Teledesic Cuts Work Force 30%

Teledesic Corp. laid off 20-25 people, about 30% of their workforce, in a move to contain costs. Bob Ratliffe, Teledesic spokesman said, “Many of the people let go were hired to work on satellite launch preparations, expertise which won't be needed for a while.” Teledesic has pushed back the launch of its service several times, and now plans to have service operational in 2005.

Teledesic is in the midst of its fourth engineering re-design. A new prime contractor is expected to be announced later this year. The Boeing Co., which bought Hughes Electronics Corp.'s satellite business last year, may regain its former position as prime contractor on the project, replacing Motorola. The company raised US$1 billion to jump-start the fourth engineering attempt last fall. There are rumors that Teledesic is preparing to seek US$9 billion through a combination of a public offering and a debt offering, with some investment expected to come from non-U.S. investors.

The U.S. Federal Communications Commission (FCC) recently ruled that Teledesic must have its first satellite under construction by January 2002, with construction of that satellite completed by January 2004. Construction of the remaining satellites must have commenced by January 2004. The first satellite must be launched and operational no later than September 26, 2004, and the remaining satellites must be launched and operational no later than January 2007. The constellation the FCC ruled on consists of 288 satellites, twenty four satellites in each of 12 orbital planes.

The date by which the Teledesic licensed system must be “brought into use” to protect the date priority of the International Telecommunication Union (ITU) filings for its frequencies is September 26, 2004. The license term for the constellation is ten years and will begin to run on the date Teledesic certifies to the FCC that the first satellite in the system has been successfully placed into orbit and the operations fully conform to the terms and conditions of the FCC license. The FCC also sent a letter to Teledesic, requesting a description of its inter-satellite link (ISL) arrangement, the amount of ISL spectrum required by each satellite, and the justification for the amount of the ISL spectrum requested.

Teledesic Corp. is a unit of ICO-Teledesic Global Ltd. According to Securities and Exchange Commission documents, Teledesic has spent more than US$392 million. 

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