Clear field? Sorry to carp at 'dem but ICO is not dead and Motorola will do what they can to keep Iridium going so they can sell handsets at huge profit and extract management fees. Motorola has already received much moolah from this golden goose to design and build it.
If the equity holders are ignored as has-beens, the debt holders are ignored as losers [other than those holding guarantees by Motorola] and all other costs are stripped away, how much money does it cost to keep the minutes ticking away well enough to sell until the constellation dies?
I suspect it is not very much and could be covered by revenue from the 15,000 subscribers [of which half are probably paging-only since there were a good number of paging customers at the last report] and new ones to come along. Let's see, 10,000 phone buyers x $2000 per phone = $20m oops, that's not much. Plus they buy minutes at $400 per month per handset [monthly charge plus minute charge] = $40m per year. Heck, that's not much either. Plus paging revenue, which will be trivial.
Wow, they really need to sell a LOT more handsets to stay in business even if the equity, debt, replacement of faulty satellites are cancelled.
As long as they stay in business, Motorola doesn't get their debt guarantee called and they get to get a bit of money from handset sales. This is NOT looking good. Globalstar will almost certainly crush what little life is left out of Iridium.
Meanwhile, ICO still seems to be determined to enter the maelstrom rather than return remaining money to shareholders and call it a diem. Luckily, they have had to delay [or at least have a good excuse to do so = rockets not working very well].
When Iridium stops operating later this year [not much later I'd say] and ICO cancels their inadequate effort, Globalstar is going to get to sell the 1bn minutes which Iridium might have sold and the 15bn minutes which ICO would have sold.
To get hold of those 15bn minutes, G* is going to have to ensure ICO doesn't launch. They can do that by giving CHEAP minutes to subscribers.
When the G* system fills, which will be sooner rather than later if Iridium and ICO subscribers buy from G*, then G* will have to raise prices much sooner than otherwise and get the next constellation up in a hurry. Actually, the next two constellations - one at 10,000km and another low level one. Maybe only 800km high.
G* stock will go through the roof. Expect $200 in a couple of years from now.
Maurice |
