Before the

**Federal Communications Commission**

**Washington, D.C. 20554**

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| In the Matter of                 | * | SAT-MSC-20000808-00119       |
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| INMARSAT VENTURES LTD.           | ) |                              |
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| Request for Extension of Time    | * |                              |
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| Section 621(5) of the ORBIT Act  | * |                              |
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**MEMORANDUM OPINION AND ORDER**

**Adopted: September 28, 2000 Released: October 3, 2000**

By the Commission:

1.  Inmarsat Ventures Ltd. ("Inmarsat") requests a nine-month extension
    of the October 1, 2000, deadline set forth in Section 621(5)(A)(ii)
    of the Open-Market Reorganization for the Betterment of
    International Telecommunications Act (the "ORBIT Act")[^1] to
    conduct an initial public offering ("IPO"). Inmarsat was originally
    created as an intergovernmental satellite organization ("IGO") to
    provide mobile satellite communications. It privatized on April 15,
    1999 as a stock corporation of the United Kingdom.[^2]

2.  The ORBIT Act establishes criteria for Commission review of
    applications to serve the U.S. market by "successor entities" of
    INTELSAT and Inmarsat. As an entity created as the result of the
    privatization of Inmarsat, Inmarsat Ventures Ltd., constitutes a
    "successor entity" under the ORBIT Act.[^3] It therefore is subject
    to the requirement in Section 621(5)(A)(ii) that it conduct an IPO
    on or about October 1, 2000, unless the Commission extends this
    deadline as provided in this section.[^4] Inmarsat requests that the
    deadline be extended to July 1, 2001.

3.  The Commission placed Inmarsat's extension request on public notice
    on August 16, 2000.[^5] Lockheed Martin Global Telecommunications
    LLC ("LMGT"), Stratos Mobile Networks (USA) ("Stratos Mobile"), and
    MarineSat Communications Network, Inc. d/b/a/ Stratos Communications
    ("Stratos Communications") (collectively "Stratos") filed comments
    in support of Inmarsat's request.[^6] Motient Services Inc.
    ("Motient") filed comments opposing the request for extension.[^7]

4.  In support of its request for an extension of the IPO deadline,
    Inmarsat asserts that it "has taken significant steps to ensure a
    successful IPO at the earliest possible date," including: (1)
    selecting a global coordinator and counsel for the U.S. and U.K.
    listings; and (2) holding its formal organizational meeting where
    it (a) established various IPO preparatory working groups; and (b)
    began preparing the U.S. prospectus and U.K. listing of particulars.
    Inmarsat further states that a successful IPO cannot be accomplished
    "until it substantially completes a sufficient portion of its
    internal reorganization and business development tasks.\"[^8]
    Inmarsat states that "adequately preparing an IPO is a complex and
    time-consuming process involving (1) internal preparations, (2)
    legal and regulatory processing, and (3) marketing."[^9] In
    addition, Inmarsat states that it must substantially complete
    internal reorganization and business development in order to make
    the IPO attractive to investors.[^10] Inmarsat's global coordinator,
    Morgan Stanley Dean Witter ("Morgan Stanley"), advises Inmarsat not
    to "complete the IPO by October 1, 2000, given the many steps still
    necessary to meet the legal and regulatory requirements in the
    United States and the United Kingdom."[^11] Morgan Stanley believes
    that it will take up to six months to complete just the first two of
    these three steps.[^12]

5.  Motient contends that Inmarsat has failed to justify its request for
    extension.[^13] Motient states that Inmarsat's reliance on the need
    to restructure and build a business attractive to investors is
    inadequate because it provides no reasons why these tasks were not
    accomplished earlier.[^14] In addition, Motient's asserts that
    should the Commission grant this extension, we should deny any
    application from Inmarsat, or any entity proposing access to
    Inmarsat to provide domestic mobile satellite service ("MSS"), until
    Inmarsat conducts an IPO and meets the other ORBIT Act privatization
    criteria.[^15] In this regard, it asserts that Congress sought to
    ensure the dilution of Inmarsat before it enters new markets and,
    absent dilution, Inmarsat effectively remains an IGO controlled by
    the former Signatories.[^16]

# discussion

6.  Section 621(5)(A)(ii) of the ORBIT Act provides that:

> \(A\) An initial public offering of securities of any successor entity
> or separated entity . . . (ii) shall be conducted, for the successor
> entities of Inmarsat, on or about October 1, 2000, except that the
> Commission may extend this deadline in consideration of market
> conditions and relevant business factors relating to the timing of an
> initial public offering, but to no later than December 31, 2001.[^17]

The purpose of this requirement is to ensure that Inmarsat becomes an
independent commercial entity with a pro-competitive ownership
structure.[^18] The ORBIT Act anticipates that independence will be
achieved, in part, through the substantial dilution of the aggregate
ownership in Inmarsat held by former Inmarsat signatories.[^19] Thus,
our consideration of Inmarsat's request for extension, as in our recent
New Skies Satellites, N.V. ("*New Skies*") decision, must be based upon
whether the proposed extension would serve to achieve the underlying
purpose of the requirement for an IPO.[^20]

7.  We conclude that granting an extension to Inmarsat to conduct its
    IPO is consistent with and will facilitate the purposes of the ORBIT
    Act. We grant the requested nine-month extension for the following
    reasons.

8.  First, Inmarsat has demonstrated diligence in preparing for a
    successful IPO. Inmarsat is taking measured steps toward this end,
    including engaging investment bankers and preparing legal and
    regulatory documents necessary for filing in the United Kingdom and
    United States. It is relying on the advice of its investment banker
    as to necessary preparations for and timing of an IPO. Inmarsat
    began taking these steps shortly after passage of the ORBIT
    Act.[^21]

9.  Second, Inmarsat's actions are reasonably related to its goal to
    become more attractive to potential investors. Inmarsat has
    demonstrated "relevant business factors" that will impact both the
    success and timing of an IPO.[^22] Inmarsat is acting reasonably in
    internally restructuring and completing certain business development
    tasks in order to make the IPO attractive to investors. It has
    negotiated contracts for its next-generation global mobile system
    and streamlined itself in order to cut costs and make its operation
    more efficient. Moreover, Inmarsat is in the process of
    restructuring its board of directors by the end of the year in order
    to comply with the ORBIT Act requirements. Inmarsat now anticipates
    that the IPO will be conducted in the first half of 2001.[^23]

10. The evidence demonstrates that Inmarsat is exercising reasonable
    business judgment in preparing an IPO that will achieve the goals of
    the ORBIT Act as well as support the business needs of the company.
    By giving Inmarsat more time to position itself so that it is more
    attractive to investors, there is a greater likelihood of a
    successful IPO resulting in substantial dilution, as required by the
    ORBIT Act. Conducting an IPO before the necessary preparations have
    been completed could undermine the ORBIT Act goal of substantial
    dilution. On the other hand, entry of a strong independent Inmarsat
    \-- through capital infusion and shareholder dilution \-- will
    contribute to a more competitive ownership structure.

11. In view of the above, we find that a nine-month extension of the IPO
    deadline, to July 1, 2001, is justified. Inmarsat should make all
    good faith efforts to conduct its IPO as soon as practicable based
    on market conditions and relevant business factors. A nine-month
    extension will not only allow Inmarsat time to adequately ready
    itself for its IPO, but it will provide reasonable flexibility for
    Inmarsat to time entry into the market at a time that will result in
    "substantial dilution" of its aggregate ownership as required by the
    ORBIT Act.[^24] Inmarsat has incentive to move forward to assure its
    access to the U.S. market.[^25]

12. Finally, we disagree with Motient that, in the event the Commission
    grants the extension request, it should deny any applications from
    Inmarsat and from any entity proposing to access Inmarsat, to
    provide domestic mobile satellite services ("MSS"), until Inmarsat
    conducts the required IPO. The ORBIT Act specifically provides for
    the authorization of services pending an IPO, provided other
    requirements in the ORBIT Act are satisfied.[^26] Further, we
    disagree with Motient that Inmarsat effectively remains an IGO
    absent dilution of former Signatory ownership and new non-Signatory
    investment. While Inmarsat must comply with ORBIT Act requirements
    to serve the U.S. market, it clearly is not now an IGO. Inmarsat is
    a private United Kingdom company having a fiduciary board of
    directors and no privileges and immunities.

13. Accordingly, IT IS ORDERED, pursuant to Sections 621(2) and 621(5)
    of the Open-Market Reorganization for the Betterment of
    International Telecommunications Act, Pub. L. 106-180, 114 Stat. 48
    (2000), §§ 621(2) and 621(5), that the Inmarsat Ventures Ltd.,
    request for an extension of the October 1, 2000 deadline to conduct
    an IPO IS GRANTED, and the deadline for Inmarsat Ventures, Ltd. to
    conduct its IPO consistent with the ORBIT Act is July 1, 2001.

> FEDERAL COMMUNICATIONS COMMISSION
>
> Magalie Roman Salas
>
> Secretary

[^1]: ORBIT Act, Pub. L. 106-180, 114 Stat. 48 (2000). *See also*
    Communications Satellite Act of 1962, as amended, 47 U.S.C. §§ 701
    *et. seq*.

[^2]: *See* Report of the Twelfth Session of the Inmarsat Assembly of
    Parties, Assembly/12/Report (May 8, 1998); Report of the Thirteenth
    (Extraordinary) Session of the Assembly of Parties,
    Assembly/13/Report (October 8, 1998).

[^3]: *See* Pub. L. 106-180, § 681(a)(7).

[^4]: Pub. L. 106-180, § 621(5)(A)(ii).

[^5]: Public Notice Report No. SAT-00053, August 16, 2000.

[^6]: Comments of Lockheed Martin Global Telecommunicaitons, August 25,
    2000 ("Lockheed Martin Comments"); Comments of Stratos Mobile
    Networks (USA) and MarineSat Communications Network, Augusts 25,
    2000 ("Stratos Comments"); Reply of Lockheed Martin Global
    Telecommunicaitons, September 1, 2000 ("Lockheed Martin Reply");
    Reply of Stratos Mobile Networks (USA) and MarineSat Communications
    Network, Augusts 25, 2000 ("Stratos Reply").

[^7]: Opposition of Motient Services Inc., August 25, 2000 ("Motient
    Opposition"); Reply of Motient Services Inc., September 1, 2000
    ("Motient Opposition").

[^8]: Inmarsat Extension Request at 3.

[^9]: *Id.*, Attachment A at 1.

[^10]: *Id*. at 3.

[^11]: *Id*. at 3 and Attachment A at 1.

[^12]: *Id*.

[^13]: Motient Opposition at 1.

[^14]: *Id*. at 5.

[^15]: *Id*. at 6-8.

[^16]: *Id*. at 7 and Motient Reply at 2.

[^17]: Pub. L. 106-180, § 621(5)(A)(ii).

[^18]: *See* Pub. L. 106-180, § 621(2), which provides, in part:

    > \(2\) INDEPENDENCE.---The privatized successor entities and
    > separated entities of INTELSAT and Inmarsat shall operate as
    > independent commercial entities, and have a pro-competitive
    > ownership structure. 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.
    > Such offering shall substantially dilute the aggregate ownership
    > of such entities by such signatories or former signatories. In
    > determining whether a public offering attains such substantial
    > dilution, the Commission shall take into account the purposes and
    > intent, privatization criteria, and other provisions of this
    > title, as well as market conditions.

[^19]: *See* Pub. L. 106-180, § 621(2).

[^20]: *In the Matter of New Skies Satellites, N.V., Request for an
    Extgension under Section 623(1) of the ORBIT Act*, Memorandum
    Opinion and Order, 2000 WL 867581 (F.C.C.), FCC 00-234 (June 30,
    2000) ("*New Skies*").

[^21]: We reject Motient's contention that Inmarsat should have begun
    these preparations in anticipation of passage of the ORBIT Act.
    Clearly, there was no requirement under U.S. law for Inmarsat to
    take such actions prior to passage of the Act.

[^22]: Pub. L. 106-180, § 621(5)(A)(ii). *See also*, *e.g.*, *In the
    Matter of New Skies Satellites, N.V., Request for an Extension under
    Section 623(1) of the ORBIT Act*, Memorandum Opinion and Order, FCC
    00-234 (June 30, 2000) (""*New Skies*").

[^23]: *See ex parte* letter from Inmarsat Ventures Ltd. Counsel, Kelly
    Cameron of Powell, Goldstein, Frazer & Murphy LLP, to Magalie Salas,
    Secretary, Federal Communications Commission, September 13, 200, at
    1.

[^24]: Morgan Stanley advises that "\[a\]n IPO's success is critically
    dependent on favorable market conditions" and "it is impossible to
    predict market conditions in the first half of 2001." Inmarsat
    Request, Attachment A at 3.

[^25]: *See* Pub. L. 106-180, §§ 601(b) & (c), 621, and 624.

[^26]: *Id* at §§ 601(b)(1)(D).