Google-backed O3b Satellite Gets $1.18B in Funding

O3b Networks, a Google-backed satellite company aimed at providing Internet service to the emerging world, announced today it has raised $1.18 billion in financing to finally bring the service on line by the first half of 2013. The company, based in St. John, Jersey, Channel Islands, had originally planned on launching 16 satellites by the end of 2010. But with the global credit crisis squeezing access to funding, O3b’s original plans were postponed as well as revised down. It will launch eight satellites by 2013, with more to come.

The name O3b comes from “the other three billion” a reference to the worldwide population of users who don’t have regular access to the Internet. The company plans on providing broadband to 150 countries in Africa, Asia, Latin America and the Middle East. Founded by Greg Wyler, a technology entrepreneur, the company has previously received funding from Google (s goog), satellite operator SES (s sesg), HSBC (s hsba), Liberty Global (s lbtya), North Bridge Venture Partners and Allen & Company. Private equity firm Satya Capital and the Development Bank of Southern Africa have signed on as new shareholders bringing the total equity investment to $410 million. O3b has secured a $510 million senior debt facility with HSBC, ING, Crédit Agricole and Dexia. HSBC Principal Investments along with a handful of international banks and developmental funding institutions have provided a $115 million Senior Debt Facility and a $145 million Mezzanine Facility. SES, the world’s second-largest satellite operator by revenue, will become the largest minority shareholder for O3b.

O3b said it has already signed deals worth between $500 and $600 million with companies that want to use the company’s planned network. O3b will primarily serve mobile operators and Internet service providers, providing backhaul for voice and data. The network will consist of eight Ka-band satellites orbiting at 8,000 kilometers, four times closer than regular geostationary satellites. The proximity of the satellites and their use of the Ka-band will mean better performance and extremely low latency. Service will begin by 2013 following the launch of the first eight satellites from French Guiana.

As Om mentioned a couple of years ago, this is an audacious effort. But it makes sense to try to provide connectivity to underserved areas where cellular network traffic is booming. How competitive will the pricing be on O3b service, however? Still, with fixed-line networks often missing or under developed in many countries, O3b may be well situated for some time to serve the needs of budding Internet users in rural areas.

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