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By | July 18, 2001

      Chris Forrester, Editor

      Echostar has shown its continued confidence in broadband-by-satellite through the investment of another $50 million (E58.53m) into StarBand, the Gilat Satellite Network’s offshoot. The investment was made July 11. Additionally, Echostar has committed itself to launching a ‘next generation’ satellite to improve the cost of space segment.

      Echostar was an early investor in StarBand when it took a $50m stake equal to 19 per cent of the equity in February last year. The fresh investment means Echostar is now holding 32 per cent, and values StarBand at $385m. But add in its newly planned craft and Echostar is sitting on 60 per cent of the company and will occupy four out of seven board positions with Gilat taking the remaining three. Gilat pulled an IPO for StarBand last year amidst talk of a $500 million valuation.

      According to a report from investment bankers Unterberg Towbin, StarBand needed the $50 million to fund near-term growth, although the bankers say this fresh cash infusion is no guarantee of StarBand’s longevity or success. StarBand is a competitor to DirecTV’s DirectWay broadband system. Unterberg Towbin suggests the Echostar news suggests its separate bid to merge itself with DirecTV “is dead”, and argues that Echostar would not have made the investment is there was any prospect of utilising DirecTV’s system. The financial markets responded by immediately sending Gilat’s stock up 19 per cent on July 11, helped by generally favourable analyst comment.

      As to the ‘next generation’ satellite, details are a little sketchy just at the moment although Unterberg Towbin say the deal might mean a brand new satellite, or else it might just be a convenient way for Echostar to pre-sell some of its capacity at either 83 degrees, 113 degrees and 121 degrees (all West of London) “which makes this deal even more prudent than it looks,” says Unterberg.

      Meanwhile, Echostar’s DISH retailers will later this month start selling Gilat’s StarBand upgraded Model 360, a derivative of Gilat’s Starblaster VSAT modem. They already sell the 180 Model version.

      Echostar is also a “strategic investor” in WildBlue, the Los Angeles-based two-way broadband outfit that says it plans to roll out affordable two-way broadband services via DTH satellite throughout the contiguous United States in 2002 and subsequently expand service to Canada and Latin America. WildBlue is backing Ka-band spot beam satellite technology. At this point it is also unclear what Echostar’s plans are for its relationship with WildBlue, whose satellites are over 50 per cent completed.

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