The Intelsat Working Party tasked with negotiating the details of the creation of a proposed private company reached consensus yesterday on a final report to be presented for consideration and approval by an Extraordinary Assembly of Parties in Salvador, Brazil, taking place from 30 March to 1 April of this year.
The Working Party agreed that a total of five Intelsat satellites located
at 57 degrees E, 183 degrees E, 319.5 degrees E and two co-located satellites at 338.5 degrees E, plus the K-TV satellite to be located at 95 degrees E, should be transferred at book value to the Intelsat New Company (INC) upon its incorporation under the jurisdiction of the Netherlands. With these satellites and any others it may eventually procure, INC is expected to focus on multi-regional video distribution DTH and interactive multimedia services to residential and business customers. Existing contracts on the transferred satellites will be moved from Intelsat to INC, with safeguards to guarantee lifeline PSN service and cable restoration in certain cases.
In keeping with the decision of the last Assembly of Parties in Puerto
Vallarta in April 1997, the orbital registrations relevant to the six
satellites in question will be transferred to the Netherlands on behalf of
INC. Still to be resolved before the Extraordinary Assembly of Parties in
March is the transfer of Ka-band registrations at two of the satellite
locations being transferred from Intelsat to INC.
On ownership of the affiliate, the Working Party recommended that Intelsat
should have a 10 percent shareholding in INC, managed through an independent
trust arrangement with no representation on the INC Board. Remaining INC
shares will initially be held by the Signatories in proportion to their
ownership of Intelsat, with considerable natural dilution of that ownership in favor of outside investors expected to occur through an initial public
offering and subsequent voluntary share trading on public markets. Individual investor ownership will be capped at 17 percent, for eventual review by INC shareholders.
INC's commercial activities will be subject to national and multinational
competition and regulatory authorities in the countries where it operates. A clear arms-length relationship will exist between INC and Intelsat with
respect to transitional and any future business transactions, plus separation of directors, officers, personnel, marketing and credit arrangements.
Several other competitive safeguards will be put into place to assure a
level playing field between INC and its competitors, including a commitment by INC not to seek exclusive authorization to provide services in any country or region. In addition, final wording of a text related to Intelsat waiving certain treaty privileges and immunities with respect to any business relations with INC is still under discussion.
INC will be established immediately following the Assembly of Parties'
formal approval of the IWP proposals. The transfer of satellite assets will
be completed within a few months thereafter and an IPO expected in the
following year, as determined by INC's future directors and management.
Intelsat will continue to operate with its remaining satellites under the
treaty provisions of the Intelsat Agreements. The restructuring will allow
Intelsat to concentrate on its core mission of providing global, universal
telecommunications services, including PSN and other services such as video
contribution and wholesale distribution.
“We are looking forward to the resolution of this restructuring process.
Negotiators from dozens of countries have been grappling with many detailed
issues in their search to balance the dual needs of establishing a healthy INC that will survive its first years on the market and at the same time ensuring the operational integrity and long-term health and viability of Intelsat,'' said Irving Goldstein, Intelsat's Director General and CEO. “Everyone deserves to be congratulated on their hard work, perseverance and willingness to compromise,'' he added.
For background information on the restructuring issue, please contact
Intelsat Headquarters.
Intelsat owns and operates the world's most extensive global communications satellite system. With 1997 revenues of over US$ 960 million, the Intelsat system provides voice/data and video services in more than 200 countries and territories via satellite.
