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McCaw set to save Iridium from Chapter 11

By Tony Hallett

Published: Tuesday 08 February 2000

Cellular phone pioneer, Craig McCaw, is rumoured to be ready to invest $600m in Iridium, the mobile satellite phone provider that has long been in the doldrums.

McCaw, whose McCaw Cellular business was bought by AT&T in 1994 for $11.5bn, is already an investor in US mobile operator, Nextel Communications; Iridium rival, ICO Global Communications; and 'Internet-in-the-sky' venture Teledesic, which also counts Bill Gates as a backer.

However, the reasons for such a move are not obvious.

Tim Sheedy, IDC research analyst, European wireless and mobile communications, said: "ICO and Iridium are very different companies, operating different systems, and we know they are not going to have a huge market."

He pointed out that Iridium would be a relatively cheap investment, given that its stock plunged before eventually being de-listed from Nasdaq last November.

Jeremy Green, principal consultant at Ovum, said: "Iridium has some useful assets if you're in that business, and if you consider things like licences and spectrum."

He also acknowledged ICO and Iridium operate differently and integration with Teledesic would be a long way off, but he guessed that McCaw is probably interested in Iridium's numbering plan, its international numbering and country codes, and the fact that it has licences all around the world.

In a separate announcement, ICO Global Communications has confirmed Eagle River, McCaw's private investment vehicle, has completed processes which will see its assistance to ICO reach the $500m mark; a further $700m in funding is expected.

Richard Greco, CEO of ICO, said in a statement: "Our financing - and future - is secure. This is a great day for ICO."