Boeing wins major satellite-cellular deal

WASHINGTON (Reuters) - Boeing Co. (BA.N: Quote, Profile, Research) on Wednesday announced its biggest satellite order in nine years, valued at more than $500 million and less than $1 billion, to build the backbone of a new hybrid satellite-cellular communications network.

The order was from Mobile Satellite Ventures, a closely held communications company funded by Motient Corp. (MNCP.PK: Quote, Profile, Research) and Skyterra Communications Inc. (SKYT.OB: Quote, Profile, Research), among others.

Depending on options, the contract would be worth "well over" $500 million at the low end and under $1 billion at the high end, Alexander Good, MSV's vice chairman and chief executive, told a teleconference with Boeing officials.

It was the richest order of its kind for Boeing since 1997, when Abu Dhabi-based Thuraya Satellite Telecommunications Co. signed to buy two large satellites for mobile communications in the Middle East and beyond.

Under the new deal, three Boeing geo-mobile satellites, among the most powerful ever built, will support what the companies described as advanced and widespread voice and data coverage throughout North and Latin America.

The first Boeing 702 class satellite is due to be ready in 44 months and to launch in 2009 with the others to follow in 2010, Boeing officials said. The satellites are compatible with a range of rockets. They will supply 11,000 watts of power with a primary antenna almost 75 feet across, about twice as large as any existing commercial satellite, MSV said.

The network would rely on ground-based stations to beef up coverage in urban areas where satellite signals are often blocked.

Boeing said these ground-based systems would provide "beam-forming flexibility and interference cancellation unprecedented in commercial satellite systems."

The deal was a bright spot for Chicago-based Boeing after a dismal 2005 with no new big commercial satellite orders of the 19 posted last year worldwide, said Marco Caceres, a space analyst at Fairfax, Virginia-based Teal Group consultancy.

Boeing and Lockheed Martin Corp. (LMT.N: Quote, Profile, Research), the Pentagon's biggest suppliers, are seeking U.S. federal approval to merge their government rocket-launch businesses to help them offset doldrums on the commercial side.

Boeing is not investing in MSV, company officials said. But it appears that it has offered easy-term financing for the project for a period of time, said Howard Rubel, an aerospace analyst at Jeffries & Co., Inc.

"This was probably an element to winning the contract," he said in a note to clients, adding that MSV had enough funds on hand to take it into late 2007. He cited signs of interest in funding the venture to completion in the cellular and video distribution market.

The hybrid system will use MSV's patented technology to work with smaller wireless devices than those used by satellite networks, such as Iridium, often derided as brick-like.

The new handsets will be virtually identical to modern cell phones in terms of "aesthetics, cost and functionality," a joint news release said.

Boeing shares were up 75 cents to $69.85 in afternoon trading on the New York Stock Exchange.