Cellular telephone titan Craig McCaw is merging his planned "Internet in the Sky" with London-based ICO Global Communications, company officials confirmed Wednesday. And one company that is likely to benefit from the merger down the road is Hughes Electronics.
Hughes, based in El Segundo, California, will take over the role of integrating ICO’s 12-satellite system and is a likely shoo-in for supplying Teledesic’s planned constellation of about 100 or so satellites in the future, according to people familiar with the deal.
A Wall Street Journal report Wednesday said that Hughes would likely pocket a windfall of close to $1 billion due in part to a possible order by ICO of 8 more satellites beyond the 12 already announced.
But people familiar with the merger said that no commitments were made for those 8 new birds. Because Hughes will be more closely aligned as a result of the merger, they were more likely to benefit by future plans.
All companies involved declined to discuss details early Wednesday because they were waiting for the green light from lawyers hashing out the last minute details of ICO’s re-emergence from bankruptcy.
"This (plan) will teach them a lot about the fixed broadband and mobile broadband systems, and will give them experience with dealing with a MEO (middleEarth orbit) constellation."
Within the next week, McCaw is expected to formally merge ICO and Teledesic into one company called ICO-Teledesic Global, sources say.
The new company will roll out in 2 phases, beginning with ICO’s ready-to-launch satellites, which will transmit voice and data to both fixed and mobile communication devices. Teldesic’s constellation, which has undergone several overhauls, will follow.
"This (plan) will teach them a lot about the fixed broadband and mobile broadband systems, and will give them experience with dealing with a MEO (middle Earth orbit) constellation," said Clay Mowry, a spokesman for the Satellite Industry Association in Arlington, Virginia.
Teledesic could go public
Industry observers have speculated that the privately-held Teledesic – founded by McCaw and Microsoft Chairman Bill Gates – could go public, after its merger with ICO.
ICO filed for bankruptcy last August, a few weeks after Iridium collapsed.
Funds to resurrect ICO have come from companies affiliated with McCaw, including Eagle River Investments and Teledesic. Also investing are Deutche Telecom, Qatar Telecom, Credit Suisse First Boston, Turk Telecom and Saudi Investment Group TSFL.
One question still open is how the two systems will be integrated.
There has been some speculation that Teledesic is leaning toward a MEO system versus a low Earth orbit (LEO) system for its constellation.
At the International Business Forum and Exhibition last week in Arlington, Virginia, William Owens, Teledesic co-CEO and vice chairman, praised the cost-effectiveness of a MEO system, which requires fewer satellites than a LEO system.
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