In 2010, Iridium took out $1.8 billion in ECA-backed debt to finance its Iridium Next constellation. Credit: Thales Alenia Space

TAMPA, Fla. — Iridium Communications expects to get another five years out of its satellites, pushing out any need to complete a replenishment of the L-band connectivity constellation to at least 2035.

The 80 satellites in the operator’s second-generation Iridium Next low Earth orbit (LEO) constellation, launched from 2017-2019 apart from five spares lofted last year, came with a 12.5-year design life from their prime contractor, Thales Alenia Space.

Speaking during Iridium’s Feb. 15 quarterly earnings call, CEO Matt Desch said a recent engineering assessment “prompted us to update the constellation’s estimated life, which we now believe will perform well to at least 2035.”

Desch said he expects the satellites will ultimately be in service longer than 17.5 years, pointing to how satellites in its first-generation network with a similar design life had lasted more than 20 years in LEO before running out of fuel.

The extended Iridium Next lifetime gives the Mobile Satellite Service (MSS) operator more flexibility over when to pull the trigger on ordering and launching a potential third-generation constellation, Iridium spokesperson Jordan Hassin said.

“And of course, eventually you want to upgrade the hardware in space, but this also gives us an opportunity to take advantage of the latest and greatest at the most favorable moment,” he said via email.

Revenues Iridium has under contract for the satellite’s hosted payloads, representing less than 2% of sales for the fourth quarter of 2023 and include the aircraft-tracking Aireon service, are fixed over the lifetime of the spacecraft.

However, an extended lifetime gives the company an opportunity to ultimately get more revenues out of the $3 billion constellation for services that include broadband, connectivity for monitoring and tracking Internet of Things devices, and a planned direct-to-smartphone business.

Iridium reported revenue up 10% year-on-year to $790.7 million for 2023, and expects to hit $1 billion in annual sales before the decade’s end.

Starlink pressure

Iridium is bracing for a financial hit to its broadband business as services from SpaceX’s higher-speed Ku-band Starlink LEO constellation gain traction in the market.

Maritime customers previously using Iridium as a primary broadband provider are increasingly relegating the company to a “companion service,” Desch said.

But providing backup connectivity with L-band spectrum that is more resistant to storms than Ku-band is where Iridium seeks to carve out a niche market, he added.

Iridium expects a 5-10% hit to average revenue per user in 2024 from losing business to Starlink in the maritime market, with growth set to return the following year because the issue affects only a small number of vessels where Iridium is currently the primary broadband provider.

Iridium also faces Starlink competition in the emerging direct-to-smartphone market.

Similar to startups Lynk Global and AST SpaceMobile, SpaceX’s strategy for providing connectivity directly to mass-market smartphones and other devices relies on getting regulatory permission to use radio waves from terrestrial cellular partners.

Iridium is seeking an update to terrestrial network protocols to enable its existing satellites to connect to standard user devices with L-band spectrum already approved globally, aiming to deploy messaging and SOS services from 2026.

SpaceX aims to launch an early texting capability in the United States this year in partnership with T-Mobile.

According to Desch, regulatory and legal issues will greatly slow any plan to use terrestrial radio waves from space amid interference concerns. 

“I think there’s a lot to play out over the coming years,” he said, “as a result of that, those are going to be highly regional kind of offerings at best.”

Iridium’s MSS peers Viasat, Terrestar Solutions, Ligado Networks, Omnispace, and Yahsat last week formed the Mobile Satellite Services Association (MSSA), a non-profit pushing for direct-to-smartphone services using their radio waves instead of cellular spectrum.

Desch said he had only recently heard about the organization but has a meeting booked tomorrow with MSSA head Mark Dankberg, Viasat’s chair and CEO, about joining. 

“I’m interested in hearing more about it,” he said, “but obviously our strategy is pretty self-contained right now. We have our own system today, we have spectrum.”

Called Project Stardust, Iridium’s direct-to-smartphone strategy will involve investments over the next couple of years in the “tens of millions” of dollars, and will also require updating hardware in gateways. 

Iridium recorded $15.4 million in net income for 2023, up from $8.7 million in 2022.

Service revenue for 2023 came in at $584.5 million, which Iridium expects to grow by 4-6% for 2024.

Jason Rainbow writes about satellite telecom, space finance and commercial markets for SpaceNews. He has spent more than a decade covering the global space industry as a business journalist. Previously, he was Group Editor-in-Chief for Finance Information...