Iridium, the satellite-phone operation that went bankrupt back in 1999 and has been quietly turning a profit since 2005, is to be merged with an investment bank affiliate in a deal that gives the company $500m in cash to play with.
The deal "ensures the future of Iridium", according to chief executive Matt Desch. "We won't need anything more in equity of debt financing until about 2014," he added.
Iridium will merge with GHL Acquisition, an affiliate of the investment bank Greenhill & Co - according to reports in the Washington Post. This leaves Iridium investors owning 42 per cent of the newly-formed "Iridium Communications", while GHL shareholders get 55 per cent.
Iridium was the first of what was expected to be a trio of satellite-phone networks, and the only one to get into operation before the last dot.com crash scuppered the outrageous start-up funding such networks need - not to mention demonstrating the futility of trying to make money from such a system.
Deploying satellites takes time, and while Iridium was busy waiting for launch windows the ground-based networks, including GSM, were rapidly covering the profitable parts of the globe. Satellite phones were left dangling as an expensive option serving areas populated by the poorest of people.
Unlike traditional satellite systems Iridium doesn't hang around in geo-stationary orbit, where latency makes communications stilted, but benefits from a far lower altitude that can offer proper phone calls - at a cost of needing 66 satellites to cover the globe. (The design originally called for 77, the atomic weight of Iridium - eventually the network managed with the lower number, though didn't retitle Dysprosium as they really should have.)
When the company went bankrupt trying to sell the service to ordinary punters, a small group of investors took on the operation, paying $25m for a network that cost Motorola $6bn to build, and started selling service in bulk to the military and industries requiring remote communications - such as pipeline monitoring and connections to shipping. This led to today's customer base of around 305,000, and a profitable operation since 2005.
To ordinary punters Iridium's most compelling feature is that you can see their satellites with the naked eye: as they pass into daylight their solar panels flare up in a flash clearly visible at night, and sometimes during the day too - times and directions can be found at the excellent Heavens Above.
This injection of cash will enable the company to wipe out $150m of debt, and start to think about replacing their satellite fleet - hopefully with birds that are as strikingly visible as the old ones.®
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