Inmarsat Agrees To Invest $45 Million in Aces System
PARIS — Inmarsat’s takeover of Asia’s Aces satellite-telephone company will cost Inmarsat $15 million spread over four years and will provide London-based Inmarsat with between $3 million to $5 million in annual revenues, Inmarsat Chief Executive Andrew Sukawaty said.
The long-expected agreement with Jakarta-based Aces International Ltd. gives Inmarsat access to additional L-band radio spectrum over Asia and to a telephone-handset design that Inmarsat will upgrade and sell worldwide as it moves to battle other satellite-telephone companies directly.
The deal, announced Sept. 4, will oblige Inmarsat to spend up to $45 million in the next two years to add a new voice coder, a component that governs the quality of the voice signal, to the current Aces telephone, and to make other additions to its ground infrastructure. By late 2007, Inmarsat will be ready to market the upgraded Aces telephone worldwide, Sukawaty said here Sept. 5 during the World Summit for Satellite Finance, organized by Euroconsult.
Not everyone is impressed with the Aces telephone.
Yousuf Al Sayed, chief executive of Aces rival Thuraya Satellite Telecommunications Co. of Abu Dhabi, said Thuraya’s satellite handsets are at least one generation ahead of Aces.
“We were offered this technology — in 1997 — and we said we didn’t want it,” Al Sayed said Sept. 7 about the Aces telephone that Inmarsat will market worldwide.
Thuraya, which is debuting business in Asia with its damaged Thuraya-1 satellite, now counts about the same 240,000-250,000 subscribers as a year ago, in part because its second-generation handset was late in coming to market. The handset debuted this spring and Thuraya, which also is adding broadband capacity to its services, is becoming a more direct Inmarsat competitor as it prepares to enter the Asian market.
Thuraya is preparing the launch of Thuraya-3 in early 2007, and once in orbit this satellite will replace Thuraya-1 over Asia. Aces has about 14,000 customers and has been limited in its ability to expand its business for the past two years because of the failures aboard its Garuda-1 satellite, a large Lockheed Martin-built spacecraft that has lost about half its capacity.
Sukawaty said Aces customers in the next nine months would be transitioned to the Inmarsat-4 satellite now covering Asia. Inmarsat will operate Garuda-1 and manage the transition of Aces customers to the Inmarsat fleet, while Aces will become a distributor in Asia of Inmarsat services, especially the BGAN mobile-broadband service Inmarsat is debuting with its two new Inmarsat-4 satellites.
Inmarsat’s land-mobile business has been losing customers to satellite-handset companies including Iridium and Globalstar, both of which went through Chapter 11 bankruptcy proceedings in the United States that wiped out most of their debt and enabled them to market their services at low prices.
Inmarsat has long sought to enter the hand-held market and is assuming that one of its two global competitors, Iridium and Globalstar, will go out of business when its first-generation constellation is retired toward the end of the decade, according to Inmarsat officials. Sukawaty said Inmarsat, which for months had said it would not launch its third and last Inmarsat-4 satellite until the business case had been secured, has recently decided to launch the satellite as soon as possible.
Inmarsat has launch options aboard Sea Launch and International Launch Services Atlas rockets. Both vehicles are showing full manifests through 2007, but Sukawaty said Inmarsat is counting on a satellite being delayed and opening a slot on one of those vehicles.
Inmarsat expects to spend between $130 million and $150 million to launch the satellite, insure its first year in orbit and install a new ground station in the United States.