COMSAT with little surprise says it supports the Inmarsat Council's plan to privatize the world's first satellite mobile phone system – Inmarsat. The Council, which met last week, will present its plan for approval by member governments at an Assembly of Parties meeting in April 1998.

“This agreement is an important strategic milestone for COMSAT,'' said

Betty C. Alewine, president and chief executive officer of COMSAT Corporation.

“The action plan developed by the Inmarsat Council is an excellent road map

for the formation of a private company from Inmarsat's assets by January 1,

1999. A public offering is planned within approximately two years of that

date.''

The privatization timetable is contingent on Inmarsat member governments

agreeing to implement the proposed amendments to the Inmarsat Convention. If

such agreement is not achieved, the ratification process could take longer.

“If agreed, however, the transformation of Inmarsat into a private company and

its subsequent public offering will create, for the first time, a tangible

market valuation for these assets,'' Alewine continued.

An investment banker, SBC Warburg Dillon Read (SBC), has been hired by the

Council to provide financial and strategic advice, due diligence and review of

Inmarsat's business plans with a view toward the privatized organization's

ability to raise capital in public markets.

COMSAT will be a shareholder and board member of the new private company

and will continue to provide services to its customers using the Inmarsat

system through its four land earth stations. Although ownership in the

company is planned to be capped at 15%, COMSAT's current 22% ownership in

Inmarsat will be grandfathered. Prior to the public offering, owners will be

able to trade shares, and strategic investors will be able to invest up to

$500 million in equity in the private company.

“This plan also addresses many of the policy goals of the U.S.

Government,'' said Alewine. “The privatization of Inmarsat will be pro-

competitive, pro-consumer and will preserve the value of COMSAT's

shareholders' investment in Inmarsat since its founding.''

If the privatization is approved, COMSAT would change its accounting for

its Inmarsat investment from consolidation to the equity method. Other

financial details, including Inmarsat dividend policy prior to its public

offering, will be determined at subsequent Council meetings.