10.29.10

Gunpowder, treason and plot

Posted in Financials, ICO/DBSD, LightSquared, Operators, Spectrum, TerreStar at 1:16 pm by timfarrar

In the UK, November 5th is celebrated as Guy Fawkes night, with bonfires and fireworks to commemorate a foiled attempt to blow up the Houses of Parliament back in 1605: “Remember, remember the fifth of November. Gunpowder, Treason and Plot.” (Yes I know that burning an effigy of someone executed 400 years ago sounds pretty bizarre to Americans)

Now it looks like next Friday could also mark a significant date for the future of the MSS industry, as that is the deadline for TerreStar Networks to submit its Disclosure Statement and Plan of Reorganization for emergence from bankruptcy. That Plan could reveal details of how TerreStar Networks intends to move forward with both its MSS services and attempts to monetize its ATC spectrum. We also may find out more about what is likely to happen with the TerreStar-2 satellite, which could end up being used to support a European S-band project. This comes at a time when we are waiting to see what happens to DBSD, after its attempted emergence from bankruptcy was stayed by the Second Circuit in early October. Even more importantly, there appears to be an ongoing battle between Harbinger/LightSquared and Clearwire to secure a partnership with T-Mobile, as the current Clearwire auction moves towards a conclusion (most likely before Thanksgiving). Securing a partnership with T-Mobile could be a make-or-break situation for Harbinger and LightSquared, as T-Mobile is the only major US wireless carrier still to decide how it will move forward with 4G. There has even been speculation from Credit Suisse about a grand bargain that would bring together all three of these ATC spectrum holders. However, with Harbinger now buying the unsecured Exchangeable Notes at TerreStar Networks at 43.5 cents on the dollar, which were only supposed to receive up to 3% of the restructured equity (i.e. less than 20 cents on the dollar), a challenge to the TerreStar Restructuring Agreement might appear to be a more likely outcome.

As a result, the next week is likely to be filled with plotting, but let’s just hope that by next Friday any gunpowder will be signaling celebration rather than destruction in the MSS industry. Today we’re releasing our new profile of LightSquared, which contains a detailed analysis of their LTE business plan and a discussion of spectrum valuation and regulatory issues, all of which will be very relevant to those seeking to understand the implications of these events. Our MSS operator profiles are sold individually and are priced at $995, including a free one hour discussion of our analysis. On Monday we’ll also be releasing a new report with details of MSS industry developments, including Inmarsat’s Ka-band system, regulatory and financial ATC-related developments and updates on market growth, which is available exclusively to subscribers to our MSS information service. Contact us if you need any more information about our research.

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