PARIS — Mobile satellite services provider Iridium Satellite LLC reported a slight dip in revenue for the first quarter of 2009 compared to the fourth quarter of 2008, with its subscriber base increasing 2.5 percent during the period. The company said June 3 it is sticking with forecasts of 20 percent subscriber growth this year and a modest increase in revenue from 2008.
In a conference call with investors, Bethesda, Md.-based Iridium declined to say when it would select a prime contractor for its next-generation constellation of low Earth orbiting satellites.
Iridium Chief Executive Matt Desch said the process of selecting between competing bids from Lockheed Martin Space Systems and ThalesAlenia Space is “on track,” and an Iridium statement on the company’s financial results said the decision is expected “in the coming months.” Desch said the second-generation system, estimated to cost $2.7 billion, is still expected to be in service starting in 2014.
Iridium officials say the company’s current fleet of satellites remains in good health and will be able to maintain Iridium’s service until the second-generation constellation, called Iridium Next, is in place.
GHL Acquisition Corp., which has announced plans to purchase Iridium, is still waiting for U.S. Federal Communications Commission (FCC) approval of the transaction before asking its shareholders to vote on the deal.
GHL Acquisition Chief Executive Scott L. Bok said during the conference call that the FCC’s decision date could not be predicted, but that it is possible by July, and likely by September.
Bok said the recent moves in the stock market suggest that this would be a good time to ask GHL Acquisition Corp. shareholders to vote to purchase Iridium. He said Iridium’s first-quarter financial performance in a rough global economy validates Iridium’s long-term value.
GHL Acquisition Corp.’s purchase proposal was trimmed in April to make it more attractive to the company’s shareholders and to reflect the drop in equity markets. The current proposal values Iridium at $517.3 million, including Iridium’s debt of $145.8 million at Dec. 31.
Iridium reported revenue of $75.8 million in the three months ending March 31, down 1.3 percent from the last three months of 2008. Iridium said its EBITDA, or earnings before interest, taxes, depreciation and amortization, was 36.4 percent of revenue for the first quarter of 2009, up from 32.5 percent in the fourth quarter of 2008.
Subscribers totaled 328,000 as of March 31, up 2.5 percent from the subscriber count at Dec. 31.
Desch said Iridium’s performance in the first quarter suffered from sharply lower equipment sales, which he attributed to the global economic downturn and to the fact that Iridium is introducing new, higher-cost telephone handsets into the market. The pipeline of older satellite telephone handsets is being emptied but this will take several months as dealers draw down on their inventories, Desch said.
Desch said Iridium is confident it will boost its subscriber base by 20 percent in 2009, with a revenue increase in the “low single digits” range compared to 2008. Iridium reported total 2008 revenue of $320.9 million. He said EBITDA in 2009 would grow by 11 percent to 20 percent.
