Google, cable titan John Malone, and HSBC have backed a company called O3b Networks to bring high-speed Internet access to the 3 billion folks in emerging markets and Africa that won’t otherwise get it. The delivery vehicle? 16+ satellites.
But don’t launch into the what’s-with-Google-and-this-space-fetish-and-oh-my-God-what-CAPEX rant just yet. The company won’t be paying for the entire $750 million project. In fact, the company’s investment may be limited to a mere $20 million (about two days-worth of cash flow).
Google, Malone, and HSBC have each put $20 million into the venture, and Allen & Co has contributed another $5 million. The $65 million of “seed” equity will eventually be supplemented by another $150-$180 million of additional equity, mostly from third parties. The rest will then be funded with debt.
We’d be shocked if the project ended up costing only $750 million, but in Google’s case, at least, there’s plenty more where that $20 came from. O3b hopes to have the satellites up and running by 2010. And even if only a fraction of the “other 3 billion” people (O3b) click on Google search links, the company will make back that $20 million in no time. More in FT…
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