NOTES FROM IRIDIUM CONFERENCE CALL WITH ED STAIANO: 1998 was a "remarkable and history-making" year for IRIDIUM, said Staiano. He emphasized that IRIDIUM is "more than just a satellite company", noting the telephones are cellular phones that also function as satphones.
The Claircom acquisition puts IRIDIUM in 1400 commercial jets and 350 executive jets. Domestic carriers served include American, Northwest, Southwest, Delta, Alaska and Canadian Airlines; International carriers include Air France, KLM, SAS and Lufthansa. Over normal metropolitan routes, the airphone we're used to will connect calls to ground stations as always, but on international, transocean and polar routes, satellite service will be the usual mode. In both cases, the air traveler will see the IRIDIUM brand, and Staiano said the company intends to take "full advantage" of this.
Primary competition comes from GTE, which has 60% of the market. IRIDIUM looked at buying this company but felt Claircom was the better deal. Claircom has 40% of the market.
In the Q&A session that followed Dr. Staiano's prepared remarks, he said the company is closing this week on bank financing that will assure sufficient cash through cash flow breakeven "with some headroom", and that the original $1 billion financing was oversubscribed and $1.5 billion was arranged.
25,000 handsets have been shipped, Staiano said, but noted that only 6000-8000 are presently in customer hands (I do have mine); the delays are due to largely to customs delays in other countries. A portfolio manager I spoke with after the call said analysts are comfortable with IRIDIUM's assertion that the distribution slowness is being corrected. There are 1000 phones per day now being shipped.
Kyocera handset shipments will begin probably by year end; software bugs that resulted in an unacceptable number of dropped calls with the Kyocera handset are being corrected.
Call quality improvement is tremendous. New system software uploaded to the constellation within the past few weeks has increased completions and reduced dropped calls. Current figures have completions at 92% and drops at 8%. My experience over 35 calls totalling nearly 3 hours of talk time are 93%+ completion and 5% drops. Asked if he was satisfied with this, Staiano said "no", and that they intend to be over 98% completions and less than 5% drops by January-February.
Asked if more acquisitions are coming, Dr. Staiano said he could not comment on that, but he gave a broad hint that there is more to come.
The first real reading of subscriber numbers and minutes of use will come on January 26, 1999 when the fourth quarter conference call takes place.
Mexico licensing for IRIDIUM service should be obtained very soon. Most of the relevant issues have been worked out.
Regards,
Jack Morgan |
