Finance Issues Dominate MSS Panel
By Mark Holmes | September 11, 2008
[Satellite News 09-11-08] How to finance all the planned mobile satellite services (MSS) systems remains a hot topic on the final day of World Satellite Business Week in Paris as operators such as Globalstar and ICO will likely need further finance for their business plans in the next year, according to sector executives at the conference.
John Mattingly, senior vice president of Mobile Satellite Ventures (MSV), admitted that procuring $500 million in funding to develop the company’s satellites and finance other business needs has not been easy. “If you look at the $500 million in financing we have recently done, it was expensive. There are sources of funds out there, but over the next year it will be challenging to raise money at the right price,” he said during the panel on Sept. 11 titled, “A New Market Cycle in Mobile Satellite Systems & Services.”
“The credit markets are obviously challenging,” said Jay Monroe, CEO of Globalstar. “If and when we want to raise more money, it will be more expensive. There are strong financial partners behind all of us. We had $180 million in cash at the end of the last quarter. We will need some additional funding before our first second-generation satellite launches. The actual amount of financing we will need is still to be determined.”
Michael Corkery, CFO of ICO, added “We have got a big refinancing coming up in 2009, so we are obviously aware of the volatility in the financial markets.”
One of the other big points of discussion is the role of U.S. hedge fund company Harbinger Capital, which already has a considerable presence in the MSS space with large stakes in both SkyTerra Communications (48.5 percent) and Inmarsat (28 percent approx). Harbinger has been linked to a potential acquisition of Inmarsat and could combine assets it owns to create an MSS powerhouse.
“We are going to do the regulatory process before an offer is made for Inmarsat,” said Mattingly. “We are going through a number of different processes before we make an offer for Inmarsat. It is likely to be a 12-to-18 month process. No one is going to have a discussion on the operational impact yet. We have not had any discussions about how a combination of the companies may look. We are at the very beginning of a regulatory process.”
Despite all these issues, new players continue to enter the market. Steve Maine, CEO of the Solaris Mobile joint venture created by SES Astra and Eutelsat, admitted there is a lot of risk going into the mobile services market.
“We will be looking to bring TV to mobile devices, as well as communication services to people in their cars,” said Maine. “The third service area is the delivery of services to the public sector. I see our business as a four-wheel drive vehicle. We are trying to power down many different roads. This is a risky initiative. That is why we are targeting markets other than mobile TV. … I see the business as underpopulated. I think you will see a number of players moving into this area. Our biggest risks revolve around the market, how quickly the market takes off, finding like-minded partners, and whether consumer demand will take off as quickly as we think it will. We have a high degree of confidence, but it is uncertain. People have been trying to make this happen over a number of years.”
John Mattingly, senior vice president of Mobile Satellite Ventures (MSV), admitted that procuring $500 million in funding to develop the company’s satellites and finance other business needs has not been easy. “If you look at the $500 million in financing we have recently done, it was expensive. There are sources of funds out there, but over the next year it will be challenging to raise money at the right price,” he said during the panel on Sept. 11 titled, “A New Market Cycle in Mobile Satellite Systems & Services.”
“The credit markets are obviously challenging,” said Jay Monroe, CEO of Globalstar. “If and when we want to raise more money, it will be more expensive. There are strong financial partners behind all of us. We had $180 million in cash at the end of the last quarter. We will need some additional funding before our first second-generation satellite launches. The actual amount of financing we will need is still to be determined.”
Michael Corkery, CFO of ICO, added “We have got a big refinancing coming up in 2009, so we are obviously aware of the volatility in the financial markets.”
One of the other big points of discussion is the role of U.S. hedge fund company Harbinger Capital, which already has a considerable presence in the MSS space with large stakes in both SkyTerra Communications (48.5 percent) and Inmarsat (28 percent approx). Harbinger has been linked to a potential acquisition of Inmarsat and could combine assets it owns to create an MSS powerhouse.
“We are going to do the regulatory process before an offer is made for Inmarsat,” said Mattingly. “We are going through a number of different processes before we make an offer for Inmarsat. It is likely to be a 12-to-18 month process. No one is going to have a discussion on the operational impact yet. We have not had any discussions about how a combination of the companies may look. We are at the very beginning of a regulatory process.”
Despite all these issues, new players continue to enter the market. Steve Maine, CEO of the Solaris Mobile joint venture created by SES Astra and Eutelsat, admitted there is a lot of risk going into the mobile services market.
“We will be looking to bring TV to mobile devices, as well as communication services to people in their cars,” said Maine. “The third service area is the delivery of services to the public sector. I see our business as a four-wheel drive vehicle. We are trying to power down many different roads. This is a risky initiative. That is why we are targeting markets other than mobile TV. … I see the business as underpopulated. I think you will see a number of players moving into this area. Our biggest risks revolve around the market, how quickly the market takes off, finding like-minded partners, and whether consumer demand will take off as quickly as we think it will. We have a high degree of confidence, but it is uncertain. People have been trying to make this happen over a number of years.”