Bring in the New

ATLANTA--Last week, North Korea became the 145^th--and last--country to become a signatory to Intelsat, the venerable satellite communications provider formed out of the Kennedy administration’s ComSat. On July 19, Intelsat will follow the trend of the telecom industry around the world and become privatized.

"The addition of North Korea is truly a symbol of the strength of this company going forward," says Jean-Robert Barallon, Intelsat group director. "Of course, becoming part of Intelsat also provides political capital for the North Koreans," he adds.

Despite the financial trouble of satellite service providers like Iridium and Globalstar, Barallon is confident of Intelsat’s future prospects because it has a deep base of mature customers, including CNN and Lockheed Martin Global Telecommunications (LMGT), which provide it with a revenue backlog of $6 billion in usage fees.

As further testament to LMGT’s confidence in the company, it increased its ownership stake in Intelsat by 10% last year. Under current rules, ownership can only be increased by purchasing the right to use more of the satellite constellation’s capacity. After privatization in July, ownership will be restricted to 15%. That rule will not apply to companies that now have larger stakes. In addition to July’s private placement, plans for an IPO are in the works, although a date has not been set.

One of the post-privatization challenges that member countries are most concerned with is ensuring that the telecom needs of smaller members will not be trampled by larger members. As insurance, the company has drafted corporate bylaws that address those concerns and has submitted nominations for the new board of directors, some of whom will be from smaller countries and are not in the telecommunications industry.

Whether one of those board members is from North Korea isn’t known, but what is for sure is that one of the last bastions of communism has locked up access to improved voice, video and data communication.
Steve Skobel is staff editor for Telecom Business. He can be reached at sskobel@intertec.com.