SecProbe.io

CORRESP
1
filename1.htm

     CORRESP

September
14, 2005

Mr. Larry Spirgel

Assistant Director

Securities and Exchange Commission

Division of Corporation Finance

450 Fifth Street, N.W.

Washington, D.C. 20549

Re:
SkyTerra
Communications, Inc.

Form 10-K for the fiscal year ended December 31, 2004

Filed March 31, 2005

Form 10-Q
for the quarters ended March 31 and June 30, 2005

File No. 0-13865

Dear
Mr. Spirgel:

This
letter is submitted on behalf of SkyTerra Communications, Inc. (the “Company”)
in response to the comments of the staff of the Division of Corporation Finance of the
Securities and Exchange Commission (the “Commission”) with respect to the
Company’s Form 10-K for the fiscal year ended December 31, 2004, filed
March 31, 2005 and Form 10-Q for the quarters ended March 31 and
June 30, 2005, (File No. 0-13865), as set forth in your letter to me, dated
September 6, 2005.

For
reference purposes, the text of your letter has been reproduced in this letter with
responses below each numbered comment.

Annual
Report filed on form 10-K for the year ended December 31, 2004

Note
2 – Interest in MSV Joint Venture, page 5

1.

We
note that following the November 12, 2004 conversion of your notes
               receivables into limited partnership interests, you account for your
               investment in MSV under the equity method. We also note on page (sic)
               that you have designated three members of the 13-member board of directors
of                the MSV Joint Venture’s corporate general partner. Tell us whether
               you designated the three members prior to the conversion of the notes.
               If so and considering that you had a representation on the board of
directors in the general partner in excess of 20% (i.e., 3 out of 13
               members), tell us in detail why you believe that you were not required
               to account for your investment in MSV under the equity method prior to
               the conversion of the notes receivable into limited partnership interests.

Mr.
Larry Spirgel

September 14, 2005

Page 2

Response:

Since
November 2001 when the Company purchased the convertible notes from Mobile Satellite
Ventures LP (“MSV LP”), the Company has designated three members of the board of
directors of MSV LP’s corporate general partner (“MSV GP”).

In
order for an investor to account for an investment under the equity method, APB 18 (as
applied to partnerships by SOP 78-9) indicates that the investor must own an equity
interest in the investee. Prior to the conversion of the notes to limited partnership
units in November 2004, the Company did not own any limited partnership interests of MSV
LP and, thus, was not permitted to account for the notes under the equity method. While
the Company has owned MSV GP common stock since that time, MSV GP does not have (and has
never had) an economic interest in MSV LP.

Quarterly
Report filed on form 10-Q for the period ended June 30, 2004 (sic)

Note
3 – Interest in the MSV Joint Venture, page 5

2.

We
note that your MSV Investors Subsidiary owns an approximately 17% interest
               in Terrestar and that it is accounting for this investment using the
               cost method. In addition to its 17% interest in Terrestar, tell us
               whether you consider other factors which could indicate that you or your
               subsidiary exercise significant influence which would require the use of
               the equity method to account for the investment in Terrestar. For
               instance, tell us whether you or your subsidiary have a significant
representation on the board of directors of Terrestar.

Response:

The
Company does not exercise significant influence over the operating and financial policies
of TerreStar. Paragraph 17 of APB 18 states, “an investment of less than 20% of the
voting stock of an investee should lead to a presumption that an investor does not have
the ability to exercise significant influence unless such ability can be
demonstrated.” As the Company owns approximately 17% of the common stock of
TerreStar, evidence must exist to overcome that presumption. In EITF 95-6, the Task Force
reached a consensus on eight factors which, if present, would indicate that an investor
exercises significant influence. Of the eight, the only applicable factor is that the
Company designates one of the seven members of the board of directors of TerreStar. As
such, the Company believes it has not overcome the presumption.

Mr.
Larry Spirgel

September 14, 2005

Page 3

Note
4 – Interest in Hughes Network Systems, page 7

3.

Addressing
FIN 46R, tell us in more detail how you concluded that you are not                the
primary beneficiary of HNS.

Response:

The
primary beneficiary of a variable interest entity is determined in accordance with
paragraph 14 of FIN 46R which states, “[the enterprise that] has a variable interest
(or a combination of variable interests) that will absorb a majority of the entity’s
expected losses, receive a majority of the entity’s expected residual returns, or
both.” The Company determined that it held two variable interests in HNS: (i) the
$55.2 million equity investment (calculated as the sum of (x) the $50 million cash paid by
the Company and (y) the $5.2 million value of the 300,000 shares of common stock
(calculated using a $17.20 per share which is the five day average surrounding the
December 3, 2004, the date of execution of the agreement to purchase the HNS
interests)) and (ii) the management fee payable to the Company by HNS in the amount of $250,000 per
quarter for the three years immediately following the closing of the acquisition (i.e., an
aggregate of $3.0 million over the three year period). Based on an analysis of expected
losses and residual returns and considering the amount of term indebtedness ($325.0
million) incurred by HNS (which is below investment grade), the Company determined that it
is not the primary beneficiary of HNS, as it will absorb less than 30% of the expected
losses and receive less than 30% of the residual returns.

     *   *   *

                The
Company hereby acknowledges the following:

o
that
the Company is responsible for the adequacy and accuracy of the disclosure in the filings;

o
staff
comments or changes in disclosure to staff comments do not foreclose the
Commission from taking
any action with respect to the filings; and

o
 the
Company may not assert staff comments in any proceeding initiated by the Commission or
any person under the federal securities laws of the United States.

                If
you have any questions regarding the responses in this letter, please call me at (212)
730-7570.

     Sincerely

 /s/ CRAIG J. KAUFMANN

    Craig J. Kaufmann

Controller and Treasurer