Satellite-based mobile operator Iridium took a step toward building a new, faster network on Tuesday by agreeing to merge with an investment company.
Iridium will merge with GHL Acquisition, a special company formed by the Greenhill investment bank, and be renamed Iridium Communications. The transaction is subject to US Federal Communications Commission approval and other conditions, and is expected to close early next year.
The proposed merger, which values Iridium at about $591 million, will allow the company to retire its debt of $131 million and be well-positioned to put up a new network of satellites, called Iridium Next, according to a press release. GHL plans to take the new company public on the Nasdaq stock exchange.
Iridium's phone service is available almost everywhere on Earth, including both poles. It went live in November 1998 after 11 years of preparation by a Motorola-led consortium, but by August 1999 it was bankrupt, doomed by expensive service and bulky handsets.
In 2000, new management changed the company's focus from executive go-anywhere phones to vertical markets such as government, oil drilling and shipping. The US Department of Defense is a major customer, and Iridium now sells more data modems than phones. The modems mostly are used for machine-to-machine communications, such as reporting ships' locations. Iridium has about 305,000 subscribers.
The Iridium Next project, estimated to cost more than $2 billion (£1.2 billion), would gradually replace the company's 66 meshed satellites with new ones and allow it to offer an IP broadband data service. Last year, Iridium Holdings Chairman and CEO Matt Desch said the network's baseline speed was 2.4Kbits/s, and it hoped to provide options for as much as 10Mbits/s with Iridium Next. In addition, the new satellites might be able to offer environmental monitoring, photography and a geographic positioning system to complement the current GPS.
Iridium's current satellites are expected to reach the end of their useful lives starting around 2014; the company hopes to have the new network completed by 2016.