AT&T today filed a petition with the FCC asking it to reconsider conditions associated with an order allowing Harbinger Capital Partners to take over a satellite company and its spectrum assets. The move is AT&T’s attempt to fight the construction of a competing 4G wireless network.
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.
A New York private equity firm plans to build a multibillion-dollar wholesale 4G wireless network using the Long Term Evolution standard that will cover most of the country by 2015. The ambitious plans by Harbinger Capital partners relies on spectrum owned by several satellite companies.
The FCC has had conversations with Qualcomm (s qcom) and Skyterra in the last few weeks about an effort to use a combination of satellites and a terrestrial network known as ATC (Ancillary Terrestrial Component), which could make 100 MHz of spectrum available for mobile broadband. Given that both the wireless industry and the FCC are unified in calling for more spectrum for mobile data services, the satellite companies are setting themselves up for a potential payday, but I still think it’s a sucker’s bet. Read More about Satellite Cos. Pitch Their Spectrum to the FCC and Eventually Carriers
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
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