Posted: Monday, September 30, 2002
Teledesic LLC, a satellite communications services company, today announced that it has suspended work under its satellite construction contract with Italian satellite manufacturer Alenia Spazio SpA and will significantly reduce its staff as it evaluates possible alternative approaches to its business.
"We continue to believe that the Teledesic system would be useful to governments around the world in connection with disaster relief, anti-terrorism, defense services and other critical government activities. We also believe that providing ubiquitous, quality broadband service to the world, including those three billion people who have never had service, will be a viable business and remains a worthy mission," said Teledesic Co-CEO William Owens. "Teledesic's global license for 1 GHz of nongeostationary satellite spectrum with international ITU priority is widely viewed as a significant regulatory achievement that is not likely to be duplicated."
Early this year, Teledesic engaged Alenia to build the first two satellites of its planned 30-satellite constellation of mid-earth orbiting satellites designed to provide broadband communications to any part of the globe. However, after continually reviewing the foreseeable financial markets and the commercial prospects for satellite point-to-point communications, the company does not believe that it is prudent, purely on speculation, to continue the substantial capital expenditures required to construct and launch the satellites consistent with the timing required to meet FCC and ITU regulatory milestones. Over the past ten years, Teledesic has spent hundreds of millions of dollars on design and development of global broadband satellite system concepts.
"Teledesic has dedicated and talented employees passionate about the Teledesic vision, leading industrial partners, and some of the most astute private investors from around the world," said Teledesic Chairman and Co-CEO Craig McCaw. "We have met our regulatory milestones to date and remain financially solvent. Our decision to suspend our activities results from an unprecedented confluence of events in the telecommunications industry and financial markets. We do not presently see elements in place that would result in returns to our shareholders that are commensurate with the risk. We continue to believe that the Teledesic service would ultimately provide unique and measurable benefits to the world, and we are looking at scenarios to preserve the ability for that service to be realized."
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