AT&T; Pays $55 Million for 50% Interest : Comsat to Sell 3 Big Earth Stations
Communications Satellite Corp. said Wednesday that it plans to sell its 50% ownership in three huge U.S.-based Earth stations to American Telephone & Telegraph for about $55 million in cash.
As a result of the move, prompted by a Federal Communications Commission ruling last year, Comsat will focus on new business services using more specialized Earth stations to transmit international satellite communications.
“Our future lies in small, low-cost international Earth stations that can be located near our customers and can decrease their communications expenses,” said William Taylor, president of the company’s new international communications division.
Under FCC policy set in 1966, four communications companies were allowed to co-own a number of large, multipurpose Earth stations used for sending telephone calls and other communications overseas via Intelsat, the international satellite consortium. Comsat held a 50% interest in the stations, while AT&T; owned 47.5% and RCA and Western Union had the rest.
However, last December, the FCC--in an attempt to increase competition in international satellite communications--ruled that individual companies could own and operate their own Earth stations and link them directly with the Intelsat network.
AT&T;, which moves 60% of its international traffic by satellite circuits from the existing stations, already had expressed interest in owning its own stations and probably would have switched much of this traffic to its own system--leaving less business and reduced revenue for Comsat and its other partners.
But Comsat’s sale of its ownership interest, which is subject to FCC approval, leaves AT&T; with nearly total control of the existing Earth stations.
“This agreement will give AT&T; direct control of the high-quality Earth stations we use to transmit telecommunications services around the world,” said Richard K. Jacobsen, vice president-international for AT&T; Communications. He did not indicate AT&T;'s further plans.
Comsat, meanwhile, will open its own Earth station in New York later this month and has received FCC approval for another station at its headquarters in Washington.
The company also hopes to build stations in San Francisco, Chicago and Houston.
According to a memorandum of understanding between Comsat and AT&T;, on Jan. 1, 1988, Comsat will sell to AT&T; its 50% ownership interest in stations in Jamesburg, Calif., Roaring Creek, Pa., and Etam, Va. Two other jointly owned stations, in Andover, Me., and Brewster, Wash., will be closed by Jan. 1, 1987, the company said.
Comsat President Irving Goldstein predicted that any adverse effect on revenue or earnings resulting from the divestiture would be offset by growth in Comsat’s new international communications services.