New Iridium Satellite on solid footing after rebirth; ahead of revenue pace

Satellite phone venture Iridium Satellite LLC has found itself on solid financial footing after about a year and a half of operations under new management, exceeding revenue targets and landing some significant deals. After purchasing the formerly Motorola Inc.-backed outfit for a mere US$25 million, targeting commercial users in remote areas has become the company’s key focus. Gino Picasso, CEO of the new Iridium, says the company has focused a significant amount of its attention on the revenue side since relaunching, and the initial strategy is beginning to pay off. "In fact, we’re running approximately 40 per cent ahead of where we expected to be at this point in time in terms of revenue," Picasso explains. Recently, the company cracked the lucrative government contract market by landing a major deal with the U.S. Department of Defense. For a struggling company that inherited a poor reputation from the previous owners, landing a contract of this nature is of significant value. "It’s safe to say that it was a key aspect of being able to go forward and have the surety of having a viable business … having an anchor tenant that not only provided the money but most importantly the validation of the value of the system because there was a lot of consternation whether the technology itself was of value," Picasso tells Report on Wireless. "Clearly, the U.S. Department of Defense contract validates the utility of a system like this and that’s what this represents." Not only does this contract provide the Reston VA-based company with a steady revenue stream, it also opens the doors to other government contracts. With the cachet that the military contract provides, others are taking a closer look at Iridium’s communications services, Picasso explains. "A lot of people can feel very comfortable in relying on the communications because it is very reliable." Picasso doesn’t see an effect on the satellite telecommunications industry by the bankruptcy protection filing of competitor Globalstar LP. He says this is a telecom industry phenomenon. "People have a jaundiced view of what is happening in the telecommunications industry specifically. The benefit we have is that when people take a look at our story, they see a very rational, very conservative business plan and financial plan," Picasso says. With the new Iridium able to scoop up the assets of the former Iridium for US$25 million, and without any debt, the skeptics seem to have gone away, he adds. Since relaunching, the new Iridium has made some significant changes to both marketing and service offerings. It shifted away from the mass market and is concentrating on providing voice and data communications to commercial and government markets in areas where other telecommunications options aren’t available. Picasso says demand is not only coming from regions like Africa (currently 25 per cent of the company’s traffic originates from there), but even industrialized nations like Australia want to implement the system. "It wasn’t a lack of telephony, it was the cost associated with serving some of the rural areas in Australia," he explains. Finding the right customers is important, but giving the user a simple pricing plan was one of the lessons learned from the old company. As Picasso puts it: "Simplicity in pricing is essential." Currently, Iridium offers Iridium-to-Iridium calls for US$1 and US$1.50 for calls from Iridium handsets to the public switched telephone network.

New Iridium Satellite on solid footing after rebirth; ahead of revenue pace

News | August 19, 2002

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