It is now almost two weeks since New ICO, formerly ICO Global Communi-cations, announced on May 17 that it had emerged from US Chapter 11 Bankruptcy protection, following a decision by the court in Delaware. Since then, the necessary approvals for similar steps have been obtained from the relevant courts in Bermuda and the Cayman Islands, both states in which ‘Old ICO’ had operations.

Even before the May 17 announcement, Teledesic’s Board had approved the merger of the Teledesic company into ICO-Teledesic Global Ltd. This is a new holding company that controls all the satellite-related assets of Craig McCaw’s private investment company Eagle River Investments. It is now planned that both London-based New ICO and Teledesic will become wholly owned subsidiaries of ICO-Teledesic Global. It is understood that Mr McCaw personally controls 54 per cent of the new company. Other owners of Teledesic include Motorola, Saudi prince Alwaleed Bin Talal, Boeing and the Abu Dhabi Investment Company. Presumably Microsoft founder Bill Gates still has a share, since his name is religiously dropped as a founding father in all press releases.

Interspace has finally managed to make contact with Jai Singh (formerly with Old ICO and before that with Inmarsat), who is now CEO of ASC Enterprises, a satellite company led by Subhash Chandra, the Indian entrepreneur who started Zee TV. But Singh was unable to go beyond the ICO/Teledesic statement that Chandra “would be a shareholder in the new holding company ICO-Teledesic Global”. Even the amount of his participation is still under wraps; earlier reports suggested “up to 38 per cent”.

The money that previous investors had sunk in Old ICO before it sought bankruptcy protection – about $3.1 billion (E3.31bn), of which $2,058 million was paid in or committed at the outset – has essentially all been spent on design and development of the original ICO network for narrow-band voice services. How much of this investment will remain of value in McCaw’s reworking of the system into a much higher-bandwidth packet data network is not yet clear. But what is apparent is that Old ICO was by no means ready to start commercial operations after putting in that $3.1 billion. In other words, this investment hadn’t yet bought them a working system. There are apparently still some creditors to pay off.

As a consequence, that investment is now virtually without value, since it cannot generate revenues. It could be argued that the founding shareholders have only themselves to blame, since they refused to respond in sufficient numbers to a rights issue offered – and extended – by Old ICO management last summer.

The result is that, citing the ICO/Teledesic press release of May 17, “Holders of the existing common shares of Old ICO will receive shares of common stock” [in what it is not stated; presumably New ICO] “comprising approximately 1 per cent of the common equity capitalisation of New ICO…” In fact, insiders are now saying that only about half of this amount would be a more appropriate payoff..

In its last Annual Report (for 1998, published last year; the 1999 “report” was merely a brief document sent only to the US Securities and Exchange Commission), Old ICO listed 72 organisations as “Some of ICO’s strategic investors”. Fifty-one of these were telcos or the ministries answerable for them. Among them was ICO’s originator Inmarsat, then an international organisation, which declared later that further investment in ICO was not in line with its business plans.

It is believed that a few telcos have contributed to the first $225 million tranche of McCaw-led refinancing, among them Deutsche Telekom, Qatar Telecom and Turk Telekom. This list also included Credit Suisse 1st Boston investment bank.

It is now reported that New ICO will not start service until 2003, at least one year later than recent announcements. The reason is more extensive work on the system than had at first been thought necessary. The ground segment (Satellite Access Nodes, primed by NEC with cooperation of Hughes Network Systems and Ericsson) will be taking up most of the effort, though the satellites are absorbing quite an amount of work in signal strengthening. Contractor Hughes (also an investor) is reportedly saying that “We’re being asked to do things we’ve never done before.” User handset designs, too, have been sent back to the drawing board. No handset contractor has yet been named, but there are hints that a 250- gram voice handset, with a terrestrial cellular alternative and almost certainly WAP-enabled, is still among the objectives for “minimum service”.

Among the many things still not clear is whether Old ICO’s existing collection of regulatory approvals from various nations and international roaming agreements will retain their validity now that the service is being changed. If not, a vast amount of work will go down the drain, though not in India, where according to Jai Singh no licence for Old ICO was in place. Certainly the ITU’s Memorandum of Understanding (1996) intended as a model for Global Mobile Personal Communications Services agreements was intended to apply to narrowband voice systems and not quasi-wideband IP networks. It is not at present thought necessary to seek approval for the new service from the ITU (now near the end of its WRC2000 conference in Istanbul); the frequencies to be used – S-Band for service links and C-Band for feeder links – will remain the same, though not necessarily the signal strengths. But plenty of other regulatory approvals – financial, technical and political – will almost certainly need renegotiation.