Iridium cuts prices to boost subscriber base
The struggling satellite communications firm announces plans to cut prices for its mobile phone service and launch a new marketing strategy to get more customers to sign up.
The company will reduce its prices by up to 65 percent and will offer a flat per-minute rate on international calls to simplify the pricing structure. Iridium's service had cost up to $7 per minute in some instances, according to analysts.
The move is a significant step for Iridium, which has experienced trouble attracting mass-market consumers due to its costly per-minute charges. The company has also suffered delays in rolling out its phone handsets.
Shares jumped nearly 16 percent today to 9.0312 on the news. The stock has suffered following a series of financial setbacks, significantly off its 52-week high of 61.625 hit in July of last year.
The falling costs of cellular and digital PCS phones and improved coverage by traditional mobile phone services has stolen some of the thunder from Iridium's high-priced promises of unlimited cellular service anywhere on the globe, analysts have said.
Iridium claimed only 10,000 customers at the end of March.
The satellite firm's new marketing strategy calls for targeting users "in the industrial marketplace that have the greatest immediate need for satellite communications services," the company said in a statement. Iridium will try to reach users in industries such as mining, maritime, oil, and gas in addition to individuals and business customers.
"The feedback from the market provided two essential messages--lower and simplify the pricing and focus on the customers who have the greatest need for the service," chief executive John Richardson said in a statement.
The company already has received several time extensions from creditors to meet its subscriber and revenue goals, but investors such as Motorola have publicly questioned their ongoing commitment to the service.
But Motorola today said it will commit 200 sales representatives to the Iridium service by the end of the month.
In addition, one of the company's handset providers Kyocera said it will reduce the price of its phone equipment in July.
Iridium recently laid off 15 percent of its workforce in order to cut costs.
Iridium's stock has hit new lows following news of poor subscriber numbers, layoffs, class action lawsuits against the company, and executive resignations.
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