MSV Moving Ahead On Inmarsat Deal, Posts Revenue Increase For Quarter
[Satellite News – 5-6-08] Mobile Satellite Ventures (MSV) posted a 6 percent increase in revenues for the first quarter of 2008 and has made significant progress in implementing the cooperation agreement signed with Inmarsat plc in December, the company announced May 6.
The agreement, made between Inmarsat, MSV, MSV Canada and MSV parent company SkyTerra Communications Inc., allows the companies to group formerly unconnected bits of bandwidth into a continuous block of spectrum and allows MSV to move forward on their next-generation network using ancillary terrestrial components (ATC). The use of ATC can enhance availability, efficiency and economic viability of mobile satellite services by reusing at least some of the frequency bands allocated to cellular systems.
“The Canadian, United States and United Kingdom governments have approved the implementation of the initial reband and reuse plans,” Alex Good, CEO and president of MSV and SkyTerra, chairman of SkyTerra and vice chairman of MSV, said in an teleconference to discuss the company’s financial performance. “These respective governments have also agreed to the completion of coordination of our next-generation satellites vis-à-vis each others’ systems.”
The agreement was defined in two phases. Phase one, which runs from December 2007 to September 2011, gives the companies an 18-to-30 month period to transition to the modified band plan, including “modification of certain of Inmarsat’s network and end-user devices and a shift in frequencies between the MSV parties and Inmarsat,” according to a filing with the U.S. Securities and Exchange Commission. MSV will be allocated 28 MHz of L-band spectrum and will pay Inmarsat $250 million in cash and $87.5 million in equity for additional spectrum.
During phase two, which will run from January 2010 to January 2013, Inmarsat will be able to modify the amount of spectrum it uses over North America and make that bandwidth available to MSV for rental use. MSV will pay $115 million for this additional spectrum.
“Over time we’ll have two blocks of 23 megahertz each,” John Mattingly, president of satellite services at MSV, said in a January interview, “as well as large blocks of contiguous channels.”
MSV and Inmarsat also have resolved a spectrum issue, with Inmarsat withdrawing its petition to the U.S. Federal Communications Commission (FCC) for reconsideration of MSV’s ATC license and the FCC’s ATC rules. “All in all, we are quite pleased with the regulatory progress on the cooperation agreement that we have achieved in a short time,” Good said.
MSV is owned primarily by and is the sole operating asset of SkyTerra, and the two company’s financial results are no longer published separately. SkyTerra posted $8.6 million in revenue for the quarter ending March 31, a 6 percent increase over $8.1 million reported in 2007. The company reported an operating loss of $21.5 million, a 40 percent increase over 2007’s $15.5 million. The increase was due to increased staffing levels and development costs related to MSV’s next-generation network, said Scott Macleod, executive vice president and CFO of SkyTerra and MSV.