TerreStar Corporation

(Public, NASDAQ:TSTR)

With the recent launching of TerreStar-1, TerraStar Corporation looks to break through and become a leader in the communications industry. AT&T Mobility along with TerreStar Corporation will market a hybrid prototype terrestrial/satellite hand set yet this year. The technology will allow the new hand set to operate on ground-based phone networks. In dead zones, the customer could use the device via satellite if they can access the southern sky similar to a satellite dish. The TerreStar-1 has a life expectancy of 15 years. StocksHaven Investments sees this price point of $0.958 as an extremely undervalued play based on financial and potential product analysis.

About

TerreStar Corporation, formerly Motient Corporation, is the controlling shareholder of TerreStar Networks Inc. and TerreStar Global Ltd., and a shareholder of SkyTerra Communications. TerreStar is based in Reston, VA, and plans to build, own and operate North America’s first next generation integrated mobile satellite and terrestrial communications network that will provide universal access and tailored applications throughout North America over conventional commercial wireless devices. With a first-to-market launch strategy in 2008, TerreStar expects to offer customer-designed products and applications over a fully optimized 4G IP network. For more information on TerreStar Networks visit www.terrestar.com.

Outlook of TerreStar-1 Satellite

“With the successful launch of TerreStar-1, we are redefining the mobile communications landscape,” said Dennis Matheson, CTO of TerreStar. “We are creating a new paradigm in mobile broadband network services and devices that will leverage our integrated satellite and terrestrial communications components to enable true ubiquity and reliability – anywhere in the United States and Canada.”

“Today’s launch is just the beginning of the TerreStar story,” said TerreStar President, Jeff Epstein. “We believe there are tremendous opportunities ahead – in both the commercial and government sectors – and we remain focused on our promise to help solve the critical communications and business continuity challenges faced by government, emergency responders, enterprises and rural communities.”

According to TerreStar, the satellite will have a spectrum footprint that covers a population of nearly 330 million throughout the United States and Canada. [ source : 7/1/09 8-K ]

TerreStar is also looking to manufacture and launch a second satellite this year. TerreStar-2, which is to be a ground spare, is identical to the TerreStar-1 satellite. Construction of TerreStar-2 commenced in September 2006, and is scheduled to be delivered in 2009. In November 2006, the Company entered into a launch services contract with Arianespace that entitled the Company to a launch window for the launch of TerreStar-1, with an option to purchase two additional satellite launches at fixed prices.

The Technology

By offering mobile satellite service (MSS), using frequencies in the two gigahertz band, part of what is often referred to as the S-band, in conjunction with ancillary terrestrial components (ATC), the Company can deploy an integrated satellite and terrestrial wireless communications network. Its network allows a user to utilize a mobile device that would communicate with a traditional land-based wireless network when in range of that network, but communicate with a satellite when not in range of such a land-based network. TerreStar-1 has an antenna approximately 60 feet across and is  be able to communicate with standard wireless devices.

Competition

SkyTerra Communications Inc. (SKYT) is planning on launching a similar satellite and offering a similar service sometime fourth quarter of 2009, so how this will play out versus TerreStar is yet to be determined. The specifications of SKYT’s sattelite and whether or not they will broaden the market to individuals, not just government and business entities will be the major concern for TSTR shareholders.

Financial Analysis

Support for TSTR has been set at around the 90 cent levels for this penny stock, which I suspect will be tested again as seen from today’s (Thursday, July 09, 2009) PPS. Longer-term, the technology will have to work for TSTR to keep the market’s attention. There’s plenty of room for potential upside, even though the true value of the company is a little hard to deteremine and most of the hype is simply that, hype. With patience, TSTR should release more concrete information with regards to the evaluation of their new launch and whether it is ready to generate money.

There are several critical steps for this satellite to start earning
money:

1. Successful launch
2. Injection into the transfer orbit (from LEO to GEO)
3. Contacting the satellite via command link
4. Parking at the GEO slot
5. Deploying the solar panels
6. Unfurling the reflector dish
7. Maintaining correct attitude at the GEO (this depends on actuators and the star tracker/inertial platform).
8. Basic shakedown of the radio systems, verifying expected antenna gain as a double-check for correct unfurling.
9. Testing the signal chain / beam-forming (DSPs, receivers/transmitters, antenna array) — this will include ground verification of beam shape /positioning accuracy.

*Should any of these fail, the satellite is as good as dead.

This process will take at least a few months to determine whether or not TerreStar has passed these critical steps.

With regards to bankrupcy, you should feel somewhat safe. 481.09 equity / 139.21 shares, means the shareholders would expect cash equivalents of $3.45 PPS. Moreover, the Debt-To-Equity ratio ( 845.94 / 481.09 ) = 1.75 is not a staggering number when compared to the industry average. Multiply this by 100 and they owe 175% more than they own in equities.

Moreover, this company is currently being held by a large number of major institutional and mutual fund holders. Among the top are: Harbinger Capital Partners Special Situations Fund, Solus Alternative Asset Management, VANGUARD GROUP, INC. (THE), Harbinger Capital Partners Master Fd I, Ltd. [ source ]

Overall Sentiment

With AT&T Mobility reportedly set to begin reselling satellite enabled phones and service from TerreStar in the near future an investment in TSTR seems like a logical choice both short-term (at these low PPS levels) and in the long-term. AT&T and TerreStar have been working together since August of 2008 when the two companies signed a nationwide reciprocal roaming agreement. Pocket sized satellites are no longer a figment of the imagination thanks to TerreStar Corporation.

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