Satellite Finance
ICO ON THE VERGE OF PIVOTAL YEAR
The first half of 2008 will be a pivotal period in the rebirth of ICO Global. A company that emerged following the bankruptcy of its predecessor on the eve of the millennium, is now on the verge of launching its first geostationary satellite, ICO G1, and with that taking the first steps towards launching a commercial North American ATC hybrid network. ICO's chief executive Tim Bryan told SatelliteFinance that despite two previous delays in the launch date, ICO was very confident of the March 2008 launch slot it has been given. Bryan said that following United Launch Alliance's successful launch of a National Reconnaissance Office spy satellite on December 10, ICO G1 was next in line for the Atlas V rocket. Due to the delay ICO has requested a further extension to the launch milestones and Bryan argued: "Hopefully in the first few weeks of the new year, the FCC will grant those extensions."
Funding the project
As with all the ATC mobile satellite services projects, the question of financing remains high on the agenda. Bryan said that ICO had the cash resources required for its short-term needs. “We have adequate cash to build and launch ICO G1 and pay for the subsequent alpha trial, which should last between six and nine months after the launch. We are fully funded through the MSS operational phase,” he said. Bryan admitted that ICO would need to raise further financing to make the move to full commercial services but argued that the company was not tied to a particular time and would be discretionary in its fund raising. As to the type, Bryan said that it could be either debt or equity or indeed a combination of the two. In terms of debt, ICO would look to leverage its asset value over current cash generation due to the relatively nascent stage of the project. "We believe we have exceptional asset value, which will be enhanced by the launch and operational steps taking place next year." Bryan added that ICO was certainly open to bringing in new investors, "ICO's role is to try and expand the universe of investors who are interested in ICO and the MSS space."
The ATC trial
Once ICO G1 is operational, the satellite operator will begin the alpha trial of its mobile interactive media (MIM) services. The company is working with Clearwire and Alcatel-Lucent to trial a DVB-SH mobile video network, although Bryan said that it would also test CDMA telecommunications services on a handset. The trial is expected to cost between US$30m and US$40m. With regards to what customer base ICO is targeting, Bryan argued that it should appeal to a wide variety of consumers, particularly those in cars and those with mobile devices (such as PDAs, PCs and Sat Nav devices). ICO was looking at a price point of around US$15-25 per month for 10 to 15 channels of high quality content alongside navigation and emergency calling.
The company is currently actively engaged in looking to license channels. Bryan added that as with the DARS providers, OEM agreements with the car manufacturers would be an important market for ICO, but argued that it was not the only one. He pointed to the portable device market and the huge growth in the satellite navigation market. Interestingly, Bryan spoke of the possibility of a tie up with one of the portable sat nav manufacturers such as TomTom or Garmin. In terms of the costly terrestrial network that would need to be constructed, Bryan said: "It is ICO's view that the terrestrial network required to support MIM would be quite small, between 1000 and 2000 towers as opposed to the 20,000 to 30,000 towers required for a mobile or WiMAX network." He also pointed out that ICO did not plan to build the network but is looking at potential partnerships.
The European S-band legacy claim
The European equivalent of ATC, CGC, is still a bone of contention for ICO. The company believes it has a legacy claim to 2 x 30MHz of 2GHz spectrum in Europe. Bryan said: "We have sketched out a position that we believe is accurate, we have met seven of the eight milestones and plan on vigorously engaging with the European Commission in the New Year." Bryan said that ICO currently has a MEO satellite, F2, orbiting the earth with a further 4 to 5 "ostensibly complete" and 4 to 5 "somewhat complete." However, the final construction has been on hold for quite some time due to ICO and manufacturer Boeing's protracted contract dispute. Bryan said that the trial is now scheduled for early next year but in the meantime ICO had taken some steps to hedge its bets and has a contract with Space Systems / Loral to look into the possibility of constructing a new set of MEO satellites, with ILS in place to launch them.
Meanwhile, ICO's controlling shareholder Eagle River, which holds approximately 33% of the share capital and 68% of the voting rights, has decided not to exercise the registration rights agreement that expired on December 12. The agreement applies to 3 million shares of the company's Class A Common Stock that Eagle River had the right to acquire pursuant to a Warrant Agreement, dated December 12, 2002. The two companies have now entered into an amendment which extends the term of the Registration Rights Agreement by an additional two years.
Source: Satellite Finance, December 18, 2007