Iridium asks court to let satellites burn
The company says it hasn't found a qualified buyer for its satellite-based mobile phone service and will shut down by midnight, leaving 55,000 customers without service.
Iridium, which offers worldwide mobile voice service using a $5 billion constellation of satellites, will liquidate some of its assets to help pay for billions of dollars of debt. The company also is set to scrap its 66-satellite system by bumping the costly equipment out of orbit, which will cause them to burn in the atmosphere before plunging toward a watery grave.
"Motorola is extremely disappointed that Iridium has not succeeded in its effort to emerge from voluntary bankruptcy," Motorola said in a statement. "Motorola and other Iridium investors have worked very hard to support Iridium's efforts to reorganize and continue operating the business. Unfortunately, that has not happened."
Iridium's spectacular failure, despite more than a decade of planning, is largely the result of poor marketing and a service that was far too costly, particularly as cellular phone coverage and costs improved worldwide, analysts have said. Iridium has been a closely watched company because of its grandiose plans, elegant technology, significant financial backing from wireless industry heavyweight Motorola and a general fascination with space that dates to the days of Sputnik.
The company launched service in November 1998, but not long after began missing revenue and subscriber targets. A string of executive resignations and generous time extensions from its investors and bondholders failed to alleviate the company's woes and the company filed for bankruptcy protections. Iridium's fate was effectively sealed when billionaire investor Craig McCaw two weeks ago opted against buying the company in a fire sale.
Motorola said it will maintain the Iridium satellite system for a limited period of time, while finalizing a plan to "deorbit" the satellites.
Iridium had hoped for an eleventh-hour rescue.
Billionaire investor Craig McCaw considered buying Iridium, and appeared to represent the company's best bet, but backed away from the plan two weeks ago, sending Iridium scrambling for new suitors.
Meanwhile, in a message yesterday to Iridium's 55,000 subscribers, chief investor Motorola wrote: "If you have not already done so, we suggest you consider making alternative arrangements for your communications needs in the event that Iridium service is no longer available."
Already, competitor Globalstar Telecommunications is attempting to capitalize on Iridium's misfortune. Globalstar yesterday announced some of its distributors would offer rebates of up to $495 toward a new Globalstar phone for former Iridium users who trade in their handsets.
Globalstar launched its full commercial service last month.