Globalstar Gets Funding While TerreStar Launches Bird

launchholdGlobalstar (s gsat) today closed on $738 million in financing, while rival satellite operator TerreStar (s tstr) launched its new bird, TerreStar-1. Globalstar plans to use its money to fund operations and launch a new generation of satellites in 2010 that will deliver all IP-based voice and data to its customers through 2025. Before celebrating, know that Globalstar’s new constellation of satellites will  provide speeds of up to 256kbps down.

Like the slow data speeds, the financing is less exciting than it first appears. Read More about Globalstar Gets Funding While TerreStar Launches Bird

The Ominous Return of the Satellite Phone

satellite-terrestrial-11-croppedTerreStar (s tstr) expects to launch a satellite that costs some $500 million at the end of June, and with it, hopes to reinvent the failed satellite service model from the 90s. Even though TerreStar’s service will launch at the end of this year with normal-sized phones that also work on cellular networks, the likelihood of success doesn’t seem high. But in addition to offering better cell coverage, TerreStar is still pursuing partners to help it build out an alternative 4G wireless network. It hopes to create a combined satellite and terrestrial network using its spectrum holdings in the 2 GHz band under a regulatory scheme known as Ancillary Terrestrial Component, or ATC.

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“Mapple” Lampoons the Cupertino Faithful on The Simpsons

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.
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PE Firm Pushing for Inmarsat/Skyterra Combo

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

Is 4G Via Satellite Destined to Fail?

Last Friday, four executives of satellite holding company TerreStar Networks suddenly resigned, leaving just three people behind to fill the void. I don’t expect this lack of management to last for too long, but until TerreStar calls me back with details, I’m betting that the change in management signals a change in TerreStar’s strategy in that it’s no longer looking for a larger partner to help it build and finance a combined 4G satellite and terrestrial network, but is preparing to move ahead alone.

TerreStar is the new name of a former pager company called Motient. In 2004 Motient scored the regulatory jackpot when, despite protests from the cellular carriers, the Federal Communications Commission approved plans for an ancillary terrestrial component (ATC) network. Since then, it has found itself tangled up in a web of financial transactions designed to maximize the value of its two bands of satellite spectrum.

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Satellite Mergers Ahead?

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.