Harbinger completes SkyTerra deal, unveils LTE network plans
Private-equity firm Harbinger Capital Partners Funds completed its purchase of satellite provider SkyTerra after last week receiving key approval from the FCC regarding the transaction and releasing plans to build a nationwide LTE network to provide wholesale 4G services terrestrially.
Last Monday, Harbinger received approval from SkyTerra stockholders regarding the deal, each of whom will receive $5 per share in the transaction, which represents at 56% premium over the average closing price of SkyTerra on Sept. 22, 2009, when the merger agreement was established. Last Friday, the FCC’s international bureau approved the transaction.
With the FCC approval, SkyTerra was simply waiting for Harbinger “paperwork” to be completed so the deal could be done, SkyTerra spokesman Tom Surface said. The $262.5 million cash transaction makes SkyTerra a private company with a total enterprise value of about $1.849 billion, according to a company press release.
FCC officials granted approval of the deal, despite the fact that the transaction will result in Harbinger owning 100% of SkyTerra and significant stakes in two other mobile satellite service (MSS) providers, Inmarsat and TerreStar.
“We find Harbinger’s acquisition of SkyTerra does pose some risk of anticompetitive harm for users of MSS in the near future, although we conclude that the harm is unlikely to be significant,” the FCC order states.
Concerns about the MSS market were overcome by the existence of other players in the sector. Moreover, Harbinger’s plan to leverage its ancillary terrestrial component (ATC) authority to construct an LTE terrestrial wireless network for wholesale 4G data services that would be provided on a wholesale basis and integrated with next-generation satellite services.
“We find that Harbinger’s plans to provide 4G mobile wireless broadband are a significant public-interest benefit, both because of the competition it will bring in mobile wireless broadband services and because it will provide mobile wireless broadband service to traditionally underserved areas,” according to the FCC.
Under the Harbinger plan, the LTE network would be built using 23 MHz of spectrum in three different bands — 1.4 GHz, 1.6 GHz and MSS/ATC L-band satellite spectrum. Harbinger also anticipates having access to an additional 30 MHz of ATC spectrum through a cooperative agreement with Inmarsat.
In addition to covering 100% of the U.S. population via satellite, Harbinger’s LTE network plans call for commercial trials by the third quarter of 2011, commercial coverage to at least 100 million people by the end of 2012, coverage to at least 145 million people by the end of 2013 and at least 260 million people by the end of 2015.
In terms of deploying next-generation satellites that allow for the use of small form-factor mobile devices, Harbinger and SkyTerra plan to launch the first next-generation satellite between August and October this year, Surface said. A second next-generation satellite is scheduled to be launched late this year or during the first quarter of 2011.
