Orbcomm Inc, which offers global machine-to-machine communications using a satellite network, is planning to raise up to $156m in an IPO on Nasdaq.
The Fort Lee, New Jersey-based company operates a network of 30 low-Earth orbit, LEO, satellites and ground infrastructure to enable its customers to track and communicate with fixed and mobile assets located anywhere in the world. It said examples of assets that are connected through its M2M data communications system include trucks, trailers, railcars, containers, heavy equipment, fluid tanks, utility meters, pipeline monitoring equipment, marine vessels, and oil wells.
Orbcomm said its airtime costs are the lowest in the industry for global connectivity and there is no other satellite or terrestrial network in operation that can offer global two-way wireless narrowband data service coverage at comparable cost using a single technology standard.
At September 30, it had approximately 199,000 billable subscriber communicators on its system and net additions totaled 86,000 units in the first nine months of this year.
It quoted Harbor Research Inc as estimating that the number of vehicles, devices and units worldwide in the commercial transportation, heavy equipment, fixed asset monitoring, marine vessel, consumer transportation, and government and homeland security markets which are connected to M2M data communications will grow from approximately 17.4 million in 2006 to 131.0 million by 2012, a compound annual growth rate of 40%.
During this time, it expects penetration of M2M data communications devices for these target markets to increase from approximately 1.4% of a total of 1.3 billion vehicles, devices and units in 2006 to approximately 8.9% of a total of 1.5 billion vehicles, devices and units in 2012.
Orbcomm said it has a significant cost advantage over any potential new LEO satellite system competitors because it acquired the majority of its current communications system assets from ORBCOMM Global L and its subsidiaries out of bankruptcy for a fraction of their original cost.
In addition, because its LEO satellites are relatively small and deployed into low-Earth orbit, the constellation is less expensive and easier to launch and maintain than larger LEO satellites and large geostationary satellites. It also believes it has less complex and less costly ground infrastructure and subscriber communication equipment than other satellite communications providers.
Orbcomm has been growing rapidly but is still trading in the red. It cut losses from $12.4m to $9.1m in 2005 when revenue grew by 43% to $15.5m. However, the net loss rose from $6.3m to $10.2m in the six months to June 30 on revenue that rose 97% to $12.6m.
One reason it needs to raise money is the need to launch a new generation of satellites. One is to be launched in the first quarter of 2007 and by the end of next year it plans to launch six satellites with slightly upgraded communication capability. At least 18 next-generation satellites with increased communications capabilities are planned starting in 2008, making a total of 25 next-generation satellites.