.

According to Bednarek, while Panamsat currently has no satellites with Ka-band
payloads, in orbit or under construction, it is "actively designing systems and
satellites for that frequency." The company is also developing specific Ka-band
applications, including broadcast services and "special telecom services," he
adds, as well as exploring the option of using both GEO and non-GEO satellites.

Another Ka-band applicant is Astrolink, a strategic venture of Lockheed
Martin, designed ultimately to operate using nine satellites in five orbital
locations to provide "a broad array of digital communications," including
voice, data and video. In fact, according to Astrolink, only four satellites
are required to provide global multimedia services, the first of which is
planned for launch in 2001, with initial operational capability expected in
early 2002.

Astrolink's president and CEO, Celso Azevedo, is optimistic about his
company's prospects: "1998 has shown a substantially increased awareness of the
growth opportunity in global broadband multimedia services sparked by Internet
and e-commerce," he says. "In 1999, we will continue to see a consolidation of
the industry and continued mergers and partnerships, which will reduce the
number of satellite ventures seeking investment financing. This should make
financing easier for satellite systems, such as Astrolink, which have a clearly
defined business and technical strategy and strong technical, operational and
financial backing from their partners."

According to Azevedo, Astrolink will be announcing its international partners
and service providers in 1999, "clearly becoming the first venture to offer
global, wireless broadband telecommunications services to business customers."
As such, he adds, "Astrolink will be the catalyst that defines the global Ka-
band broadband satellite service industry."

New entrants

There will, however, be plenty of competition. Kastar Satellite
Communications Corp., a Denver, CO-based company and a relatively new entrant
to satellite communications market, is one of them. According to a company
statement, Kastar plans to build, launch and operate a global, digital, Ka-band
satellite system that will provide on-demand, low-cost, two-way interactive
multimedia services to operators of cable modem systems, DBS satellite systems
and other terrestrial network systems, initially across the United States and
subsequently around the world.

The company, which was incorporated in 1995, says the Kastar satellites are
unique because they provide extremely flexible broadband capacity at low cost,
using spotbeams and onboard processing. "No previous satellite systems have had
this flexibility or capability," says Kastar. The proposed satellites are
destined for the 109.2 W, 73.0 W, 52 E and 175 W orbital positions.

What the company calls "just-in-time bandwidth" will provide international
connectivity to the Internet and other private and public networks at data
rates from 64 kbps to 155 Mbps. "As people learn to use and economically
benefit from higher data rates," says CEO and President Thomas E. Moore,
"Kastar expects higher data-rate connectivity from 1.5 to 5 Mbps."

Kastar filed its initial FCC application in July 1995, and an amendment the
following September, to construct, launch and operate a Ka-band digital
domestic fixed communications satellite system. The FCC assigned the company
its first two orbital positions-73 W and 109.2 W-on May 8, 1997; the 52 W and
175 W positions are pending. According to Moore, Kastar intends to launch its
first two satellites "prior to the year 2003."

In September 1998, Space Systems/Loral announced that it signed an agreement
with Kastar Satellite Communications Corp. to construct two advanced Ka-band
spotbeam satellites. The first satellite, in a contract valued at more than
$300 million, will be delivered in orbit no later than February 2002, according
to the company.

Another of the early applicants for Ka-band frequencies was Loral's Cyberstar,
which received its FCC license in May 1997. In June 1997, however, Loral Space
and Communications and Alcatel-Alsthom announced a "cross investment" in their
respective broadband communications systems, Cyberstar and Skybridge. Although
the companies will remain separate, it is intended that they will pursue joint
marketing activities. Previously, Cyberstar planned to use three Ka-band GEO
satellites; Alcatel's $3.5 billion Skybridge, previously named Sativod, will
use a constellation of 80 Ku-band satellites in low earth orbit.

According to Pascale Sourisse, president and chief executive officer of
Skybridge Limited Partnership, use of the well-established Ku-band reduces
technology risk, the price of system components and the potential for signal
fade. Moreover, locating the satellites in LEO produces lower signal
propagation delay than GEO and will allow the use of smaller end-user antennas.

Skybridge will use a unusual spectrum-sharing scheme, developed by the company
to solve potential interference problems, which involves switching off the
transmissions from the satellites in LEO as they cross the geostationary arc.
The handover procedure is ensured by the gateway and is fully transparent to
the user. Other satellites in the constellation would take up the signal at
this point.

Skybridge filed its space segment application with the ITU in 1995/96 and with
the FCC in February 1997, receiving approval from the ITU at the World Radio
Conference (WRC) in November 1997, and what the company considered "a positive
sign" from the FCC in November 1998. Pascale Sourisse expressed her pleasure at
the decision which, she says, represented "another milestone for Skybridge, as
we advance toward our goal of commencing service in 2001."

An industrial team under the leadership of Alcatel is now in place to design
and develop Skybridge, with more than 400 engineers working on the program.
"Skybridge is right on track with its development strategy and schedule," says
Sourisse.

Broad interest

Despite Skybridge's decision to stick with Ku-band, the large number of
companies that have shown interest in developing Ka-band systems, satellites or
payloads is indicative of the future importance of the band.

For example, in May 1998, GE Americom entered into a contract with Harris
Corp. for one Ka-band satellite with options for additional spacecraft, much to
the surprise of many observers because it marked the emergence of Harris as a
satellite prime contractor. Since then, according to Monica Morgan, a
spokeswoman for GE Americom, the two companies have been engaged in trade-off
and optimization studies to determine the best payload design for the range of
markets that are being identified in parallel market research efforts.

Before either of these efforts can be concluded, however, GE must await the
results of an FCC edict, which proposes to reallocate half of the frequency
bands. According to Morgan, the proposed spectrum reallocation is "not an
adequate resolution of Ka-band spectrum for Americom," and the issues "must be
resolved before final definition of the system architecture can be completed."

Societe Europeene des Satellites (SES), the operator of the Astra system, is
also pursuing Ka-band developments, as shown by the fact that Astra 1H and
Astra 1K will carry two Ka-band transponders each in addition to the usual
stack of Ku-band transponders. In December 1998, SES signed a contract with
Nortel Networks for the provision of a turnkey interactive satellite system,
which, according to SES spokesman Yves Feltes, will be "Europe's first
commercial Ka- band satellite return channel system."

Currently, SES's Astra-Net multimedia platform uses digital video broadcast
(DVB) technology at Ku-band to provide customers with multimedia data at rates
up to 38 Mbps. From 2000, the Ka-band transponders on Astra 1H, and from 2001
Astra 1K, will provide the return path at the higher frequencies (29.5-30
GHz/18.3-18.8 GHz), allowing interactive broadband and bandwidth-on-demand
services.

SES's arch rival, Eutelsat, is also interested in Ka-band, as indicated by the
publication of at least 20 Ka-band orbital position requests with the ITU back
in 1996.

The following year saw the announcement of another two European Ka-band
proposals. One, Euroskyway, is backed by Alenia Aerospazio and two dozen
partners, and will eventually comprise five dedicated satellites, the first of
which should be launched in 2000. The other, an initiative for an advanced Ka-
band digital satellite from Matra Marconi Space called WEST (Wideband European
Satellite Telecommunications), is intended to be used for interactive wideband
multimedia applications, which could include interactive TV, telemedicine,
telebanking and investment services, and even interactive gaming and gambling.
If partners, and more importantly funding, can be found, the $2 billion WEST
system could eventually comprise at least one GEO satellite covering Europe and
up to nine ICO (intermediate circular orbit) satellites to provide global
coverage.

Although they have yet to progress beyond the proposal stage, these projects
could, if successful, herald a new era in satellite contracting; one in which
manufacturers offer the market their most innovative technology, rather than
responding to requests for proposals from prospective customers.

Higher, better?

Although Ka-band is more susceptible to rain attentuation, when compared
with the increasingly crowded lower frequency bands, Ka-band begins to look
like California did to the settlers from the East, offering broad tracts of
bandwidth to accommodate the spectrum-hungry applications of the new,
multimedia/Internet age of telecommunications.

But what is that, on the misty horizon? In late 1997, another stack of
frequency applications was received by the FCC-this time for V-band frequencies
(40 to 50 GHz). Licensing procedures have still to be determined, but the
activity suggests that yet another round of financing, contracting and
posturing is about to begin. It also shows there is rarely a pause in the
development of satellite communications; like the frequency spectrum itself, it
is a continuum with no discernible end.

Mark Williamson is an independent space technology consultant to space
industry and insurance sectors and a technical author. He is based in the
United Kingdom and can be contacted at +44/1768-361-040 (tel/fax) or at
markwilliamson1@compuserve.com.
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This article was sent to you by an Inquisit subscriber who thinks you
may be interested in subscribing to our service. To find out more about
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To: Geoff Goodfellow who wrote (3687)4/2/1999 2:50:00 AM
From: Geoff Goodfellow  Respond to of 29987
 
ACQUISITIONS AND MERGERS: A STAPLE OF SATELLITE INDUSTRY LIFE
by James Careless
(Via Satellite; 03/25/99)

Mar. 25, 1999 (VIA SATELLITE, Vol. 14, No. 3 via COMTEX) -- Right now it's
the "merger" between Gilat Satellite Networks and GE Capital Spacenet Services
that many people are talking about. The new company-to be called "Spacenet
Inc."-should be large enough to give Hughes Networks Systems (HNS) some serious
competition for the growing VSAT (very small aperture terminal) market.

But, as impressive as this deal is, it's only one of many that have happened
in the last 10 years, says Roger Rusch, president of the management consulting
firm (Telastra) Inc. "For instance, RCA was picked up by General Electric, and
then in the early '90s Martin Marietta acquired GE's space assets," he recalls.
"Then Lockheed merged with Martin Marietta to form Lockheed Martin; it's now
acquiring Comsat Corp."

Lockheed Martin is just one acquisition story. In recent years, GTE sold its
Spacenet business to GE Americom to form GE Capital Spacenet Services, better
known as GE Spacenet. Meanwhile, AT&T acquired Tridom, and the merged AT&T
Tridom was then sold to GE Spacenet, which, of course, is now merging with
Gilat.

But that's not all: Loral Space and Communications acquired Orion Network
Systems, forming a new company called Loral Orion. Loral also-in partnership
with Mexico's Telefonica Autry-acquired a 75 percent stake in Satelites
Mexicanos S.A. de C.V. (Satmex), which currently operates three satellites in
Mexico, and has just launched a fourth, called Satmex 5. Beyond this, Loral
bought Skynet-which distributes video by satellite-from AT&T in 1997 as well.

Wait, there's more: L-3 Communications has bought Microdyne Corp., which
manufactures aerospace telemetry receivers, and satellite modem manufacturer
Radyne has purchased rival Comstream. Meanwhile, Maxwell Technologies is taking
over Space Electronics Inc., which makes specially protected computer chips for
satellites and other spacecraft. And Stratos Global Communications-a Canadian
upstart focused on the mobile satellite communications market-has acquired
Novanet Communications and Marinesat Communications, plus Teleglobe Canada's
Inmarsat business and status as Inmarsat signatory.

Merger motivations

So why are all of these acquisitions and mergers taking place? Well, there's
more to the answer than "empire-building," although that's a part of it.

One reason for merger-mania is the end of the Cold War. As a result of peace
breaking out, the Department of Defense's acquisition budget fell by almost two-
thirds in real terms between 1985 and 1995.

According to Rusch, the government itself has pushed to "reduce the number of
contractors," he says. His view is certainly backed by a December 29, 1994,
letter from Deputy Secretary of Defense John M. Deutch to the Federal Trade
Commission. Written to support the Lockheed-Martin Marietta merger, Deutch's
letter first notes the decline in DoD purchasing, then adds, "As a result,
there is substantial excess capacity in the industry. To eliminate that
capacity and the resulting overhead costs, defense firms have begun to
consolidate. Since the Department of Defense, and ultimately the U.S. taxpayer,
bears the costs of excess capacity and overhead in the defense industry, we
clearly benefit from the restructuring."

Meanwhile, for defense contractors-including those in the satellite industry-
"I think there was a belief on the part of some of the companies that it would
be more efficient to operate as a larger company," Rusch says, "and that they
would be more influential if they were to have a larger block and a wider
constituency across the country."

But what about the commercial side of the business? Well, in this case, the
motivation for acquisitions and mergers is often growth for its own sake. But
there also has been a recognition by many firms that it only makes sense to
offer both services and equipment in a single package, says Simon Bull, senior
consultant at Comsys in London.

After all, when it comes to buying satellite services, customers aren't
interested in chasing after equipment manufacturers and service providers.
Instead, "they want to see a single solution," Bull says. "They want 'one-stop
shopping,' in effect." He adds that Hughes Network Systems is a good example of
how well this integrated sales approach works. "When you call them and say,
'Hi, I want a 1,000-site VSAT network,' one person will talk to you from that
company, and they'll talk to you about the whole thing: the service, the
development, the prices-everything will be in that one bundle."

A one-stop shop

The merged companies of Gilat and GE Spacenet want to mimic HNS' one-stop-
shopping success. In fact, they hope the deal will help them surpass it.

That's because the new Spacenet "will have superior reach, distribution and
product position, which will allow it to compete successfully in any part of
the world," explains GE Americom chairman and CEO John F. Connelly. Adds Gilat
Chairman and CEO Yoel Gat, "The merger of Spacenet into Gilat will create a
vertically integrated, globally competitive firm focused purely on VSATs. These
strengths should help us realize our goal of becoming the world's leading VSAT
company."

To their credit, both companies have long realized that offering both service
and equipment was the golden road to success. That's why Gilat and what was
then GTE-owned Spacenet started working together in the late '80s, jointly
developing what eventually became Spacenet's "Skystar Advantage" VSAT service.

When GE bought Spacenet from GTE, the two tried to form a closer relationship,
even going so far as to share management for a time. "For instance, my first
boss under GE was Joshua Levenberg, who was the vice president of marketing
here at Spacenet," says Dianne VanBeber, previously vice president of marketing
at GE Capital Spacenet Services, "and he was also an officer in Gilat."
However, the "sharing arrangement" didn't work out, and so the two companies
separated their management systems. For a while, GE Spacenet tried to create
its own VSAT product called Turbosat. Observes Dennis Conti, vice president of
North American sales and marketing for Hughes Network Systems, "That was, I
believe, a recognition by a service provider that-as competitive as the market
is-they needed to have their own in-house manufacturing capability."

Ironically, once GE Spacenet and Gilat went their own separate ways and worked
on their own VSAT projects, it became clear "there was more value in bringing
the companies together than to try and really go full-fledged as competitors
against each other," VanBeber says. This, more than anything, spurred them to
resolve the situation through a formal merger.

Under the "merger"-which actually sees GE Americom turn over GE Spacenet for a
30 percent stake in Gilat-"Gilat is the acquiring entity, " she says. Still,
the size of GE Americom's stake makes it Gilat's largest single shareholder,
and big enough to hold two of the seven seats on Gilat's board of directors.
Clearly, this will allow GE Americom to protect its interests, while giving
Gilat's management the power to run the new Spacenet Inc.

Gilat also bought Skydata, a Florida-based VSAT company, in December 1996. It
also has a minority stake in Global Village Telecom, which operates rural
telephone networks over VSAT, and Ksat, a joint venture with Keppel
Communications of Singapore, which wants to bring satellite-based telecom
services to the People's Republic of China.

Synergy

Loral Space and Communications is another company that believes in the power
of acquisitions and mergers. But why did Loral buy Orion, an upstart satellite
company that challenged Intelsat with the launch of Orion 1?

The one-word answer to this question is "synergy," says Bernard Schwartz,
Loral's chairman and CEO. When it comes to Orion, "they are in the leasing of
satellites-in-orbit capacity, and secondly, they're in the data market through
a network of VSATs around the world. Both of those are targeted businesses for
us, so they enhanced our capacity in both of those areas."

Orion also has a viable strategy for interfacing satellites to the Internet-an
area that is widely expected to boom as Internet Protocol (IP) applications
proliferate worldwide. Finally, the fact that Orion already links the United
States and Europe by satellite, and will soon span the Pacific Ocean as well,
made the company an irresistible acquisition. After all, once Orion 2 and 3 are
on station in June 1999, Loral Orion will be able to reach 85 percent of the
world's population.

As for Lockheed Martin's acquisition of Comsat, the company's reason for
making the deal is "to unite two advanced-technology companies with
complementary capabilities in the commercial space- based telecommunications
industry," says Charles Manor, Lockheed Martin Global Telecommunications' vice
president of news and information. "We believe it will create a dynamic new
global competitor. Just as importantly, we are committed to achieving timely,
pro-competitive privatization of Intelsat and Inmarsat.

"Lockheed Martin has a long and impressive history in satellites, launch
vehicles, launch services and ground space systems," Manor adds.
"Telecommunications services were the missing piece, and we created a new
company to concentrate and extend our role in this fast-growing business area,
which we expect to grow on the order of 30 percent annually."

Marc Crossman, executive director of CIBC Oppenheimer and Co. in New York, has
a simpler explanation for Lockheed Martin's actions. "That's a company that's
always been acquisition-hungry," he says, an opinion bolstered by all the
purchases Lockheed Martin has made over the years.

An appetite for acquisition

And then there's Stratos Global Corp., a company for whom acquisitions and
mergers are the very stuff of life. That's because Stratos started life as
Neweast Wireless Telecom, a Newfoundland-based company that supplied two-way
radios to trawlers and oil rigs.

However, Newfoundland's relentlessly depressed economy led Neweast CEO Derrick
Rowe to move his headquarters to Toronto, change its name to Stratos and start
bulking up through acquisitions in the mobile satellite communications sector.

The reasoning behind the move was "the mobile satellite industry-and
particularly the service provider part of it-needed to be consolidated," says
Rowe. "It needed to create someone with some mass that could implement the
systems and the infrastructure to cost effectively deliver mobile satellite
systems. And that is indeed what we've started to do."

Specifically, Stratos started by acquiring IDB Mobile from Worldcomm and
Teleglobe. It subsequently purchased MCN, a distribution arm of American Mobile
Satellite Communications (AMSC), and then acquired the maritime business unit
itself from AMSC. "We then bought out the ownership of Teleglobe and became the
Canadian signatory" to Inmarsat, says Rowe, and "announced the purchase of
Novanet out of Denver, CO, which is a SCADA (supervisory control and data
acquisition) VSAT company."

Through all of these acquisitions, Stratos has quickly established itself as a
multi-network satellite service provider, offering mobile communications for
everyone from the Coast Guard to cruise ships. Recently Stratos won a contract
from the U.S. Navy to provide Inmarsat B high-speed data-lease channel-mode
communications services for data, voice and fax traffic.

For Derrick Rowe, consolidation of the mobile satellite communications
business is virtually a Holy Crusade, and one that "needs to be done within the
next 18-24 months," he says. The reason? Although the current group of small
mobile companies can cope with current demand, Rowe believes they won't be able
to keep up as usage increases. "We feel that market will expand rapidly, and
none of them have the infrastructure to successfully handle that type of growth
and that type of service delivery," he says. By growing fast, Stratos hopes to
dodge this bullet.

A doubled-edged sword?

So who really loses and who really wins from all these acquisitions and
mergers? That depends on how well they go. The obvious losers are those
executives whose positions disappear when their company is taken over, and the
employees who are subsequently "downsized" out of jobs as facilities are
"rationalized."

However, the acquiring companies can be losers as well, if the merger doesn't
go smoothly. In fact, "more than 50 percent of these businesses are a disaster
when they come together, because of the cultural clashes and the difference in
business operations," Rusch says. "They actually lose money, and in some cases
the companies actually come apart."

As for winners? Usually it's the customers who benefit from acquisitions and
mergers. As satellite companies consolidate, they tend to choose targets whose
business is complementary to their own. For instance, an equipment provider
like Gilat takes over a service provider like GE Spacenet. For the customer,
the result is truly one- stop shopping, because they no longer have two sources
from which to procure the equipment and services they require.

Which brings us to the bottom line of acquisitions and mergers: Will the big
companies continue to gobble the small fish up, until only a handful of
multinational satellite conglomerates remain? Not likely. That's because new
small companies keep appearing, as new opportunities such as Internet access
arise in the marketplace.

Now as these new companies grow stronger, they too will likely start to devour
their weaker competitors, growing still bigger in the process. As Loral's
Schwartz says, "The continuation of consolidation is inevitable."

However, don't expect the mega-companies of tomorrow to resemble those of
today, Schwartz warns. Instead, he foresees industries such as satellite,
telephone, cable and the Internet melding together, so that in the future
consolidation "will be both horizontal and vertical.

"It's a pretty exciting time to be in the business," Schwartz adds. "I think
there's going to be a lot of changes in the next 10 to 15 years, but the most
important thing is that I believe we really have the wind at our back, because
as applications and technology drive usage, these industries are going to be
rather explosive."

James Careless is a freelance writer based in Ottawa, Canada.
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Copyright Phillips Publishing, Inc.
This article was sent to you by an Inquisit subscriber who thinks you
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To: Geoff Goodfellow who wrote (3687)4/2/1999 8:49:00 AM
From: Geoff Goodfellow  Respond to of 29987
 
Iridium May Need to Seek Additional Financing This Year

Washington, March 31 (Bloomberg) -- Iridium LLC, which runs the first global satellite-telephone network, said it may need to seek additional financing if it's revenue this year doesn't close a $310 million funding gap.

Iridium said in a regulatory filing that it has cash needs of $1.65 billion this year and that it has external funding of about $1.34 billion. Tom Watts, a Merrill Lynch & Co. analyst, estimates the company's revenue will be about $190 million, short of the $310 million funding gap.

Backed by a group led by Motorola Inc., Iridium went public at $20 a share in June 1997 and more than tripled within a year, boosted by the promise of offering phone service anywhere. Now, Iridium is plagued by problems: Iridium is revising its revenue targets because of marketing and distribution difficulties and will seek changes in its loan terms. ''These events are likely to adversely affect Iridium's estimates about its future sources of funds, and Iridium expects that it will need additional financing,'' the company said in the filing.

Iridium's shares have tumbled 30 percent this week and 76 percent over the past year.




To: Geoff Goodfellow who wrote (3687)4/2/1999 8:51:00 AM
From: Geoff Goodfellow  Respond to of 29987
 
Motorola Wins $219 Mln Defense Contract for Iridium Phones

Washington, April 1 (Bloomberg) -- Motorola Inc., the No. 2 cellular telephone company, won a $219 million contract from the U.S. Defense Department to supply Iridium LLC phones, pagers, accessories and phone service, the Defense Department said.

Motorola has a 19.5 percent stake in Iridium, the world's first provider of a global satellite telephone network. The three- year contract was awarded to Motorola Worldwide Information Network Services division in Chandler, Arizona. The Motorola division is Iridium's service provider for the U.S. government.

Iridium will get its first contract with the Defense Department the U.S. government's dedicated gateway.

Shares of Washington-based Iridium World Communications Ltd., the public investment vehicle of Iridium LLC, rose 3/8 to 15 1/2. Motorola, based in Schaumburg, Illinois, rose 3/4 to 74.




To: Geoff Goodfellow who wrote (3687)4/2/1999 11:09:00 AM
From: Sawtooth  Read Replies (1) | Respond to of 29987
 
Good article, Geoff, thanks.

<<"But the ultimate issue is price - and that's where very few satellite applications today can compete head-on with terrestrial systems.">>

Well, so much for Maurice's long postulated theory!!! ; )

(Good job, Maurice. Pegged it as usual.)



To: Geoff Goodfellow who wrote (3687)4/5/1999 8:09:00 PM
From: Dragonfly  Respond to of 29987
 
MARKET WILL SUPPORT ONLY ONE GLOBAL MOBILE SUPPLIER

This is as absurd as Thomas Watson saying "4 computers is all the world will ever need".

The reality is that there will be multiple successful LEO based mobile data and telephony systems. The only question is which ones they will be and when they will be successful.

It doesn't take much vision to see that 20 years from now the cellphone as we know it will be obsolete and the satphone (actually its derivatives) will have taken its place.

Furthermore, Iridiums lack of subscribers is due more to poor marketing and I suspect beind distracted by operational problems than lack of a market. And if it isn't just marketing the second part of it is price- the handsets are two expensive. These two things will be fixed quickly over the next year by both Iridium and Globalstar and those companies will develop the market.

Why is it "analysts" are so poor at analysis? In my experience, they end up saying what their clients pay them to say, and the ones I've delat with directly (in another industry, but from big name firms) usually know less about what's really going on than the average reporter. (And I consider reporters to be generally underinformed because they don't have the time to learn their subjects.)

Dragonfly