**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

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| In the Matter of                 | * | IB Docket No. 04-439         |
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| Inmarsat Group Holdings Limited  | ) |                              |
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| Petition for Declaratory Ruling  | * |                              |
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| Section 621(5)(F) of the ORBIT   | * |                              |
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**MEMORANDUM OPINION AND ORDER**

**Adopted: June 13, 2005 Released: June 14, 2005**

By the Commission:

# INTRODUCTION

1.  In this Order, we find that Inmarsat Group Holdings Limited
    (together with its subsidiaries, "Inmarsat") is in compliance with
    the Certification it submitted to the Commission[^1] pursuant to
    Section 621(5)(F) of the ORBIT Act,[^2] and therefore has met the
    objectives of 621(5) of the ORBIT Act.[^3] The Commission has
    previously found that Inmarsat has met its obligations to achieve a
    pro-competitive privatization under other criteria in Sections 621
    and 622 of the ORBIT Act.[^4] In this Order, we also find that the
    provisions relating to additional services under Section 602 of the
    ORBIT Act are no longer applicable to Inmarsat,[^5] and that the
    effective date for purposes of Section 645(3) of the ORBIT Act is
    the effective date of this Order.[^6]

# BAckground

2.  In March 2000, Congress passed the ORBIT Act to "promote competition
    in the provision of satellite communications services" through the
    pro-competitive privatization of former intergovernmental
    organizations ("IGOs"), Inmarsat and INTELSAT.[^7] The ORBIT Act
    requires, among other things, that the Commission make a
    determination as to whether Inmarsat's privatization is
    pro-competitive and specifies the criteria that the Commission is to
    use for making this determination. The ORBIT Act sets out detailed
    criteria in Sections 621 and 622, which set a standard to ensure a
    pro-competitive environment in the telecommunications markets of the
    United States. The criteria include:

-   privatization from an IGO to a non-IGO status within a specified
    timeframe;[^8]

-   termination of privileges and immunities that Inmarsat had as an
    IGO;[^9]

-   incorporation in a country that is a Signatory to the World Trade
    Organization ("WTO") Basic Telecommunications Agreement and that has
    effective laws and regulations that secure competition in
    telecommunications services;[^10]

-   conversion to a stock corporation with a fiduciary board of
    directors;[^11]

-   limitations on interlocking officers, directors, or employees shared
    with any IGO or any Signatory or former Signatory of Inmarsat;[^12]

-   an arms-length relationship between and among Inmarsat and any
    separated entities or INTELSAT;[^13] and

-   conduct of an initial public offering of securities that achieves
    substantial dilution of the aggregate ownership of former
    Signatories of Inmarsat after privatization;[^14]

Until Inmarsat is privatized consistent with the requirements of the
ORBIT Act, the ORBIT Act states that Inmarsat "shall not be permitted to
provide additional services" and the "United States shall oppose and
decline to facilitate applications by \[Inmarsat\] for new orbital
locations to provide such services."[^15]

3.  In October 2001, the Commission determined that Inmarsat had
    privatized in a manner consistent with most -- but not all -- of the
    privatization criteria of the ORBIT Act. [^16] Specifically, the
    Commission found that, although the privatized Inmarsat had
    satisfied the non-IPO criteria of the ORBIT Act, it had not yet
    conducted an initial public offering of securities, as mandated by
    the Act.[^17] Despite this finding, the Commission observed that it
    had previously determined that the ORBIT Act permitted authorization
    of certain services by successor entities of former
    intergovernmental organizations, such as Inmarsat, prior to the
    conduct of an IPO.[^18] Accordingly, the Commission authorized
    several entities to use the space segment of the privatized Inmarsat
    for communications services to, from, or within the United
    States.[^19] This authority was conditioned, however, on a future
    Commission finding that the privatized Inmarsat has conducted an IPO
    as required by the ORBIT Act.[^20] Furthermore, the Commission
    explicitly stated that the authorizations for non-core services[^21]
    would be limited, or revoked entirely, should the privatized
    Inmarsat fail to conduct an IPO in compliance with the requirements
    of the ORBIT Act.[^22] The Commission also directed the privatized
    Inmarsat to file with the Commission, within 30 days after conduct
    of its IPO, a demonstration that the IPO is in compliance with the
    ORBIT Act.[^23]

4.  On February 10, 2004, Inmarsat notified the Commission of two
    transactions that it claimed satisfied its remaining ORBIT Act IPO
    requirement.[^24] These transactions were: (1) a private equity
    transaction, by which a majority of the equity interest in Inmarsat
    was sold to private investment funds advised by Apax Partners[^25]
    and Permira,[^26] and (2) an offering of debt that would be listed
    on the Luxembourg Stock Exchange.[^27] The Commission placed
    Inmarsat's filing on Public Notice on March 5, 2004.[^28] Several
    parties filed comments in response to this Public Notice.[^29]

5.  Subsequent to Inmarsat's notification of the two transactions,
    Congress amended Section 621(5) of the ORBIT Act in October of 2004
    to add, as an alternative to conducting an IPO and public securities
    listing, a certification process that permits Inmarsat to certify,
    and the Commission to determine, that certain financial and control
    interests by Signatories and former Signatories, and certain
    ownership interests by IGOs, no longer exist in Inmarsat.[^30]
    Generally, the amendment provides that Inmarsat may be deemed a
    national corporation and may forgo an IPO and public securities
    listing and still achieve the purposes of Section 621(5), if it
    certifies to the Commission that certain financial, control and
    ownership requirements have been met with respect to interests of
    Signatories, former Signatories and IGOs, and if the Commission,
    after notice and comment, determines that Inmarsat is in compliance
    with such Certification.[^31]

6.  Inmarsat certified to the Commission on November 15, 2004, that it
    had fulfilled the amended privatization requirements of Section
    621(5) of the ORBIT Act, and it petitioned the Commission to
    determine that its certification complied with the remaining
    privatization criterion of the ORBIT Act.[^32] On December 16, 2004,
    Inmarsat supplemented its Request for Declaratory Ruling with
    additional information about the ownership interests of the
    intergovernmental organization, the International Mobile Satellite
    Organization (IMSO), in Inmarsat ("Supplemental Submission").[^33]
    The Commission placed Inmarsat's Request for Declaratory Ruling,
    together with its Supplemental Submission, on Public Notice on
    December 21, 2004.[^34] Several parties filed comments in response
    to the Public Notice.[^35]

# discussion

7.  The recent amendment to Section 621(5) of the ORBIT Act, provides
    the following:

> \(F\) Notwithstanding subparagraphs (A) and (B), a successor entity
> may be deemed a national corporation and may forgo an initial public
> offering and public securities listing and still achieve the purposes
> of this section if --
>
> \(i\) the successor entity certifies to the Commission that --

(I) the successor entity has achieved substantial dilution of the
    aggregate amount of signatory or former signatory financial interest
    in such entity;

(II) any signatories and former signatories that retain a financial
     interest in such successor entity do not possess, together or
     individually, effective control of such successor entity; and

(III) no intergovernmental organization has . . . more than a minimal
      ownership interest in a successor entity of Inmarsat;

> \(ii\) the successor entity provides such financial and other
> information to the Commission as the Commission may require to verify
> such certification.
>
> \(iii\) the Commission determines, after notice and comment, that the
> successor entity is in compliance with such certification
>
> \(G\) For purposes of subparagraph (F), the term 'substantial
> dilution' means that a majority of the financial interests in the
> successor entity is no longer held or controlled, directly or
> indirectly, by signatories or former signatories.[^36]

8.  Inmarsat submitted a Certification, executed on December 16, 2004,
    by Andrew Sukawaty, Chairman and Chief Executive Officer of
    Inmarsat, that certifies as to the financial, control, and ownership
    interests held in Inmarsat, as required under Section 621(5)(F)(i)
    of the ORBIT Act.[^37] Specifically, Inmarsat certifies, as required
    under Section 621(5)(F)(i)(I), that "Inmarsat has achieved
    substantial dilution of the aggregate amount of former signatory
    financial interest in Inmarsat."[^38] Inmarsat further certifies,
    pursuant to Section 621(5)(F)(i)(II), that "\[a\]ny signatories or
    former signatories that retain a financial interest in Inmarsat do
    not possess, together or individually, effective control of
    Inmarsat."[^39] These provisions concern the continued financial
    interests in, and continued control over, the privatized Inmarsat by
    signatories and former signatories of Inmarsat. Inmarsat also
    certifies, as required under Section 621(5)(F)(i)(III), that "\[n\]o
    intergovernmental organization has more than a minimal ownership
    interest in Inmarsat."[^40] This provision concerns the nature of
    any IGO ownership interests in Inmarsat. Inmarsat's Certification
    states, under penalty of perjury, that the representations contained
    in the Certification, the Petition for Declaratory Ruling, and the
    Supplemental Submission are true and correct.[^41]

9.  To verify its Certification, Inmarsat relies on ownership and
    financial information that was submitted with its Certification, as
    supplemented. This information specifically includes: (1) Inmarsat
    Capitalization and Corporate Structure;[^42] (2) identification of
    Inmarsat Shareholders;[^43] (3) historical transfers of Inmarsat
    shares since privatization in April of 1999;[^44] (4) a list of
    Inmarsat subordinated preference certificates ("SPC")
    Holders;[^45] (5) a copy of the Inmarsat Shareholders'
    Agreement;[^46] and (6) the Articles of Association of Inmarsat
    Group Holdings Ltd.[^47]

10. Upon review of this information, and after notice and comment, we
    determine that Inmarsat is in compliance with the certification
    requirements set forth under Section 621(5)(F) of the amended ORBIT
    Act. We address each of these requirements and Inmarsat's
    certifications thereto below.

##  Section 621(5)(F)(i)(I): "Substantial Dilution"

11. In order to take advantage of the alternative certification
    provisions of the amended ORBIT Act, Inmarsat must first certify
    that it "has achieved substantial dilution of the aggregate amount
    of signatory or former signatory financial interest in such
    entity."[^48] The term "substantial dilution" is defined by the
    amended ORBIT Act to mean, for the purposes of this subparagraph,
    that "a majority of the financial interests in the successor entity
    is no longer held or controlled, directly or indirectly, by
    signatories or former signatories."[^49] Inmarsat has certified that
    it had achieved such substantial dilution as part of the *December
    16 Sukawaty Certification* that was attached to Inmarsat's
    Supplemental Submission.

12. We find that Inmarsat complies with this certification. Inmarsat
    provides information that demonstrates that approximately 57.46% of
    the ownership of Inmarsat is now held by non-Signatory
    shareholders.[^50] At the time of Inmarsat's filing, the record
    shows that 25.87% of the equity in Inmarsat was held by funds
    advised by Apax Partners; another 25.87% was held by Permira; 5.70%
    by current or previous Inmarsat directors, officers, and employees
    (as well as an employee benefit trust); and 0.01% by other former
    directors and current employees of Inmarsat not included in the
    previous category.[^51] Neither Apax Partners nor Permira are former
    Signatories of Inmarsat, and there is nothing in the record to
    indicate that these entities are owned or controlled, either
    directly or indirectly, by Signatories or former Signatories.[^52]

13. Although the term "financial interest" is not defined by the amended
    ORBIT Act,[^53] we find that the interests of former Signatories
    have been substantially diluted even if the term is defined to
    include debt interests. Inmarsat reports that its debt interests can
    be divided into three broad categories: (1) subordinated preference
    certificates ("SPCs"); (2) debt held by private banks; and (3) debt
    incurred through issuance of bonds.[^54] Inmarsat states that the
    SPCs are "stapled" to its Class B ordinary shares and cannot be
    transferred apart from these shares.[^55] Inmarsat asserts that
    non-Signatories hold these SPCs in roughly the same percentage that
    they hold equity interests in Inmarsat; that is, a majority (54.89%)
    of the SPCs is owned by non-Signatories.[^56] Inmarsat also states
    that 100% of its bank debt is held by institutional entities that
    are non-Signatories, and that, "to the best of its knowledge," all
    of its bonds are held by institutional entities who are
    non-Signatories.[^57] Therefore, based on the record before us, we
    find that the financial interests of former Signatories in Inmarsat
    have been substantially diluted.

## Section 621(5)(F)(i)(II): "Effective Control"

14. The second element of the alternative certification provisions of
    the amended ORBIT Act requires Inmarsat to certify that "any
    signatories and former signatories that retain a financial interest
    in such successor entity do not possess, together or individually,
    effective control of such successor entity."[^58] In its Request for
    Declaratory Ruling and *December 16* *Sukawaty Certification*,
    Inmarsat acknowledges that former Signatories retain a financial
    interest in the company, but certifies that these former Signatories
    do not possess, together or individually, effective control of
    Inmarsat.[^59] For the reasons below, we find that Inmarsat is in
    compliance with its certification.

15. The record shows that, as a result of Inmarsat's private equity
    placement and debt offering, only three former Signatories retain
    ownership interests in excess of five percent of the privatized
    Inmarsat: Telenor (14.95%); COMSAT (13.96%); and KDDI (7.55%).[^60]
    Twelve other former Signatories hold interests less than five
    percent each, which in the aggregate amount to 6.08%.[^61] Taken
    together, the total ownership interest of all former Signatories
    amounts to 42.54 percent.[^62] The record shows that Inmarsat is
    organized under English Company Law, pursuant to which a simple
    majority decides questions or issues arising at a meeting of
    shareholders, except for extraordinary matters such as amending the
    company's charter documents.[^63] Accordingly, former Signatories
    lack the majority required to control Inmarsat under English Company
    Law, regardless of whether they act either together or individually.

16. Provisions of Inmarsat's corporate governance also support the
    conclusion that Apax Partners and Permira exercise effective control
    over Inmarsat. Under Inmarsat's Shareholders Agreement, Apax
    Partners and Permira must both give prior written consent before
    Inmarsat can undertake any of the following actions: (1) make any
    major disposal or acquisition in excess of £500,000;[^64] (2) make
    any material change to the nature of Inmarsat's business;[^65] (3)
    undertake any merger, consolidation, or restructuring;[^66] (4)
    appoint or terminate any Inmarsat employee whose base salary exceed
    £100,000;[^67] (5) amend, modify, or waive any finance
    documents;[^68] (6) make any capital expenditure in excess of 5
    million dollars;[^69] (7) enter into any agreement outside of the
    ordinary and normal course of business;[^70] (8) amend or surrender
    the terms of any Inmarsat material contract;[^71] (9) enter into any
    partnership or joint venture arrangement;[^72] (10) enter into any
    agreement restricting Inmarsat's freedom to do business;[^73]
    and (11) create any encumbrance or guarantee of Inmarsat's assets or
    give any guarantee, indemnity, or security.[^74] These provisions
    provide Apax Partners and Permira with the ability to block
    significant business decisions of Inmarsat. Apax Partners and
    Permira also have veto rights over six of the eight seats currently
    available on Inmarsat's board of directors, and the two funds can,
    by mutual consent, increase the size of the board and appoint
    additional directors.[^75] In addition, Apax Partners and Permira
    each has the right to approve the appointment of any Inmarsat
    officer.[^76] Taken together, these provisions indicate that
    ultimate control over Inmarsat's operations, policy, personnel, and
    financing rests with Apax Partners and Permira.

17. Nonetheless, MSV contends that former Signatories maintain effective
    control over Inmarsat.[^77] MSV puts forward three theories to
    support this contention. First, MSV argues that the former
    Signatories retain a large collective ownership in Inmarsat that
    gives the former Signatories control of Inmarsat despite the lack of
    a majority of ownership interests.[^78] Second, MSV asserts that the
    privatized Inmarsat is economically dependent on former Signatories
    as significant distributors of its service.[^79] Finally, MSV points
    to provisions contained in the Inmarsat Articles of Association and
    Shareholders Agreement that MSV claims retain effective control of
    Inmarsat for former Signatories.[^80] For the reasons discussed
    below, we find none of these arguments demonstrates that the former
    Signatories exert effective control over Inmarsat.

18. First, the retention of a 42.54% ownership in the privatized
    Inmarsat does not give the former Signatories control over Inmarsat,
    even if they act collectively as a block. Although MSV correctly
    notes that ownership interests of less than 40% can confer effective
    control of entities in other situations,[^81] it is not the case
    here. Because the level of collective ownership interest retained by
    former Signatories falls short of the simple majority of the voting
    rights required to control Inmarsat, the former Signatories would
    have to be joined by either Apax Partners or Permira before a
    majority could be assembled.[^82] By contrast, Apax Partners and
    Permira are capable of forming a majority without the participation
    of any former Signatories, or any other shareholders. Thus, the
    former Signatories lack negative control over Inmarsat.[^83] MSV's
    argument that neither Apax Partner nor Permira can individually
    control Inmarsat is irrelevant to our review. The ORBIT Act does not
    require control of Inmarsat to be vested in a single entity; it
    simply requires that former Signatories not exercise such control,
    either together or individually. In the absence of any indication
    that Congress intended that control of Inmarsat be vested in a
    single entity, we will not read such a requirement into the
    Act.[^84]

19. Second, the fact that former Signatories that retain significant
    voting interests in Inmarsat, such as Telenor and KDDI, are
    significant distributors of Inmarsat services does not mean that
    these entities retain effective control over the company. The record
    contains no citation to any Commission or court decision to support
    the claim that being a major distributor of a company's service
    amounts to effective control over the company. In any event, MSV's
    argument is inconsistent with the provisions of the ORBIT Act. Under
    MSV's reasoning, even if a sole former Signatory retained one
    ownership share in the privatized Inmarsat, it would exert effective
    control over the company if it were also a significant distributor
    of Inmarsat's service. As a result, the privatized Inmarsat could
    escape effective control by former Signatories only if the former
    Signatories completely divest themselves of all ownership interests
    in Inmarsat, or if the former Signatories cease to be significant
    distributors of Inmarsat services. Given that the ORBIT Act clearly
    contemplates that former Signatories may retain some ownership
    interest in the privatized Inmarsat,[^85] and that nothing in the
    ORBIT Act requires former Signatories to cease distribution of
    Inmarsat services, we decline to read such requirements into the
    Act.

20. Third, neither the terms of Inmarsat's Articles of Association nor
    the terms of its Shareholders Agreement support MSV's contention
    that the former Signatories retain effective control of
    Inmarsat.[^86] For example, MSV identifies "supermajority"
    provisions in the Articles of Association and the Shareholders
    Agreement that it alleges provide former Signatories with effective
    control of Inmarsat.[^87] These supermajority provisions require
    more than 50% of the voting stock to effectuate issuance of new
    shares of stock, to abrogate the rights of share classes, to allot
    any equity securities, or to modify the Shareholders Agreement.[^88]
    These supermajority provisions, however, are commonplace provisions
    typically included to protect the rights of minority shareholders
    and do not amount to effective control of a company.[^89] Another
    provision in the Articles of Association cited by MSV restricts
    Inmarsat from acquiring, or merging with, a Land Earth Station
    Operator ("LESO") without the assent of all 10% or greater
    shareholders, which includes the former Signatories, Telenor and
    COMSAT.[^90] We agree with Inmarsat, however, that this restriction
    amounts to nothing more than a covenant on the part of Inmarsat not
    to compete with shareholders who engage in such operations.[^91] The
    record shows that it is narrowly tailored to a particular line of
    business and is of a limited, two-year duration.[^92] Commission
    precedent indicates that covenants not to compete are common
    provisions in mergers or acquisitions and do not, in themselves,
    amount to effective control of a company.[^93] Likewise, the
    provision that prohibits Inmarsat from entering into contracts with
    Apax Partners or Permira without the approval of the directors
    appointed by Telenor and COMSAT appears to be a narrowly tailored
    restriction designed to prevent self-serving deals by the majority
    shareholders at the expense of minority shareholders. This provision
    does not give former Signatories effective control of the operations
    of Inmarsat.

21. We also reject MSV's argument that provisions regarding the
    composition and conduct of Inmarsat's board of directors, which are
    contained in the Articles of Association and Shareholders Agreement,
    grant former Signatories effective control of Inmarsat.[^94] These
    provisions give Telenor and COMSAT each the right to appoint one
    director to the board and require the presence of at least one of
    the directors appointed by the former Signatories in order to
    constitute a quorum for directors to conduct business.[^95] The
    record shows, however, that directors appointed by former
    Signatories will account for only 2 out of the 8 seats currently
    available on the board.[^96] Apax Partners and Permira have veto
    rights over the remaining six board members, and the two funds can,
    by mutual consent, increase the size of the board and appoint any
    additional directors.[^97] MSV is correct that neither Apax Partners
    nor Permira has any obligation to appoint directors unacceptable to
    former Signatories,[^98] but that is not an indication of control by
    the former Signatories. Rather, the relevant point is that former
    Signatories are no longer able to appoint a majority of the board of
    directors, and, as a result, lack control over it. Although the
    required presence of a board member appointed by the former
    Signatories could indicate a form of negative control over Inmarsat
    through the power to block business from being transacted, the
    record shows that in such an absence the board can be reconvened
    seven days later and that merely the two directors appointed by Apax
    Partners and Permira need to be present to constitute a quorum.[^99]
    Thus, the former Signatories are not able to exercise negative
    control over Inmarsat through the absence of their appointed
    directors.

## Section 621(5)(F)(i)(III): "Intergovernmental Organization Ownership"

22. The last of the three certifications set forth by the amendments to
    Section 621(5)(F) is a certification that "no intergovernmental
    organization has . . . more than a minimal ownership interest in a
    successor entity of Inmarsat."[^100] Inmarsat has made this
    certification as part of the *December 16 Sukawaty Certification*
    that was attached to Inmarsat's Supplemental Submission.

23. In the *Inmarsat Market Access Order*, the Commission found that the
    International Mobile Satellite Organization ("IMSO") held only a
    minimal ownership interest in Inmarsat.[^101] IMSO is a residual IGO
    created in 1999 to monitor Inmarsat's continued provision of certain
    "public services," principally those of the global maritime distress
    and safety system ("GMDSS").[^102] The Commission found that the
    "special share" held by IMSO in the privatized Inmarsat constituted
    "minimal ownership" because it was restricted to allowing IMSO to
    veto certain actions that threatened the GMDSS and conferred neither
    rights to participate in the profits of the privatized Inmarsat nor
    any normal voting rights.[^103] Based on the information provided by
    Inmarsat in its Supplemental Submission, we find that there has been
    no change in IMSO with respect to its ownership relationship with
    Inmarsat and that no other IGO has any ownership in Inmarsat.[^104]
    Moreover, based on its review of distress alert data from the
    Distress Alert Quality Control System, Inmarsat has determined that
    GMDSS-related traffic on the Inmarsat system accounts for less than
    1% of Inmarsat's total revenues for the twelve months ended October
    31, 2004.[^105] Because the record shows that GMDSS consists of only
    a small percentage of Inmarsat's overall business, the veto
    provision of IMSO's special share provides minimal ownership
    interests in Inmarsat. Accordingly, we find that Inmarsat complies
    with its Certification made pursuant to Section 621(5)(F)(i)(III) of
    the amended ORBIT Act.

24. Finally, we reject the contention that the "independence"
    requirement of Section 621(2) of the ORBIT Act requires a separate,
    and more searching, review than that provided pursuant to Section
    621(5)(F) of the amended ORBIT Act.[^106] MSV points to the text of
    Section 621(2), which states that "\[the privatized Inmarsat\] shall
    operate as independent commercial entities, and have a
    pro-competitive ownership structure."[^107] MSV argues that, because
    this section of the ORBIT Act was not affected by the amendments
    made by Congress in October 2004, the Commission must evaluate the
    independence of Inmarsat from former Signatories "under the broader
    criteria of the Act," rather than just determining whether Inmarsat
    has complied with its certification pursuant to Section
    621(5)(F).[^108] As a result, MSV argues that the Commission must
    determine whether the privatized Inmarsat is "truly independent" of
    its former Signatories under Section 621(2) of the ORBIT Act,
    regardless of whether it finds that Inmarsat complies with the
    certification made under Section 621(5)(F).[^109]

25. We agree that Section 621(2) remains an integral part of the
    Commission's evaluation of the privatization efforts of Inmarsat. We
    do not agree, however, that Section 621(2) requires a separate
    review from the certification procedures of Section 621(5)(F).
    Section 621(2) plainly states that the independence of the
    privatized Inmarsat is to be achieved by the conduct of an initial
    public offering in accordance with Section 621(5).[^110] Congress
    amended Section 621(5) of the ORBIT Act to permit Inmarsat to
    substitute a certification procedure in lieu of an initial public
    offering. As a result, Congress permitted the independence
    requirement of Section 621(2) to be satisfied not only through the
    conduct of an initial public offering, but also through the
    certification procedure provided by Section 621(5)(F) of the amended
    Act. As a result, if Inmarsat satisfies the certification provisions
    of Section 621(5)(F), it also satisfies the independence requirement
    of Section 621(2). Accordingly, there is no need for a separate
    review under Section 621(2) once it is determined that the
    privatized Inmarsat meets the certification criteria of Section
    621(5)(F).

# conclusion

26. Based on the above, we conclude that Inmarsat has complied with
    Section 621(5)(F) of the ORBIT Act, and as such, may forego an IPO
    and public securities listing as required under Section 621(5)(A)
    and (B).[^111] Thus, we remove from Inmarsat's authority to serve
    the U.S. market the condition that requires Inmarsat to conduct an
    IPO under Sections 621(2) and 621(5)(A) of the ORBIT Act.[^112] We
    also remove from Inmarsat's authority the condition that subjects
    Inmarsat's authorization for non-core services to limitation or
    revocation should Inmarsat fail to conduct an IPO in compliance with
    Section 621 of the ORBIT Act.[^113] Further, given our findings in
    this Order, along with our previous findings in the *Inmarsat Market
    Access Order* that Inmarsat's privatization is consistent with the
    non-IPO provisions of ORBIT Act,[^114] we find that Inmarsat has met
    the criteria set forth under Sections 621 and 622 of the ORBIT Act
    for the purpose of satisfying the Certification requirement.
    Consequently, we find that Section 602, which prohibits Inmarsat
    from providing additional services and requires the United States to
    decline and oppose new orbital locations for provision of such
    services until Inmarsat meets the privatization requirements of the
    ORBIT Act, is no longer applicable.[^115]

# ordering clauses

27. Accordingly, it is DETERMINED THAT the Certification of Inmarsat
    Group Holdings Ltd. ("Inmarsat") COMPLIES WITH Section 621(5)(F)
    and (G) of the Open-Market Reorganization for the Betterment of
    International Communications Act, as amended. ORBIT Act §§ 621(5)(F)
    and 621(5)(G), and Inmarsat's Request for Declaratory Ruling, filed
    November 15, 2004, IS GRANTED.

28. It is FURTHER DETERMINED THAT by this action, and consistent with
    the provisions of the Open-Market Reorganization for the Betterment
    of International Communications Act, as amended, Inmarsat may forgo
    the requirement that it hold an initial public offering of
    securities as set forth in Sections 621(2) and 621(5)(A) and a
    public listing of securities as set forth in Section 621(5)(B).
    ORBIT Act §§ 621(2), 621(5)(A), 621(5)(B), 621(5)(F), and 621(5)(G).

29. It is FURTHER DETERMINED THAT by this action, and consistent with
    the provisions of the Open-Market Reorganization for the Betterment
    of International Communications Act, as amended, Inmarsat IS NO
    LONGER SUBJECT TO the provisions under Section 602, which prohibited
    Inmarsat from providing additional services and required the United
    States to oppose and decline to facilitate applications for new
    orbital locations to provide such services. ORBIT Act §§ 602(a),
    602(b).

30. It is FURTHER DETERMINED THAT by this action, and consistent with
    the provisions of the Open-Market Reorganization for the Betterment
    of International Communications Act, as amended, the condition on
    Inmarsat's authorization that subjects its authority to serve the
    U.S. market to a future Commission finding that Inmarsat has
    conducted an IPO under Sections 621(2) and 621(5)(A)(ii) of the
    ORBIT Act, IS HEREBY REMOVED.

31. It is FURTHER DETERMINED THAT by this action, and consistent with
    the provisions of the Open-Market Reorganization for the Betterment
    of International Communications Act, as amended, the condition on
    Inmarsat's authorization that subjects Inmarsat's authorization for
    non-core services to limitation or revocation should Inmarsat fail
    to conduct an IPO in compliance with Section 621 of the ORBIT Act,
    IS HEREBY REMOVED. ORBIT Act §§ 601(b)(1)(A), 681(a)(11).

    FEDERAL COMMUNICATIONS COMMISSION

Marlene H. Dortch

Secretary

**APPENDIX**

List of Parties Filing Pleadings in IB Docket No. 04-439:

[Comments:]{.underline}

Mobile Satellite Ventures Subsidiary LLC ("Opposition of Mobile
Satellite Ventures")

Lockheed Martin Corporation

[Replies to Comments:]{.underline}

Inmarsat Group Holdings Ltd. ("Reply of Inmarsat Group Holdings")

Iridium Satellite LLC

Lockheed Martin

Mobile Satellite Ventures Subsidiary LLC ("Reply of Mobile Satellite
Ventures")

List of Parties Filing Pleadings in File No. SAT-MSC-20040210-00027

[Comments:]{.underline}

Mobile Satellite Ventures Subsidiary LLC

SES Americom, Inc.

Stratos Mobile Networks, Inc.

[Responses:]{.underline}

Deere & Company

Inmarsat Group Holdings Ltd.

Stratos Mobile Networks, Inc.

Telenor Satellite Services, Inc.

[Replies:]{.underline}

Mobile Satellite Ventures Subsidiary LLC

SES Americom, Inc.

[^1]: Request for Declaratory Ruling, filed Nov. 15, 2004, and
    Supplemental Submission, filed Dec 17, 2004, IB Docket No. 04-439.

[^2]: Open-Market Reorganization for the Betterment of International
    Telecommunications Act, Pub. L. No. 106-180, 114 Stat. 48 (2000),
    *as amended*, Pub. L. No. 107-233, 116 Stat. 1480 (2002), *as
    amended* Pub. L. No. 108-228, 118 Stat. 644 (2004), *as amended,*
    Pub. L. No. 108-371, 118 Stat. 1752 (2004). The ORBIT Act amended
    the Satellite Communications Act of 1962, 47 U.S.C. § 701 *et seq.*
    (Satellite Act) and is codified *at* 47 U.S.C. § 761 *et seq.* For
    the sake of convenience, in this Order, the term "ORBIT Act" and the
    citations to statutory section numbers refer to the Satellite Act,
    as amended by the ORBIT Act. The term "ORBIT Act, as amended" refers
    to the provisions added by the most recent amendment to the ORBIT
    Act, Pub. L. No. 108-371, 118 Stat. 1752 (2004), signed into law on
    October 25, 2004, adding new subsections (F) and (G) to Section
    621(5), which provide an alternative method for compliance with the
    privatization requirements of Section 621(5) of the ORBIT Act. *See*
    ORBIT Act, as amended, §§ 621(5)(F), 621(5)(G).

[^3]: ORBIT Act, §§ 621(5)(A) and (B).

[^4]: ORBIT Act, §§ 621 and 622. *See also* *C**omsat Corporation et.
    al.,* Memorandum Opinion, Order and Authorization, 16 FCC Rcd 21661
    (2001) ("*Inmarsat Market Access Order"*).

[^5]: ORBIT Act, § 602 (a). Under the ORBIT Act, the term "additional
    services" for Inmarsat are defined as "non-maritime or
    non-aeronautical mobile services in the 1.5 and 1.6 Ghz band on
    planned satellites or the 2 Ghz band." ORBIT Act, § 681(a)(12)(A).

[^6]: ORBIT Act, § 645(3).

[^7]: International Telecommunications Satellite Organization
    ("INTELSAT") and Inmarsat were originally intergovernmental
    organizations created by international agreements as a result of
    early initiatives to develop space technology.

[^8]: ORBIT Act, § 621(1)(A).

[^9]: ORBIT Act, § 621(3).

[^10]: ORBIT Act, § 621(7).

[^11]: ORBIT Act, § 621(5)(D).

[^12]: ORBIT Act, § 621(5)(C).

[^13]: ORBIT Act, § 621(5)(E).

[^14]: ORBIT Act, §§ 621(2) and 621(5)(A).

[^15]: ORBIT Act, §§ 602(a) and (b).

[^16]: *Inmarsat Market Access Order,* 16 FCC Rcd at 21661 (paras.
    109-110).

[^17]: *Inmarsat Market Access Order*, 16 FCC Rcd at 21711 (para. 109).

[^18]: *Inmarsat* *Market Access Order*, 16 FCC Rcd at 21683-84 (para.
    37), citing *INTELSAT LLC,* Memorandum Opinion Order and
    Authorization, 16 FCC Rcd 12280, 12288 (paras. 23-24) (2001),
    relying on ORBIT Act, § 601(b)(1)(D).

[^19]: These entities were Comsat Corporation, Stratos Mobile Networks,
    LLC, SITA Information Computing Canada, Inc., Honeywell, Inc.,
    Marisat Communications Network, Inc., and Deere & Company. *See
    Inmarsat Market Access Order*, 16 FCC Rcd at 21668 (para. 1).

[^20]: *Inmarsat Market Access Order*, 16 FCC Rcd at 21712 (para. 110)
    ("IT IS FURTHER ORDERED that the authorizations issued herein are
    subject to a future Commission finding that Inmarsat has conducted
    an IPO under Sections 621(2) and 621 (5)(A)(ii) of the ORBIT Act").

[^21]: Under the ORBIT Act, "non-core" services for Inmarsat are
    services other than global maritime distress and safety services or
    other existing maritime or aeronautical services for which there are
    not alternative providers. ORBIT Act, § 681(a)(11).

[^22]: *Inmarsat Market Access Order*, 16 FCC Rcd at 21712 (para. 112)
    ("IT IS FURTHER ORDERED that the authorizations for non-core
    services issued herein are subject to limitation or revocation
    pursuant to Section 601(b)(1) of the ORBIT Act and Title III of the
    Communications Act of 1934, 47 U.S.C. 301 et seq., should Inmarsat
    fail to conduct an IPO in compliance with the requirements of
    Section 621 of the ORBIT Act").

[^23]: *Inmarsat Market Access Order*, 16 FCC Rcd at 21712 (para. 111).

[^24]: Letter from Alan Auckenthaler, Inmarsat, to Ms. Marlene H.
    Dortch, Secretary, FCC, File No. SAT-MSC-20040210-00027 (filed Feb.
    10, 2004) ("*February 10 Inmarsat Letter"*).

[^25]: Inmarsat describes Apax Partners as "a leading advisor of private
    equity funds in the United Kingdom, United States, and Western
    Europe," which includes Apax PartnersWorldwide LLP, Apax Partners
    Europe Managers Ltd., Apax Partners, Inc., and Apax Partners
    Holdings Ltd. *See* *February 10 Inmarsat Letter* at 2.

[^26]: Permira is described by Inmarsat as "a leading European private
    equity firm," which includes Permira Advisers Limited and various
    other entities which act as advisors and consultants to the Permira
    funds. *See* *February 10 Inmarsat Letter* at 2-3.

[^27]: *February 10 Inmarsat Letter* at 4.

[^28]: Public Notice, Policy Branch Information, Report No. SAT-0019
    (Mar. 5, 2004).

[^29]: A list of parties filing pleadings in response to the Public
    Notice is attached as Appendix A. These pleadings were filed under
    File No. SAT-MSC-20040210-00027 and have been incorporated into IB
    Docket No. 04-439.

[^30]: ORBIT Act, as amended, §§ 621(5)(F) and (G).

[^31]: ORBIT Act, as amended, § 621(5)(F).

[^32]: Request for Declaratory Ruling, IB Docket No. 04-439 (filed Nov.
    15, 2004).

[^33]: Supplemental Submission, IB Docket No. 04-439 (filed Dec. 16,
    2004).

[^34]: Public Notice, "Inmarsat Group Holdings Limited Files
    Certification and Petition for Declaratory Ruling Pursuant to
    Section 621(5)(F) of the Open-Market Reorganization for the
    Betterment of International Telecommunications Act, as amended (the
    "ORBIT Act")," DA 04-4011 (Dec. 21, 2004).

[^35]: A list of parties filing pleadings in response to the Public
    Notice is attached as an Appendix to this Order. Iridium Satellite,
    LLC ("Iridium") filed reply comments in response to Inmarsat's
    Request for Declaratory Ruling, in which Iridium urges the
    Commission to ensure that incumbent U.S. licensees are protected
    from harmful interference from any new services offered by Inmarsat
    as a result of its provision of mobile-satellite services in the
    United States. *See* Iridium Reply Comments at 2. Because the
    concerns raised by Iridium are not germane to our analysis of
    Inmarsat's compliance with the privatization provisions of the ORBIT
    Act, we will not consider Iridium's comments as part of this
    proceeding. This action is without prejudice to Iridium submitting
    such concerns about interference to its system in response to any
    earth station application to access the Inmarsat space segment, or
    petitioning for a rulemaking on this subject.

[^36]: ORBIT Act, as amended, §§ 621(5)(F), 621(5)(G).

[^37]: The Certification was first executed on November 15, 2004. *See*
    "Certification of Inmarsat Group Holdings Limited" attached to the
    Request for Declaratory Ruling. Inmarsat re-executed the
    Certification on December 16, 2004, as part of its Supplemental
    Submission (*"December 16 Sukawaty Certification"*).

[^38]: *D**ecember 16 Sukawaty Certification*.

[^39]: *December 16 Sukawaty Certification*.

[^40]: *December 16 Sukawaty Certification*.

[^41]: *December 16 Sukawaty Certification*.

[^42]: Request for Declaratory Ruling, Attachment A.

[^43]: Request for Declaratory Ruling, Attachment B.

[^44]: Request for Declaratory Ruling, Attachment C.

[^45]: Request for Declaratory Ruling, Attachment D.

[^46]: Request for Declaratory Ruling, Attachment E.

[^47]: Request for Declaratory Ruling, Attachment F.

[^48]: ORBIT Act, as amended, § 621(5)(F)(i)(I).

[^49]: ORBIT Act, as amended, § 621(5)(G).

[^50]: Request for Declaratory Ruling at 4.

[^51]: Request for Declaratory Ruling at 4 and Appendix B. At the time
    of filing, Inmarsat had 27,000,000 total issued shares. Of this
    amount, Apax Partners held 6,985,960 shares (25.8739259%); Permira
    held 6,985,960 shares (25.8739259%); current or previous Inmarsat
    directors, officers, employees and employee benefit trust held
    1,539,000 (5.700%); and other Inmarsat employees and former
    directors held 2,264 shares (0.0083852%). *See* Request for
    Declaratory Ruling, Appendix B.

[^52]: To the contrary, Inmarsat expressly states that, "No former
    Signatory of Inmarsat is an investor in the funds advised by Apax
    Partners or the funds advised by Permira that own shares in Inmarsat
    Group Holdings." Request for Declaratory Ruling at 7, n.22.

[^53]: Request for Declaratory Ruling at 5.

[^54]: Request for Declaratory Ruling at 5.

[^55]: Request for Declaratory Ruling at 5.

[^56]: Request for Declaratory Ruling at 5-6 and Appendix D. Inmarsat
    explains that non-Signatories hold a smaller percentage of SPCs than
    their percentage holdings of equity because certain non-Signatories
    hold only Class A shares that do not provide any ownership of SPCs.
    *See id.* at 6, n.19.

[^57]: Request for Declaratory Ruling at 5-6. Inmarsat notes that,
    although all of Inmarsat's bonds were initially placed with
    non-Signatory institutional investors, its bonds are publicly traded
    and it is not possible to ascertain definitively who holds all of
    the bonds at any given time. *See id.*, n.20. Even if all the bonds
    were eventually acquired by former Signatories, Inmarsat states that
    more than 50% of the total capital (either equity alone or debt and
    equity) of Inmarsat would still be held by non-Signatories. *Id.*

[^58]: ORBIT Act, as amended, § 621(5)(F)(i)(II).

[^59]: *December 16 Sukawaty Certification*.

[^60]: Request for Declaratory Ruling at 8. Although parties have
    challenged the treatment of COMSAT as a former Signatory due to the
    privatization and subsequent sale of COMSAT to private entities,
    *see, e.g.,* Comments of Lockheed Martin at 3, we believe that the
    plain language of the ORBIT Act requires us to treat the interest of
    COMSAT as a former Signatory for the purposes of review under the
    ORBIT Act. *See* ORBIT Act, §§ 642(b)(1) (stating that COMSAT is an
    Inmarsat Signatory) and 681(18) (defining the term "COMSAT" as "the
    corporation established pursuant to title III of the Communications
    Satellite Act of 1962 (47 U.S.C. 731 et seq.) or the successor in
    interest to such corporation"). As detailed in this Order, Inmarsat
    has achieved independence even treating COMSAT as a former
    Signatory. If COMSAT were not treated as a former Signatory, it
    would only strengthen the conclusion that Inmarsat has achieved
    independence from its former Signatories.

[^61]: Request for Declaratory Ruling at 7.

[^62]: *See* Request for Declaratory Ruling at 8 and Appendix B.

[^63]: *See* Request for Declaratory Ruling at 12.

[^64]: Shareholders Agreement, Schedule 6, Item 5.

[^65]: Shareholders Agreement, Schedule 6, Item 6.

[^66]: Shareholders Agreement, Schedule 6, Item 8.

[^67]: Shareholders Agreement, Schedule 6, Item 13.

[^68]: Shareholders Agreement, Schedule 6, Item 18.

[^69]: Shareholders Agreement, Schedule 6, Item 19.

[^70]: Shareholders Agreement, Schedule 6, Item 20.

[^71]: Shareholders Agreement, Schedule 6, Item 21.

[^72]: Shareholders Agreement, Schedule 6, Item 25.

[^73]: Shareholders Agreement, Schedule 6, Item 26.

[^74]: Shareholders Agreement, Schedule 6, Item 27.

[^75]: *See* Articles of Association, §§ 32, 37.5; Shareholders
    Agreement at Schedule 6, Item 11. *See also infra* para. 21.

[^76]: *See* Shareholders Agreement at Schedule 6, Item 11. *See also
    infra* para. 21, n.97.

[^77]: *See generally* Opposition of Mobile Satellite Ventures; Reply of
    Mobile Satellite Ventures.

[^78]: Opposition of Mobile Satellite Ventures at 8-9.

[^79]: Opposition of Mobile Satellite Ventures at 10-11.

[^80]: Opposition of Mobile Satellite Ventures at 11-15.

[^81]: Opposition of Mobile Satellite Ventures at 9, n.17.

[^82]: The record shows that the former Signatories would not be able to
    assemble a majority of the voting interests in Inmarsat even if they
    were to have the support of the approximately 5.7% of the voting
    interests of non-former Signatories that are not controlled by Apax
    Partners or Permira. *See* Request for Declaratory Ruling, Appendix
    B.

[^83]: "Negative control" is held by a person or entity that can block
    decisions affecting every aspect of licensee activity, but cannot
    compel action without the concurrence of another party. *See*
    Stephen F. Sewell, Assignments and Transfers of Control of FCC
    Authorizations Under Section 310(d) of the Communications Act of
    1934, 43 Fed. Comm. L.J. 277, 304 (1991) (*"Sewell"*).

[^84]: We note that Section 621(2) permits Inmarsat to achieve
    independence through an initial public offering of stock in Section
    621(5)(A), which could result in the stock of Inmarsat being widely
    held by a diverse group of shareholders with no single entity
    exercising control. *See* ORBIT Act, as amended, §§ 621(2) and
    621(5)(A). These provisions indicate that Congress did not intend to
    require that control of Inmarsat be vested in a single entity when
    it drafted the ORBIT Act.

[^85]: *See* Sections 621(2) and 621(5)(F)(i)(I), which call for only
    "substantial dilution" of ownership interests of former Signatories,
    not the complete divestiture of all such interests. *See* ORBIT Act,
    as amended, §§ 621(2) and 621(5)(F)(i)(I).

[^86]: Opposition of Mobile Satellite Ventures at 12-15.

[^87]: Opposition of Mobile Satellite Ventures at 12.

[^88]: Opposition of Mobile Satellite Ventures at 12, n.23 (citing
    Articles of Association § 20.2, which requires approval of 75
    percent of shareholders to issue new shares; Articles of Association
    § 19.1, which prohibits the abrogation of the rights of any share
    class without the approval of holders of 75% of its shares; and
    Articles of Association § 53.1, which prohibits amendment of
    Articles of Association without the approval of directors appointed
    by entities holding 10% or more of the shares) and at 14 (citing
    Shareholders Agreement § 16.3, which prohibits allotment of any
    equity securities without approval of 75 percent of the shareholders
    and the directors appointed by the 10 percent shareholders;
    Shareholders Agreement § 9.2, which prohibits modification of the
    Shareholders Agreement without approval of 75 percent of the
    shareholders).

[^89]: *See* Implementation of Section 309(j) of the Communications Act
    -- Competitive Bidding, *Memorandum Opinion and Order*, 10 FCC Rcd
    403, 447 (para. 81) (1994) (providing that "non-voting shareholders
    may be given a decision making role (through supermajority
    provisions or similar mechanisms) in major corporate decisions that
    affect their interest as shareholders without being deemed to be in
    de facto control."). *See also* News International, PLC, *Memorandum
    Opinion and Order*, 97 FCC2d 349, 358 (1984)) (*"News
    International"*); *Sewell*, 43 Fed. Comm. L.J. at 304, n.98 (noting
    that "minority shareholders who can block specified major
    transactions, such as the sale of all or substantially all of the
    licensee's assets, or changes in the corporate charter affecting
    minority shareholders' rights, are not considered to possess
    negative control").

[^90]: Opposition of Mobile Satellite Ventures at 12, n.23 (citing
    Articles of Association, § 39). The term "LESO" is defined by the
    Articles of Association as "any company, partnership, or other
    entity that owns, controls or operates a land earth station or any
    Affiliate thereof... ." Articles of Association, § 1.

[^91]: Reply of Inmarsat Group Holdings Ltd. at 16.

[^92]: *See* Articles of Assocation at § 39.9.1 (providing for a
    "sunset" of the LESO provision in December 2006).

[^93]: *See, e.g.*, *News International,* 97 FCC 2d 349 at para. 20
    (holding that a covenant not to compete reflects "reasonable
    business judgment" that "grants neither party control").

[^94]: Opposition of Mobile Satellite Ventures at 13.

[^95]: Opposition of Mobile Satellite Ventures at 13 (citing Articles of
    Association §§ 12 and 39.8).

[^96]: Reply of Inmarsat Group Holdings Ltd. at 10.

[^97]: *See* Articles of Association, §§ 32, 37.5; Shareholders
    Agreement at Schedule 6, Item 11. In addition, Apax Partners and
    Permira each has the right to approve the appointment of any
    Inmarsat officer. *See* Shareholders Agreement at Schedule 6, Item
    11.

[^98]: Opposition of Mobile Satellite Ventures at 13.

[^99]: *See* Reply of Inmarsat Group Holdings at 3, n.5 (citing Articles
    of Association, § 39.8).

[^100]: ORBIT Act, as amended, § 621(5)(F)(i)(III).

[^101]: *Inmarsat Market Access Order*, 16 FCC Rcd at 21686 (para. 41).

[^102]: *Inmarsat Market Access Order*, 16 FCC Rcd at 21686 (para. 41).

[^103]: *Inmarsat Market Access Order*, 16 FCC Rcd at 21686 (para. 41).

[^104]: Supplemental Submission at 1.

[^105]: Supplemental Submission at 2.

[^106]: Opposition of Mobile Satellite Ventures at 5.

[^107]: Opposition of Mobile Satellite Ventures at 5.

[^108]: Opposition of Mobile Satellite Ventures at 5.

[^109]: Opposition of Mobile Satellite Ventures at 5.

[^110]: ORBIT Act, § 621(2) ("The successor entities and separated
    entities of INTELSAT and Inmarsat shall conduct an initial public
    offering in accordance with paragraph (5) to achieve such
    independence.")

[^111]: ORBIT Act, as amended, § 621(5)(F).

[^112]: *Inmarsat Market Access Order*, 16 FCC Rcd at 21712 (para 110).

[^113]: *Inmarsat Market Access Order*, 16 FCC Rcd at 21712 (para 112)

[^114]: *Inmarsat Market Access Order*, 16 FCC Rcd at 21686-91 (paras.
    39-51).

[^115]: ORBIT Act, §§ 602(a) and (b).