Chris Jasper/LONDON
The merger of satellite communications specialists New ICO Global Communications and Teledesic has been shelved in response to the poor market performance of technology stocks.
New ICO, based in London, and Bellevue, Washington, USA-based Teledesic, both controlled by telecoms pioneer Craig McCaw, had been due to merge into satcoms holding company, ICO-Teledesic Global (ITGL), but are now conducting a review of their business plans. New ICO has also applied to delay a listing on the Nasdaq stock exchange.
New ICO, formed out of bankrupt ICO Global Communications last May after a $1.2 billion rescue led by Teledesic chief McCaw, says a merger is impossible given market conditions. "Tech stocks have been hard hit, with satellite stocks among the worst affected, and the telecoms industry in general is in turmoil, when a year or two ago it was the darling of the market," it says.
'Old ICO' shareholders received stock in New ICO as part of its emergence from bankruptcy, with the shares due to be listed on Nasdaq by 31 March. New ICO has applied to the bankruptcy court for a suspension of the agreed timetable.
The ICO-Teledesic merger would have seen the pair brought under a single management, headed by Greg Clarke, chief executive of Kirkland, Washington-based ITGL. They would have retained distinct identities, but sources say synergy savings were anticipated.
New ICO says its business plan "is still under review", but it is likely that it and Teledesic will continue to focus on separate areas of the market, as had been planned.
New ICO had originally aimed to offer narrowband satcom services at 9.6kbit/s, possibly rising to 38.6kbit/s, but following the collapse of Iridium and huge losses of Globalstar - offering narrowband (2.4-4.8kbit/s) voice and data services - it has refocused on the medium band (144kbit/s) market, including internet services. Teledesic, by contrast, aims to be "the ultimate broadband operator".
New ICO sources say it now aims to decide on its "approach to the market, identifying what products and services will be offered when and to whom", and the structuring of commercial activities both vertically (focusing on maritime, asset tracking and government sectors, for example) and horizontally (with the emphasis on the general user irrespective of sector).
ITGL has meanwhile agreed a deal with another mobile satcoms specialist, Ellipso, which will initially see the latter co-operate with New ICO, but which could ultimately involve it in any resurrected merger plan. Washington DC-based Ellipso - backed by Boeing, Harris and L-3 Communications - is developing a low-cost satcoms system utilising patented elliptical orbits, and the Virtual Geo broadband system, which replicates geostationary satellite characteristics.
ICO's second satellite is to be launched aboard an International Launch Services Atlas IIAS booster in June. The medium Earth-orbit satellite is one of 12 built by Boeing Satellite Systems for 'Old ICO', the first of which was lost in a Sea Launch failure last year.
Source: Flight International
