BA

$70 Million To End Contract

Boeing Co. will pay SES Americom $70 million as part of the shutdown of the Connexion By Boeing inflight Internet service, SES Global announced Oct. 3.

Boeing is using the AMC-23 satellite to provide the service over the Pacific Ocean. SES will recognize about $49 million of the payment as revenue in the third quarter and the remaining $21 million in the fourth quarter, SES said.

Boeing also terminated services on the AMC-6 satellite in August.

Boeing will close Connexion at the end of 2006. The company is believed to have lost about $1 billion on Connexion and will take a $350 million charge to shut down the service.

SIRI XMSR

Sirius Satellite Radio added 441,000 net subscribers in the 2006 third quarter, raising its total base to 5.1 million, the company announced Oct. 4. In the same period, XM Satellite Radio added more than 285,000 net subscribers to reach 7.2 million. This was the fourth-straight quarter Sirius beat XM in net subscriber additions, Sirius said.

XM removed about 20,000 subscriptions from its total number under plans to no longer include certain rental car fleets in the total base, the company said. The change is part of a new marketing program designed to increase the number of rental cars equipped with XM and expose more potential customers to the service.

XM still expects to finish 2006 with between 7.7 million and 8.2 million subscribers. Sirius reiterated its guidance of 6.3 million subscribers by the end of 2006.

The reports were released shortly on the heels of a study conducted by Bridge Ratings that found that retail sales of satellite radios continue to be sluggish, and a general lighter trend in retail traffic suggest that "should this trend continue into mid-October, it may very well be appropriate to assume retail interest in satellite radio has waned," Bridge said.

Activity for the week before Sept. 27 was flat compared to the previous week and down 29 percent from Labor Day weekend statistics, according to the audience measurement service.

Two hurdles cited by Bridge Ratings were costs of the service for the college-age market and overall lack of consumer awareness about the benefits of satellite radio in comparison to terrestrial, Internet or traditional radio.

Bridge quoted Bank of America analyst Jonathan Jacoby as saying "poor retail trends and Big Three auto production cuts" make it hard for the car companies to "bail out" XM Satellite Radio and Sirius Satellite Radio from what looks to be weakening subscriber add numbers; Jacoby thought the number of receivers being sold at retailers "may peak" this year.

Bridge said XM is expected to add more than 300,000 subscribers in the third quarter, compared to about 450,000 for Sirius, representing "a real turnaround, [one] in favor of Sirius."

Separately, XM announced that George Haywood has resigned as a member of the company’s board. With the resignation, effective Oct. 3, XM’s board composition is not in compliance with a Nasdaq rule that requires a majority of the board be comprised of independent directors. XM expects this situation to be corrected by the board’s next annual meeting.

GSAT

Globalstar Inc. is planning an initial public offering of 6.5 million shares priced at between $16 per share and $18 per share, the company said in an Oct. 2 filing with the U.S. Securities and Exchange Commission. The company is seeking a Nasdaq listing under the symbol GSAT.

In July, Globalstar filed a registration statement outlining the proposed $100 million IPO and said the proceeds will be used to launch eight spare satellites to augment the current Globalstar constellation, launch the company’s second-generation constellation, and upgrade gateways and ground facilities. Globalstar’s constellation was launched in the late 1990s, and the company plans to launch eight spares in 2007, which will allow Globalstar to provide its satellite telephony and data services into at least 2010, the company said in the most recent filing. Globalstar intends to begin deploying its second-generation satellites in 2009 and expects those spacecraft to provide service until about 2025.

The company reported a profit of $18.7 million in 2005 on revenues of $127.1 million, up from a profit of $400,000 on revenues of $84.4 million in 2004.

Globalstar also is awaiting a decision from the U.S. Federal Communications Commission on whether the company can use its entire assigned Mobile Satellite Services spectrum to provide Ancillary Terrestrial Component (ATC) services in the United States. In January, the FCC said Globalstar could use 11 megahertz of its satellite spectrum to provide ATC services, which allow satellite operators to use their authorized satellite radio frequencies to integrate into their satellite service offerings a terrestrial wireless service that is similar to cellular or PCS. Globalstar is seeking to use its remaining 27.85 megahertz of spectrum for providing its service.

"Ultimately Globalstar’s limited ATC spectrum will hamper its ability to fully serve the needs of its public safety and commercial customers," the company said in a June petition to the FCC. "The needs of these customers and the public interest require that Globalstar be placed on equal footing with its competitors."

SATTEL

The Supreme Administrative Court of Thailand accepted an appeal demanding three government agencies revoke concessions held by Shin Corp. following the sale of shares to Singapore’s Temasek Holdings, threatening a Shin Satellite deal with the country’s government, according to press reports from Thailand.

The suit was filed earlier in 2006 prior to a September coup that ousted Prime Minister Thaksin Shinawatra, who founded Shin.

In January, Thaksin’s family sold its stake in Shin to a group of investors led by Singapore’s state-run Temasek Holdings Pte., Siam Commercial Bank Pcl (SCB) and a group of Thai investors for 73.3 billion Thai baht ($1.9 billion).

According to reports, the suit seeks an order for three state agencies to end contracts held by Shin because the sale to a Singapore-based company meant that a foreign firm would control a businesses deemed sensitive to national security, a violation of the country’s constitution.

Shin Satellite shares have yet to recover losses sustained in the wake of the coup, and fell again after the court ruling.