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Satellite Communications

Back in Business — Iridium Returns Under New Ownership

By Regina P. Ciardiello, senior editor

On Wednesday, March 28, 2001 Iridium Satellite

LLC called members of the media and the satellite communications community to a press conference in

Washington, D.C. announcing its return to the satellite communications market. Subsequent to more than three months of quality assurance testing. Iridium expressed that its gateway was fully operational out of

Tempe, Ariz. — making the commercial launch of its global satellite communications a reality. Many proba- bly wondered, "Was this the same Iridium that filed

Chapter 11 almost a year to the date of its re-launch- ing?" But ask the company's CEO Gino Picasso, and he will say that the differences between the old and the new companies are like night and day. "The fact that the current satellite system was pur- chased for $25 million — rather than $3.5 billion gives us a huge cost advantage," Picasso said. "The total monthly operating costs for the company are less than one-tenth of the original Iridium."

The advantage of the new Iridium is straightforward.

Since the company had already established a satellite system, it did not need to start from the ground up. The systems were already in place and were just waiting for

Picasso and his team to work the technological ideas into the fray. Not to mention the fact the new Iridium already has committed, signed contracts from the U.S.

Department of Defense, as well as 13 service provider agreements, who are offering worldwide distribution capabilities. These non-exclusive agreements, which were signed even before Iridium launched its services, enable the providers, namely GEOLINK, Marconi

Marine, Stratos and Infosat Telecommunications, to sell Iridium's services to industrial and government markets.

With a business plan in place, the company, whose

Satellite Network Operations Center is currently locat- ed in Leesburg, Va., brought highly regarded Boeing

Company into the mix for technical support. Boeing's involvement in the new Iridium entails all engineering,

July, 2001 technical, operations and maintenance support for the system that includes 66 operational satellites, as well as seven spares in orbit. Iridium also has gateway oper- ations out of Tempe, Ariz, location, and in Hawaii, which handles the services for the U.S.

Department of Defense. According to the company, the multi-year fixed contract with

Boeing, all marketing and promotional expenses and Iridium Satellite's LLC debt ser- vice on the closing note to Iridium LLC, who is the previous owner of the satellite system, will not exceed more than $7 million per month. This plan represents a significant decrease of the original Iridium's operating expenses, thus giving the company more lee- way in terms of pricing and break-even thresh- old.

No Pipe Dreams Here — Only Reality "Why are we going to succeed — because we are able to," Picasso said. "The numbers add up and they are compelling — there is no doubt in my mind that we will break even."

According to Picasso, already one-third of

Iridium's services are contractually committed — demonstrating that there is a demand for this type of service. "There's no market to prove when the market is already there," he said.

Picasso is referring to the company's focus on government and industrial users who have a proven track record of satellite phone uti- lization in remote areas — areas such as heavy construction, defense/military, maritime, oil and gas, and aviation. Picasso hopes that the mix of intelligent marketing strategies, new technology, a system that is the only truly mobile and global one available, as well as a cost-effective pricing will lead Iridium into the forefront of the satellite communications mar- ket.

According to Picasso, the company will tar- get the vertical markets, (marine, aviation, oil and gas, etc.), as well as more broad-based groups, proving Iridium is "more than just a cell phone company" offering cost-effective, easily portable phones for half the price of its competitors. "Which would you rather do, carry a lap top or a small phone that fits into your hand," Picasso said. "With other models you have to set up an antenna and walk and talk at the same time - the Iridium phones don't require this."

The new Iridium phones are not bulky and awkward to handle, and the company's 9505 handset is touted as the smallest satellite phone available. Measuring 158 x 62 x 59 mm, the 13.2 oz phone is expected to retail at approximately $1,500. including accessories, and will be available for purchase in August 2001. Specialty equipment geared to address the needs of maritime customers is also offered, mainly Iridium's Fixed Mast Antenna, which is marine rated for permanent vessel or building mounting and provides optimum reception for all of the company's satellite products.

Estimated costs (which are set by Iridium's service providers) for the satellite Series 9500 are less than $1,000 and airtime rates are expected to steady at

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Circle 228 on Reader Service Card www. maritimereporterinfo. com 33

When Iridium, the $5 'iiir^sM^. • billion satellite company, | fell into bankruptcy on ^fli down as one of the costli- y-^JmS K est corporate ficiscoes of

I all time. More than one

JM ^TB IM^M year later, Iridium is ^VH^HjHHH back in business, though ^^ under completely new ownership. Iridium raised a few eyebrows * and a fair share of skep-

Gino Picasso, .. . , . , . . „ r~ . ,. tics with its decision to CEO Iridium launch its global satellite communications services. How could the new company prosper when the previous one — using the same tech- nology had failed? Enter Gino Picasso, the company's

CEO. Up front and honest, Picasso says that the new

Iridium is no pipe dream. Speaking via telephone from a restaurant near Iridium's Tempe, Ariz, offices, Picas- so shared his visions and ideas with MR/EN regarding the future of the new company.

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