Top Five Companies To Watch: Iridium Communications
Headquarters: Bethesda, Md.
Revenue: $75.9 million
Just over a year ago,Communications Inc. looked to be in the driver’s seat versus its main competitor, , which was bleeding customers due to a technical defect that was rapidly degrading the two-way voice service over its 48-satellite constellation. Iridium’s 66 low-orbiting satellites, meanwhile, remained in good health, and the company enjoyed an anchor customer in the U.S. Department of Defense for two-way mobile voice and data services.
Iridium was busy making plans for its $2.7 billion replacement constellation, dubbed Iridium Next, and had narrowed the field of bidders to Lockheed Martin and, with a contract award expected before the end of 2009.
But fortunes can change quickly in the space industry. Last March, Globalstar secured $574 million in loan guarantees from France’s Coface export credit agency for its next-generation constellation. The Coface backing secured the contract award for Thales Alenia Space of France and Italy, with launches to be provided by the French-ledconsortium using Russian-built Soyuz rockets.
Now Iridium’s in the hot seat. It too hopes to get export credit agency backing, either from Coface or the U.S. Export-Import Bank, but faces hurdles. Coface is willing to help finance projects where no more than 30 percent of the work is performed outside of France. In Iridium’s case, due to the possibility that sensitive military technology will be place aboard the Iridium Next satellites, final assembly of the spacecraft must take place in the United States. That means even if Thales Alenia Space wins the construction contract, about 40 percent of the work would be outsourced to partner Ball Aerospace & Technologies Corp. of Boulder, Colo.
The obstacle to Export-Import Bank financing, meanwhile, is the fact that Iridium is a U.S. company, and the U.S. export credit agency’s mandate is to support domestic companies looking to sell goods and services to foreign customers. This has raised speculation that Iridium might try to set up an overseas operation that would manage the Iridium Next work.
The current Iridium constellation is expected to continue providing service through 2014, the company says, but it takes time to build and launch 66 satellites. Which means if Iridium wants to avoid a degradation in service between its current and future constellations, it needs to get the Iridium Next program under contract within the next year or so. Iridium now hopes to select a prime contractor by mid-summer, depending, of course, on when it is able to secure the necessary financing. The pressure’s on.