updated 1/11/2006 5:57:11 PM ET 2006-01-11T22:57:11

Boeing Co.'s long-stagnant commercial satellite business got a boost Wednesday with the announcement of the unit's largest order in nine years — a contract to build three satellites and associated ground systems for Mobile Satellite Ventures Corp.

Financial terms were not formally disclosed, but Mobile Satellite Ventures CEO Alexander Good valued the deal on a conference call at between $500 million and $1 billion.

That would make it Boeing's biggest commercial satellite deal since an international order for two large satellites in 1997, according to the Chicago-based aerospace company.

While continuing to produce satellites regularly for the U.S. government through classified contracts, the company has built only a handful of commercial satellites in recent years at its facility in Seal Beach, Calif. Worldwide market demand tumbled after hitting a peak in the late '90s, partly due to new communications opportunities opened up by the Internet, and Boeing has had problems with some satellites already in orbit.

Analyst Paul Nisbet said the contract with MSV signals that Boeing's commercial satellite business is slowly reviving as global demand picks up.

"To have it begin to come back is significant, simply because they're taking a losing operation and hopefully converting it to a profitable one," said Nisbet of Newport, R.I.-based JSA Research. "Certainly an order like this would indicate they've convinced at least one customer that the problems are behind them."

Asked about the potential for future deals, Howard Chambers, vice president of Boeing Space and Intelligence Systems, said only that the company is "competing vigorously on other contracts at the moment."

The satellites, to be built by Boeing at its facilities in Southern California, are to be launched in 2009 and 2010 for Reston, Va.-based MSV, which is privately held. The satellite communications company envisions them as the core of a hybrid wireless network that will incorporate satellites working in unison with ground-based towers.

Unlike existing satellite-based communications, MSV said, the system will use small handsets nearly identical to standard cell phones and will enable calls and data to be transmitted smoothly from virtually anywhere in North America as well as parts of South America.

The company said the costs of using the satellite service will be much less than those for current mobile satellite services and closer to what is charged for existing wireless.

"We are excited at the prospect of completing this paradigm-shifting project ahead of schedule and to provide improved service in both rural and urban areas, eliminating the telecommunications divide," Good said.

Ten-year-old MSV is backed by an investor group that includes Motient Corp., SkyTerra Communications, TMI Communications, Columbia Capital and Spectrum Equity Investors. The clients for its two existing satellites include the U.S. Department of Homeland Security and the Coast Guard.

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