PARIS — EchoStar Corp., which in January paid $43.4 million in cash to purchase an all-but-defunct company owning a license to provide S-band mobile satellite and terrestrial services in Europe, is likely to find out by this summer whether it will face any near-term competition in the business, industry officials said.
Negotiations between EchoStar’s presumptive S-band competitor, installation of an Inmarsat S-band antenna on an Arabsat-owned satellite are facing a deadline this summer, officials said.of London, and the Arabsat consortium of Riyadh, Saudi Arabia, about the possible
Arabsat has issued requests for bids for four satellites, including the Hellas Sat 3 at 39 degrees east, which would carry the Inmarsat payload. Arabsat has asked manufacturers to submit proposals by May 1.
Arabsat would likely have a few months’ margin after that to determine whether the Inmarsat hosted payload will in fact be onboard. Inmarsat is negotiating with prospective terrestrial network partners and has not decided whether to proceed with the S-band project, for which it has held a European Commission license since 2009.
For Inmarsat, an Arabsat tie-up would present perhaps the least-expensive ticket to the S-band business in Europe.
The European Commission, which is not used to refereeing wireless spectrum competitions, has said it would prefer to have at least two licensees moving toward system deployment, and ultimately expects that will be the case.
Dublin-based Solaris Mobile, which EchoStar purchased in January from satellite fleet operators of Luxembourg and of Paris, is the other licensee.
Englewood, Colo.-based EchoStar has said it is ready to finish the remaining construction on the large TerreStar-2 satellite that it acquired with the other assets of a bankrupt U.S.-based mobile satellite services provider and launch it over Europe to satisfy European regulatory requirements.
In a Feb. 21 filing with the U.S. Securities and Exchange Commission (SEC), EchoStar said its acquisition of Solaris Mobile should be viewed as the purchase of a license, not a business.
“On the acquisition date, Solaris Mobile lacked certain inputs and processes that would be necessary to be considered a business,” EchoStar said.
“The primary asset was an EU Regulatory Authorization for S-band frequencies, which had a cost of $51.8 million consisting of $43.4 million in cash” in addition to Solaris liabilities that EchoStar assumed with the purchase. “The cost of the Regulatory Authorization is being amortized using the straight-line method over the remaining time of the authorization, to May 2027.”
SES and Eutelsat initially invested a combined 130 million euros, or about $178 million at current exchange rates, in the Solaris Mobile joint venture, in which the two companies held equal 50 percent shares. Most of that money was returned in the form of a 130 million-euro insurance settlement following a defect in the Solaris S-band antenna flown on a Eutelsat satellite.
The antenna defect makes it impossible for the antenna to meet the coverage and power requirements of Solaris’ license.
In their financial accounts for the period ending Dec. 31, SES and Eutelsat said they had booked a combined gain of 24.8 million euros on the Solaris sale to EchoStar.
EchoStar’s sister company, Dish Network — both are owned by satellite television pioneer Charlie Ergen — paid some $2.9 billion to purchase the assets of two S-band mobile satellite/terrestrial operators after both had filed for Chapter 11 bankruptcy protection.
Inmarsat has been more cautious in its assessment of the prospects for an S-band satellite/terrestrial network in Europe, which the company has said would require several billion euros of investment in terrestrial towers called a Complementary Ground Component in Europe and an Ancillary Terrestrial Component in the United States.