While the satellite sector generally remains in good health, a financial crisis that has cast a huge shadow over the globe also threatens the necessary funding that many companies will need as they look to expand their operations and capitalize on new technology and initiatives. There are warning signs already present. WorldSpace, filed for Chapter 11 bankruptcy protection in October, and its future remains very much up in the air. "We are heading into a nuclear winter of funding," says Craig Moffett, managing director of Sanford Bernstein. "$1 trillion of funding has been wiped out. $15 trillion of lending capacity has disappeared." Against this turmoil,
Via Satellite recaps some of the stories that affected various satellite sectors and will shape the industry in the coming years.
Mobile TV
With the demand for video on any screen seemingly knowing no bounds, mobile TV represents a serious growth opportunity for the satellite industry, however, the major story in 2008 was the scheduled shutdown of an established provider. In July, Toshiba Corp. announced it would close its satellite digital multimedia broadcasting business, Mobile Broadcasting Corp., in 2009. The service, which began operations in October 2004, had attracted only a fraction of the subscribers Toshiba had hoped for. "We had initially envisaged the subscriber base reaching 1.4 million in the first three years, but as of July 2008 the number of subscribers remained at 100,000," says Keisuke Ohmori, group manager, international media relations group, for Toshiba.
MBC could serve as a warning for operators in Europe, where progress in the mobile TV sector took a great leap. In August, the European Commission said it was putting mechanisms in place so that mobile services could be offered in a uniform fashion throughout Europe. Companies such as ICO, Inmarsat and Solaris Mobile — a joint venture of Eutelsat and SES Astra — have bid for a pan-European license. While this new licensing structure is not just about mobile TV, it will undoubtedly be a key component for these operators if they are successful in getting hold of a license.
In the United States, ICO launched its North American geosynchronous satellite, ICO G1 and began conducting alpha trials for its fully interactive mobile video, navigation and emergency assistance service to be known as ICO mim (mobile interactive media). The mobile television component of ICO mim will use the DVB-SH standard for trials are taking place in Raleigh-Durham, N.C., and Las Vegas.
There is little doubt that mobile TV is an exciting market, and progress was definitely made in 2008, particularly in Europe and to a lesser extent the United States. However, the failure of MBC in Japan as well TU Media’s struggle to profitability in Korea is proof that the mobile TV path is not necessarily paved with gold.
Mobile Communications
The biggest story of the year in the mobile satellite services (MSS) areas was the role of hedge fund company Harbinger Capital Partners Funds to consolidate the sector. Harbinger, which owns a 28 percent stake in Inmarsat, said it would look to acquire Inmarsat and combine it with SkyTerra Communications to create an even bigger player in the MSS space. "The combination of SkyTerra and Inmarsat would present an excellent opportunity to advance the realization of ubiquitous wireless coverage of the United States and Canada through an integrated satellite-terrestrial communications network," says Harbinger.
Inmarsat CEO Andy Sukawaty says, "We are profitable. We fund our own growth and we provide very healthy returns for shareholders based on dividend growth, cash flow growth and profitability growth. We intend to continue to do that. If someone like Harbinger, with whom we have a constructive relationship as they are a 28 percent shareholder, wants to make an offer to the other shareholders for the whole of the company, that is their prerogative. As long as that value and price exceeds what people feel they can get with us as an independent company, then we are open to that."
Iridium also was involved in a deal, which saw the company acquired by GHL in September. The agreement will eliminate Iridium’s debt of about $131 million and allow the mobile satellite service provider to develop its next-generation satellite constellation, Iridium Next. The trials and tribulations of Globalstar also remain a talking point, with some observers seeing continued trouble ahead for the operator. Thales Alenia Space has begun production assembly, integration and testing of the first Globalstar second-generation flight model satellites, which are scheduled to be launched in the second half of 2009 to replace the faltering first-generation spacecraft.
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