Iridium relaxed about rival direct-to-device services
July 27, 2023
By Chris Forrester
Iridium Communications, despite going through a Chapter 11 bankruptcy some 20 years ago, has in general since gone on from strength to strength. However, its second-quarter numbers reported a loss of $30.7 million (€27.6m) when analysts were expecting profits. Its shares fell 13 per cent on July 25th.
Iridium is a pioneer in providing satellite-based telephone and other communications services. It has excellent relations and usage from the world’s military, government and emergency responders.
Sales revenues were $193.1 million while the market expected around $198 million. Commercial service revenue rose 11.5 per cent and engineering and service revenue was up more than 148 per cent. Meanwhile, the company grew its customer base almost 14 per cent to 2.05 million billable subscribers (1.875 million subs a year ago).
Total revenue increased 10 per cent versus the comparable period of 2022, while service revenue grew 9 per cent from the year-ago period. Service revenue, which represents primarily recurring revenue from Iridium’s growing subscriber base, was 75 per cent of total revenue for the second quarter of 2023.
The reason behind the loss was explained as management having to write off the value of one ground spare satellite and thus generating an accounting loss. It still has five ‘spare’ satellites in orbit.
CEO Matt Desch says he believes that it will take 10 to 15 years before the many rival satellite-to-phones and devices become wholly viable.
Competition is growing from the likes of Globalstar, Lynk Global, AST Space Mobile and some are already providing emergency connectivity to certain ‘smart’ phones.
Desch told analysts: “To really achieve the big numbers [from rivals] some analysts are talking about could take a long time, probably 10-15 years when you factor in the need for many players to build and launch new satellites and get global regulatory approvals.”
“We believe the near- to mid-term opportunity is in SOS, like the service being pioneered for Apple with the iPhone 14 and that we plan to support for the Android ecosystem,” Desch added. Iridium has an agreement in place with Qualcomm to integrate Iridium’s L-band connectivity into Qualcomm’s new generation of chips on Android devices.
“Our service also provides for real-time messaging and I suspect Apple’s will, too,” Desch said. “We now expect the first activation will move into 2024.”