Mobile satellite service providers continue to struggle financially, but rebuilding efforts in Iraq appear to have increased minutes of use and precipitated the launch of new services.
Bankrupt Globalstar L.P. said its second-quarter results were bolstered by its service launch in Iraq. The company’s revenue totaled $13.9 million, up 20 percent from the previous quarter and 216 percent from second-quarter 2002. Its net loss, however, was up 11 percent from the previous quarter to $16.8 million, including a $2.5 million charge related to the write-off of certain satellite assets. The company expects to emerge from Chapter 11 before the end of the year.
At the end of the second quarter, Globalstar counted 93,000 worldwide subscribers, 11 percent more than at the end of the previous quarter, and $18.3 million cash-on-hand. Minutes of use were up 28 percent from the previous quarter and 88 percent from the year-ago quarter, to 14.5 million minutes, which Globalstar attributed to Iraqi service launch.
The company also received court approval in the quarter to transfer substantially all of its assets to a newly created Delaware corporation in exchange for a minority interest in the new corporation. ICO Global Communications Holdings Ltd., which itself emerged from Chapter 11 in 2000, will acquire a majority interest in the new company in exchange for its $55 million investment.
“We are moving ahead with plans for further product development and expansion of our service, while at the same time finalizing our future business plan, based on the broader resources and skills that should become available to us when the ICO transaction is complete,” said Tony Navarra, president of Globalstar.
Loral Space & Communications Ltd. also filed its second-quarter financials, one month after filing for Chapter 11 bankruptcy protection. The company reported revenues of $143 million, down from $316 million in the year-ago quarter. Sales were also down significantly to $81 million from $250 million last year. Net loss stood at $99 million, compared with a loss of $69 million last year.
The company’s Fixed Satellite Services (FSS) business revenues for the second quarter were $73 million, compared with $103 million a year ago, and the division’s operating income was $7 million, down from $22 million last year. The company’s satellite manufacturing and technology division, Space Systems/Loral (SS/L), recorded an operating loss of $96 million, compared with a breakeven operating income last year. That unit’s sales were down to $81 million from $250 million last year.
Loral in July announced the sale of its six North American telecommunications satellites to Intelsat for up to $1.1 billion and last week announced it has also received an offer from EchoStar Communications Corp. for the assets. EchoStar also indicated interest in acquiring the balance of Loral’s FSS fleet and its SS/L assets.
“EchoStar’s interest reconfirms the value of the assets assembled by Loral over the years,” said Bernard Schwartz of Loral. “We will consider all bids received very carefully, noting that our current plan is to emerge from the bankruptcy process with a viable, ongoing satellite services and manufacturing business.”
Meanwhile, Iridium Satellite L.L.C., which was recently authorized to provide and sell its mobile satellite communications services, subscriber terminals and related equipment in Iraq, earlier this month announced the launch of short messaging services to its commercial subscribers.
The SMS service will allow subscribers to send and receive up to 160 characters per message to and from other subscribers. Users will also be able to send and receive messages via e-mail addresses. The company plans to make the service available during the fourth quarter.
The launch of SMS service follows the introduction of Short Burst Data, which allows subscribers to transfer compressed data files of up to 1,960 bytes and is useful in applications like asset tracking and pipeline monitoring.
Thuraya Satellite Telecommunications Co. recently announced Hughes Network Systems Inc. will design and supply 100,000 next-generation mobile satellite handsets, as a follow-on order to a 2001 supply contract for 235,000 units. Production of the new handsets, which will feature GPS and WAP technologies and allow customers to choose the language used on the display, will begin in the first quarter of 2004.
“We have witnessed significant growth in our subscriber base and airtime usage,” said Thuraya’s Chairman Mohammad Omran. “In less than two years of service, Thuraya has gained more than 150,000 subscribers and new orders for our handsets and other products continue at a healthy pace.”
