O3b Networks Raises $1.2 Billion for Satellite Project, Backers Include Google

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satelliteO3b Networks raised a hefty $1.2 billion from some major backers including Google (GOOG) for a satellite telecommunications service designed to serve emerging markets, O3b announced Monday.

The company expects to build and launch its next-generation satellite network to be used by telecommunications companies and Internet service providers in Latin America, Africa and Asia. O3b aims to have telcos and ISPs use its service to connect their 3G, WiMAX and wired networks with the rest of the world.

The company's existing investors involved in the deal include Google, North Bridge Venture Partners, SES, Liberty Global and HSBC Principal Investments, and new investors including Development Bank of Southern Africa, Sofina and Satya Capital joined in.

"We are pleased to have the new shareholders supporting this important mission," said John Dick, O3b Networks chairman, in a statement. "The amount of new funding and the quality of the investors reflects O3b Networks' ability to balance important social goals while maintaining the required private sector returns."

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The market is promising, given the rapid growth of Internet usage in emerging markets. In Brazil, Russia, India, China and Indonesia (the "BRICI" countries), the combined number of Internet users has reached 610 million. That number should nearly double by 2015, according to a report by Boston Consulting Group.

And people living in these emerging markets tend to rely heavily on cellular phones for their Internet usage, much more than on PCs, the report observed. O3b is teaming with telecom carriers and ISPs to service the region's Internet-hungry consumers.

But despite the rapid growth that is anticipated in these emerging markets, there is also competition among the local Internet providers. "The commercial opportunities in these digital markets are rapidly evolving," said Yvonne Zhou, a Boston Consulting Group principal, in a statement. "And the presence of strong local competitors in many of these markets means that the 'incumbent' digital-market leaders in the United States and Europe should not take success in the BRICI countries for granted."
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