Iridium struggles after £440m losses

Iridium, a provider of mobile satellite phone services, has posted a loss of $440m for the last three months of 1998.

After a postponement due to technical faults, the company launched its go-anywhere mobile phone service on 1 November last year. However, uptake has been slow, with many 'gateway' service providers - such as Orange in the UK and Sprint PCS in the US - continuing to conduct commercial and technical trials.

This meant the company only brought in $186,000 in revenue, while sitting on close to $2bn in long-term debt.

According to Ovum consultant, Alex Nourouzi, the company must exploit its advantage of launching before other satellite-based mobile telephony services, such as Globalstar, although both companies may have been over-ambitious in their plans.

Ovum forecasts that the mobile satellite service market will have 11 million subscribers by 2007. However, the consultancy has noted GSM roaming arrangements and a globally accepted third-generation standard are likely to offer a viable alternative for many users.

Another analyst said it is now make or break time for Iridium, with the company having to sign up thousands of subscribers during 1999.

However, Edward Staiano, Iridium vice chairman and CEO, remained confident. "With our network performing at a high level of quality, subscriber equipment now widely available and intensive marketing efforts underway, 1999 will be the year that the Iridium system transforms from a technological event into a revenue generator," he said in a statement.

Companies behind Iridium include Motorola - which built the satellites and supplies the handsets - Lockheed Martin, Raytheon, and Sprint.