PARIS — Mobile satellite communications services provider Iridium on April 30 said it would ask its creditors to ease launch insurance requirements as the company prepares to deliver 72 satellites to orbit in the next 30 months.

McLean, Virginia-based Iridium Communications also said its current constellation of 66 operational satellites, all well past their planned retirement dates, remained in good health as of March 31.

In an April 30 conference call with investors, Iridium Chief Executive Matthew J. Desch said there have been no Iridium satellite failures for the past eight months. He said the network provides “100 percent global coverage. The user experience is getting even better as we make improvements and add new software in the network to provide additional services.”

Iridium needs the satellites to stay in good health until sometime in mid-2016, by which time it can begin replacing failed spacecraft with the Iridium Next second-generation models.

Iridium Next
Iridium Next satellite. Credit: Iridium

Iridium is scheduled to start launching its $3 billion Iridium Next satellites in October, the first two aboard a Russian-Ukrainian Dnepr vehicle. As the first of a new generation of spacecraft, these two will be thoroughly tested before Iridium starts launching 10 satellites at a time aboard SpaceX Falcon 9 rockets. Iridium said the dispenser that will carry and deploy the two satellites from Dnepr will be certified as good to go by late June.

Iridium has contracted with Hawthorne, California-based SpaceX for seven Falcon 9 launches starting in early 2016, with all of them to be completed by late 2017 under a deal valued at $453.1 million. Iridium has reserved additional SpaceX launches with a $3 million payment made in 2014.

Iridium has 81 satellites under construction by Thales Alenia Space of France and Italy, with Orbital ATK of Dulles, Virginia, performing satellite integration at its Arizona plant. The satellite construction contract is valued at $2.3 billion, of which $1.35 billion had been paid as of March 31, Iridium said in an April 30 filing with the U.S. Securities and Exchange Commission (SEC).

Eighty-five percent of the satellite construction contract payments are covered by a commercial bank loan guaranteed by Coface, the French export-credit agency. Under the terms of the Coface-backed loan, Iridium is required to purchase insurance covering the satellites’ launch and their first 12 months of in-orbit operations.

In its SEC filing, Iridium said it has purchased only a portion of the required coverage. The company said the insurance package that would be required may stretch the capacity of the satellite insurance market, and that it would seek to modify the relevant loan covenants.

“We are currently in discussions with prospective insurers and our lenders regarding the structure of the planned coverage,” Iridium said. “We expect to seek a waiver from the lenders of one or more requirements of the credit facility in order to complete the placement of this insurance.”

Prospective insurance underwriters are among those requiring that Iridium conduct extensive testing of the first two satellites before proceeding with the 10-per-rocket SpaceX launches.

For the three months ending March 31, Iridium reported $97 million in revenue, down 1 percent from the same period a year ago. Service revenue was up 3 percent but sales of Iridium satellite handsets and other hardware was down 18 percent.

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Commercial voice and data customers totaled 351,000 as of March 31, up some 4 percent from a year ago. But average monthly revenue from these customers was $40 during the period, down 7 percent from a year ago.

The company blamed a stronger U.S. dollar and a $600,000 drop in Russian revenue — Iridium bills Russian customers in rubles — for the monthly per-customer revenue dip.

Iridium has signed a five-year, fixed-price contract with the U.S. Defense Department for Iridium use. The contract, valued at $400 million, allows U.S. defense forces unlimited use of the Iridium system. There were 63,000 U.S. government subscribers to Iridium as of March 31, up from 53,000 a year ago.

For the three months ending March 31, U.S. government revenue totaled $18 million, up 13 percent from a year ago. This included the regular quarterly payment under the contract, plus optional services that were billed separately.

Iridium Chief Financial Officer Thomas J. Fitzpatrick said quarterly U.S. government fixed-price-contract payments will increase starting late this year. That plus additional government use is likely increase the total government revenue in 2015 compared to 2014, Fitzpatrick said.

Iridium’s machine-to-machine customer base is now 49 percent of the 748,000 billable subscribers the company reported as of March 31. These commercial customers’ average payment to Iridium was $15 per month, down from $16 last year mainly because of the loss of a large non-U.S. government customer that had used the service in a conflict area that no longer requires it.

Peter B. de Selding was the Paris bureau chief for SpaceNews.