Struggling wireless data carrier Motient Corp. appears to be returning to the industry from which it originally sprang-satellite communications.
The company last week raised $126.4 million in a private stock placement to increase its stake in Mobile Satellite Ventures from 29.5 percent to 38.6 percent, a move that cheered the company’s beleaguered investors.
Motient was founded in 1988 as American Mobile Satellite Corp. and offered various satellite communications services to business users. In 1998, the company bought the Ardis wireless data network from Motorola Inc. for $100 million and shortly thereafter began offering wireless e-mail and other data services under the its new Motient name. In 2000, Motient and investment partners Columbia Capital, Spectrum Equity Investors and Telcom Ventures L.L.C. created a subsidiary called Motient Satellite Ventures L.L.C. to manage its satellite network. Motient Satellite Ventures later changed its name to Mobile Satellite Ventures. In 2001, Motient sold its satellite assets to MSV in return for a $15 million promissory note and a $2.5 million convertible note.
Now however, Motient appears to be reversing its course by buying back into its former business. The move comes shortly after the Federal Communications Commission gave MSV authorization to operate a land-based wireless system to supplement its satellite operations-the first such authorization of its kind. MSV promises that the new hybrid network will allow public-safety agencies and other entities to make satellite calls using standard mobile phones. MSV, which is a member of the CDMA Development Group, appears to be considering CDMA technology for its terrestrial component.
And MSV now appears to have the funds necessary to build its planned hybrid network. The company last week said it had raised $230 million in equity financing from Motient and other investors, including $145 million in new funding and the conversion or exchange of $85 million of senior debt and accrued interest.
Barney Dewey, an industry analyst with Outlook4Mobility, said Motient’s renewed interest in its former satellite business comes as the company suffers significant revenue troubles.
“I think the Motient network has very little life left,” Dewey said. “Everybody thinks that GPRS and CDMA are really the technologies that people should be moving toward. … Motient is trying to shore up its business.”
Motient has been suffering under years of declining revenues and a dwindling customer base. The firm did not comment on the issue. RCR
