Iridium places $2.1B order for 81 satellites

 - July 7, 2010, 6:44 AM

Iridium Communications of McLean, Va., last month placed a multibillion-dollar order with Thales Alenia Space of France for 81 communications satellites needed to upgrade its global satellite communications network. The $2.1 billion deal includes 66 low-earth-orbit satellites for the Iridium Next constellation, with the remainder to serve as spares.

The first satellite launches are scheduled for the first quarter of 2015. Iridium has selected Space Exploration Technologies–better known as SpaceX–to launch the satellites in a $492 million deal that is the largest single commercial launch contract ever signed, the companies said. SpaceX’s in-development Falcon 9 rocket will carry multiple Iridium Next satellites per launch from Vandenberg AFB in California between 2015 and 2017.

Iridium said it might contract with at least one additional launch services provider. The next-generation satellite network is expected to remain operational until at least 2030, officials said.

Lockheed Martin Space Systems was the losing bidder in a competition to build the new Iridium satellite that began in 2007. In the end, financing the mammoth project appears to have played a key role in Iridium’s decision to partner with Thales Alenia Space.

Iridium officials last month outlined details of their plan to fund, build and deploy the Iridium Next project. Iridium’s contract with Thales Alenia Space, a joint company between Thales and Finmeccanica, covers the design and construction of the satellites. Coface, the French export credit agency, has committed to financing 95 percent of the $1.8 billion cost of this portion of the project, officials said. Goldman Sachs, Société Générale and Hawkpoint Partners are advising Iridium on the deal.

Iridium’s agreement with Thales Alenia Space covers the construction of 72 operational satellites and in-orbit spares, plus an additional nine ground spares. Work on the project was planned to start immediately, even before all the financing details were fully completed, Iridium officials said. As a result of the expanded scope of the project, the total cost of the Iridium Next network is now expected to rise to about $2.9 billion.

Iridium currently has about 360,000 subscribers, including thousands of business jet operators. The narrow-band Iridium service permits voice calls and low-bandwidth data transfers anywhere in the world. The Iridium Next network will include higher bandwidth data services and be backward compatible with current Iridium satcom equipment, said Iridium CEO Matt Desch.

Iridium’s current Motorola-designed network began operating in 1998 but soon ran into financial trouble as consumers shunned the bulky and expensive Iridium handsets in favor of cellphones. Investors in 2000 paid a tiny fraction of Iridium’s original $5 billion development cost to buy the failed firm’s assets in an effort backed by the U.S. Defense Department, Iridium’s biggest customer.