Harbinger Capital Partner’s bold plan to build out an open 4G wireless network has more moving parts than the latest OK Go video, and would require a minimum of $6 billion to build. I’m skeptical that a competitive LTE network will come out of the plan.
After winning the right to offer a satellite and cellular-based mobile voice and data service, raising $500 million in capital and restructuring its ownership, Skyterra (formerly Mobile Satellite Ventures) is getting ready for what it hopes will be two game-changing years. The company will launch a new satellite in 2009, and in 2010, it will see Qualcomm (s QCOM) integrate radios into its cellular chips that can communicate with Skyterra’s satellite network. Skyterra may also complete a merger with Inmarsat, if regulators sign off on it. This all means Skyterra would have both the ability to provide service, and a reasonably priced device on which to provide it. But there’s still the issue of building a viable business model. Read More about Satellite Player Skyterra Ready to Try Again
Apple fans found their beloved company satirized Simpsons-style last night. The latest installment of the Fox cartoon featured a “Mapple” store in the beginning of the episode, a tech store where hip, young t-shirted employees take brand loyalty very seriously and display an inordinate amount of devotion to their bespectacled leader. Sound familiar?
The Mapple Store bears an uncanny resemblance to the 5th Avenue Apple Store, with the exception of being in Springfield’s Mall and not New York City. Lisa is amazed at the MyPods, MyPhones, and the Braniac Bar, where smug customer service representatives deal with Comic Book Guy’s complaints about the latest Mapple OS. Homer is intrigued by the dream-fueled, imagination-powered MyCube, whose function isn’t entirely clear, and which glows to show you that it’s not on.
Read More about “Mapple” Lampoons the Cupertino Faithful on The Simpsons
Harbinger Capital today offered satellite service provider MSV/Skyterra $500 million to pay for the company’s launch of its two new satellites. The private equity firm also made clear it’s planning to push for a deal to acquire British satellite company Inmarsat. The acquisition attempt isn’t welcomed by Inmarsat, but Harbinger owns 28.8 percent of its stock, which means Inmarsat will have a tough time keeping Harbinger and the Skyterra deal at bay.
We started to anticipate such mergers back in March after looking at the number of players trying to make it in the difficult satellite services business, as well as the likelihood of U.S. regulators approving the Sirius-XM merger, which took another step further yesterday. Harbinger is apparently confident that the FCC will look favorably on its attempt to provide a 4G satellite and terrestrial network, too.
The combination of Skyterra and Inmarsat makes sense because they both own complimentary spectrum and satellites that work in the L band. According to the Skyterra press release, regulatory approvals for any deal would take between a year to 18 months to complete, which means the $500 million in cash is needed to keep the company — and its birds — afloat in the meantime.
Harbinger could be eyeing other deals as well. The firm has a large ownership stake in TerreStar, which owns spectrum in the same band owned by EchoStar. TerreStar is leasing spectrum from Echostar are already sharing spectrum, so closer ties between those two are likely coming.
photo from NASA
Monday’s decision by the Justice Department to allow XM and Sirius to merge, combined with incumbents such as Verizon and AT&T winning much of the spectrum on offer in the 700 MHz auction, means we’re likely see M&A among the major satellite players in the coming year.
Had a new entrant won a lot of spectrum in the auction, they could have partnered with one of the satellite operators and potentially reduced some of the costs of building out a terrestrial network as well as gotten some extra spectrum. In the last few years, there has been a plenty of speculation over spectrum among MSS players, with operators including Iridium, Globalstar, ICO Global Communications, TerreStar Corp. and Mobile Satellite Venture are all trying to operate or build out networks.
Instead of launching a satellite only-business, these companies hope to take advantage of a combined terrestrial and satellite network to offer wireless services, most likely to carriers or to governments. But a shortages of spectrum for some players, plus a Justice Department willing to let satellite deals through, means many of them may team up rather than go it alone.
Tim Farrar of research firm TMF Associates says that, given the spectrum owned and the types of satellites launched, the likeliest deals would be between Inmarsat and MSV; ICO and TerreStar; and Globalstar and Iridium. 2008 will be the year to watch this sector.