Orbiting Wall Street

By | May 28, 2007 | Feature

BSkyB

BSkyB‘s acquisition of a 17.9 percent stake in ITV will be investigated by the U.K. Department of Trade and Industry. Alistair Darling, the secretary of state for Trade and Industry, referred the deal to the Competition Commission May 24.

BSkyB acquired a stake in the commercial broadcaster in November for 940 million British pounds ($1.8 billion). The deal had taken place without the knowledge of the ITV board, but BSkyB said it had no intention of acquiring shares that would result in BSkyB’s stake exceeding 19.9 percent or making an offer for the whole of ITV’s remaining share capital.

The investigation, which comes after recommendations by the U.K. Office of Communications and the Office of Fair Trading, will look at the impact the deal could have on the media climate in the United Kingdom.

"My decision reflects consideration of the reports I have received from both the Office of Fair Trading and Ofcom and of other representations I have received about this matter," Darling said. "On the basis of the evidence before me, a fuller investigation by the Competition Commission is justified."

An investigation could take up to six months, with recommened actions taking effect within a year after any decisions, Sarah Simon, a media equity analyst at Morgan Stanley, said in an April 30 research note.

SkyPort, RAMTelecom

SkyPort Global Communications Inc. and RAMTelecom Inc. agreed to terminate the proposed acquisition of RAMTelecom by SkyPort, the companies announced May 22.

SkyPort signed a letter of intent in February to purchase RAMTelecom Inc. and had expected to complete the deal before the end of May. The companies have agreed to explore more partnership opportunities.

"We recognize the common synergies between the two companies and strengthening the existing business-to-business relationship will help us expand our satellite-based business communications services," Ralph Misener, CEO of RAMTelecom, said in a statement.

"Our relationship with RAMTelecom is strong, and we wish to continue to grow it through our partner program," Patrick Brant, president and CEO of SkyPort, said. "There are many complimentary aspects between our two companies and we look forward to working with them."

Telenor

Telenor ASA will delist from the Nasdaq because the cost of meeting compliance requirements "outweigh the benefits of maintaining a U.S. listing," the company announced May 22. Telenor expects to file the required form with the U.S. Securities and Exchange Commission by June 11, and the deregistration will be effective 90 days later. Telenor will continue to trade on the Oslo Stock Exchange.

EchoStar

EchoStar Communications Corp. won a patent infringement lawsuit filed by Forgent Networks Inc. for patent infringement of digital video recorder technology, EchoStar announced May 21.

In July 2005, Forgent initiated litigation against about 15 and satellite operators, reaching settlements with many of them.

Forgent had asked for more than $200 million in damages from EchoStar.

SES Global

SES Global should see strong growth from its IPTV initiative being launched in the United States by subsidiary SES Americom, said Sarah Simon, satellite equity analyst with Morgan Stanley.

"More competition between pay and free TV platforms creates greater need for platform operators to invest in new and additional services," she said. "This creates more demand for bandwidth. Thus the stiff competition between cable and DBS (direct broadcast satellites) in the U.S. market has led to a huge increase in the number of HD channels being offered by the DBS providers, since this is their differentiating feature [versus] cable. Hence Echostar’s need for increased capacity that it has outsourced to SES."

The service, IP Prime, is an end-to-end offering for processing content and television programming and distributing it via satellite to telecommunications companies and IPTV consumers. Simon believes SES will offer a compelling solution to telcos who wish to launch IPTV but do not want to spend a fortune to do it.

"While large telcos can afford to invest in the additional capital expenditure required at the headend (to convert broadcast signals into IPTV signals), smaller ones may not," she said. "Thus SES has created a turnkey solution that removes the need for telcos to make these large investments, but still provide them with the ability to provide IPTV services to their customers."

Simon believes IP Prime could be an "extremely high margin business" for SES Global. "Our financial forecasts are simple: we assume that not all of the National Rural Telecommunications Cooperative members launch the service on day one — rather we forecast a rising number of ‘addressable households’ for the IP Prime service, with all 30 million offering IPTV by 2012. Penetration is forecast to rise gradually to 9.5 percent by the same date. This compares with our U.S. telco team’s assumptions of 22.9 percent IPTV penetration for AT&T and 18 percent video take-up for Verizon by the same date. … These assumptions result in revenues reaching approximately $56 million by 2010 and $82 million by 2012. This is consistent with management’s comments that it would expect revenues of $50 million to $100 million within three to five years."

Powerstar, Xpel

Powerstar International Inc., which provides network services over wireless, satellite and terrestrial platforms, completed its purchase of Xpel Communications AB, Powerstar announced May 24.

Powerstar issued 1.4 million shares of stock and paid $52,500 in cash to close the acquisition of Stockholm, Sweden-based Xpel, the largest provider of public Wi-Fi Internet access in the Swedish capital

"Xpel provides immediate opportunity for Powerstar to expand its various services, including its digital signage network, into the European marketplace" David Lauterbach, president of Powerstar subsidiary Solutrea Inc., said in a statement. "We are planning to grow Xpel’s revenue adding new customers and services. We also expect to build on the relationships Xpel has established."

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