This will be the largest satellite-communications project in the region, with an estimated total cost of $1 billion and a coverage area encompassing nearly 1.8 billion people in the Middle East, North Africa, Eastern Europe including Turkey, Central Asia and the Indian subcontinent.

The project cost includes manufacture of two high-power satellites, launch services for the first satellite, insurance, ground facilities and a quarter of a million handheld telephones.

Hughes, of Los Angeles, will provide a turnkey system with two ``geo-mobile'' body-stabilized satellites, ground facilities and mobile telephones. Thuraya, a privately held company owned by prominent organizations from the region, will select the launch vehicle later.

Hughes will deliver the first satellite in 31 months, enabling Thuraya to begin operations in the year 2000. The second spacecraft will be a ground spare. The contract also has a provision for a third satellite to be ordered when needed.

The satellite will operate in geostationary orbit, transmitting and receiving calls through a single 12.25-meter-aperture reflector. On-board digital signal processing will route the calls directly from one handheld unit to another, or to a terrestrial network.

Thuraya and Hughes concluded two weeks of final negotiations with a signing ceremony in Abu Dhabi, at the headquarters of ETISALAT, the Emirates Telecommunications Corp. Mohammad Hassan Omran, chairman of Thuraya, and Michael J. Houterman, HSCI president, signed on behalf of their companies.

Omran said, ``Today is considered the beginning for Thuraya's journey to orbit.'' The first satellite is scheduled for launch in May 2000 and will begin commercial operations by September 2000.

``Thuraya will enable businesspeople to stay in touch while traveling in this region, as well as extend the most modern services to areas that lack telephones now,'' said HSCI's Houterman. ``This project also establishes Hughes as the world's leading supplier not only of satellites, but also of entire space-based communications systems.''

The Thuraya system will offer GSM-compatible mobile-telephone services. The satellites will employ advanced digital processing to create spot beams that can be redirected wherever needed, even after the satellite is placed in orbit, from big cities to rural areas and even at sea. Thuraya is developing agreements with service providers in the coverage area.

Thuraya is the first satellite project in the Middle East for Hughes, which was supported by the U.S. government in its bid.

U.S. Secretary of Commerce William Daley added: ``We are pleased that Thuraya has chosen an American firm for this important project. State-of-the-art technology from U.S. firms like Hughes can provide telecom services to people in many countries while supporting jobs here in the U.S. We are happy to have played a role in Hughes' success.''

This marks the fifth satellite contract for Hughes this year, bringing its backlog to 41 spacecraft to be delivered by the end of 2000. The satellites are being built at Hughes Space and Communications Co.'s Integrated Satellite Factory, near Los Angeles International Airport.

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