Sep 1, 2008 12:00 PM, By Donny Jackson

Potential merger may bring satellite to first responders

Mobile Satellite Ventures has secured financing to launch its next-generation satellites and possibly pursue a merger with Inmarsat as the company pursues its strategy of making satellite communications part of the day-to-day operations of first-response organizations.

In late July, MSV parent SkyTerra Communications announced that the Harbinger Capital Partners Funds hedge fund has agreed to provide $500 million in debt financing, while Harbinger affiliates have signed an agreement addressing the structure of a possible merger of SkyTerra and Inmarsat.

With the $500 million financing commitment, SkyTerra and MSV can fund SkyTerra's business plan through the third quarter of 2010. MSV hopes to launch its MSV-1 satellite — a satellite so large that services can be provided to devices with cell-phone-sized form factors and antennas — in late 2009 and a similar MSV-2 satellite during the latter half of 2010, said Alexander Good, SkyTerra CEO and president.

The Harbinger financing announcement came less than three weeks after satellite builder Boeing agreed to defer $40 million in payments associated with the MSV-2 satellite. Together, these deals address a major concern regarding the ability of SkyTerra and MSV to fund its business plan, said Scott McLeod, SkyTerra CFO. “We appreciate that strong financial support of Harbinger, particularly in what are otherwise very challenging capital markets,” McLeod said.

Harbinger's financing is not contingent on SkyTerra completing a deal for Inmarsat, and SkyTerra has the option of trying to secure better financing terms in the marketplace before the first $150 million tranche is exercised in January 2009.

When MSV launches its huge MSV-1 satellite in 2009 — expected to provide service in 2010 — the size of the satellite means the antennas in devices can be much smaller. During the APCO conference last month, MSV unveiled a prototype handset and PDA that boast similar form factors to those operating on cellular networks today.

“The cigar antenna of the typical satellite phone [today] will be gone,” said Tom Surface, spokesman for MSV.

Just as important, the costs associated with satellite devices can decrease, making satellite capability something that can be integrated into cellular or LMR handsets — an ideal feature for public-safety devices, such as those that would operate on the proposed 700 MHz nationwide broadband network, said Jim Corry, vice president of government solutions for MSV.

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