PARIS — Mobile satellite services provider Iridium Communications lost the use of two more satellites in the three months ending Sept. 30 and is now down to a single in-orbit spare, a situation the company said is unlikely to cause service disruptions given the arrival of the second-generation system in 2015.
Iridium’s $3 billion Iridium Next constellation of low-orbiting satellites is scheduled to make its inaugural launch, of two satellites, in June aboard a Russian-Ukrainian Dnepr rocket from Russia’s Yasny spaceport.
The remaining launches will be aboard seven Space Exploration Technologies Corp. Falcon 9 rockets, each carrying 10 Iridium Next satellites. These launches are scheduled to start in late 2015 and to be completed by mid-2017.
In an Oct. 30 conference call with investors, Iridium Chief Executive Matthew Desch said the company has lost, on average, one satellite per year for the past five years. All the current satellites are well past their contracted design lives.
Desch said Iridium’s network, which features intersatellite links to reduce network dependence on ground stations, can absorb the loss of a satellite without causing signal disruption to users, even if the lost satellite was not replaced for an extended period of time.
“You would have to lose a lot of satellites to really be very noticeable” by customers, Desch said.
Iridium officials have said they have obtained all the necessary export and shipment authorizations needed for the first two satellites.
During the conference call, Desch said SpaceX’s recently demonstrated ability to increase its launch rate, with four Falcon 9 liftoffs in three months, reinforces Iridium’s confidence that the rocket’s crowded manifest will be absorbed by late next year to begin the scheduled Iridium launches.
McLean, Virginia-based Iridium, on the strength of a five-year contract with the U.S. Defense Department concluded in October 2013, thus far appears to be an exception among commercial satellite operators in seeing growth in its defense business.
The company also told investors that it has maintained its monthly revenue level of $17 per machine-to-machine (M2M) customer despite a 21 percent increase in M2M subscribers in the past year.
Iridium said government services revenue increased by 13.5 percent, to $16 million, for the three months ending Sept. 30 compared with the same period a year ago.
Iridium’s Enhanced Mobile Satellite Services contract with the U.S. Defense Information Systems Agency is not based on subscriber numbers. It offers unlimited use to subscribers for a fixed annual payment — $64 million in 2014, $72 million in 2015 and $82 million for each of the final three years.
Commercial operators of satellites in geostationary orbit have reported declines in their defense portfolios as U.S. and coalition forces withdraw from Iraq and Afghanistan.
Iridium reported total revenue of $107.5 million for the three months ending Sept. 30, up 7 percent from the same period a year ago. Its subscriber base was 726,000 as of Sept. 30, up from 705,000 on June 30, mainly from new M2M customers.
In addition to increased military revenue and more M2M customers, Iridium’s growth in the quarter was attributed to a rebound in its OpenPort maritime product line after a hardware defect a year ago.
“The [maritime] business is fully back now and growing again now that our quality issues are behind us,” Desch said. The company said OpenPort subscribers increased by 23 percent in the three months ending Sept. 30, with the service’s revenue up 29 percent.
Iridium is funding its Iridium Next constellation mainly through a $1.8 billion loan backed by the French export-credit agency, Coface, with the satellites being built by Thales Alenia Space of France and Italy and integrated at the Arizona plant of Orbital Sciences Corp. of Dulles, Virginia.
Iridium and its lenders earlier this year agreed to amend the terms of the loan, allowing Iridium to carry a slightly lower cash balance, which rises as the satellites are launched and enter operations. The loan’s terms obliged Iridium to issue new common and preferred stock in transactions completed in May.
The company is counting on several revenue sources to service its debt starting in 2017. Among them is selling unused space on the Iridium Next satellites to third parties that have sensors of their own, unrelated to Iridium’s mobile voice and data communications service.
Iridium has hired Harris Corp. of Melbourne, Florida, to find customers for the Iridium Next satellites. Desch said the Harris effort is yielding better-than-expected results, and will now generate an estimated $55 million in revenue for Iridium, compared with the earlier estimate of $45 million. The revenue is from customers paying Iridium a hosting fee for providing space on the satellites, plus a data delivery fee.
Desch said Iridium already has received $12 million from Harris under the arrangement.
