Teledesic Suspends Work Under Satellite Contract

Teledesic LLC, a satellite
communications services company, today announced that it has suspended
work under its satellite construction contract with Italian satellite
manufacturer Alenia Spazio SpA and will significantly reduce its staff
as it evaluates possible alternative approaches to its business.

"We continue to believe that the Teledesic system would be useful
to governments around the world in connection with disaster relief,
anti-terrorism, defense services and other critical government activities.
We also believe that providing ubiquitous, quality broadband service to the world,
including those three billion people who have never had service, will be
a viable business and remains a worthy mission," said Teledesic
Co-CEO William Owens. "Teledesic’s global license for 1 GHz of
nongeostationary satellite spectrum with international ITU priority is
widely viewed as a significant regulatory achievement that is not likely
to be duplicated."

Early this year, Teledesic engaged Alenia to build the first two satellites
of its planned 30-satellite constellation of mid-earth orbiting satellites
designed to provide broadband communications to any part of the globe. However,
after continually reviewing the foreseeable financial markets and the
commercial prospects for satellite point-to-point communications, the
company does not believe that it is prudent, purely on speculation, to
continue the substantial capital expenditures required to construct and
launch the satellites consistent with the timing required to meet FCC and
ITU regulatory milestones. Over the past ten years, Teledesic has spent
hundreds of millions of dollars on design and development of global
broadband satellite system concepts.

"Teledesic has dedicated and talented employees passionate about
the Teledesic vision, leading industrial partners, and some of the most
astute private investors from around the world," said Teledesic Chairman
and Co-CEO Craig McCaw. "We have met our regulatory milestones to date and
remain financially solvent. Our decision to suspend our activities results
from an unprecedented confluence of events in the telecommunications industry
and financial markets. We do not presently see elements in place that
would result in returns to our shareholders that are commensurate with the risk.
We continue to believe that the Teledesic service would ultimately provide
unique and measurable benefits to the world, and we are looking at scenarios
to preserve the ability for that service to be realized."