Iridium Mops Up $276 Mn Via Ipo

Iridium World Communications Ltd, the Motorola-led global consortium of telecom and industrial companies which is engaged in developing the first global wireless network, has mopped up nearly $276 million through its initial public offering of 12 million shares of Class A common stock at a price of $20 each.

The shares closed at $21.5 on the Nasdaq on Wednesday.

Proceeds from the offering will be used by the consortium to purchase membership interests in Iridium LLC. Its network will combine the reach of 66 low-earth orbit satellites with land-based wireless systems to enable subscribers to communicate using hand-held telephones and pagers anywhere in the world.

 

The Iridium service will be operational from September 23, 1998, chief executive officer Edward F Staiano said at a press briefing in New Delhi yesterday. The service will allow connectivity across different cellular phone protocols in Europe, the US and Japan. The company had successfully launched five satellites last week. Seven more are slated for launch in the next five days.

By April 1998, all the 66 satellites will be placed in orbit, said Staiano. The constellation will undergo technical trials during the next two months, while commercial trials are due to begin in July. Around 11 gateways are being built in countries all over the world, including India, connectivity at all places at all times.

Iridium India Telecom Ltd (IITL), a joint venture between Motorola NMG, Indian public financial institutions and Videsh Sanchar Nigam Ltd, has invested $70 million in the $3.4 billion Iridium project. IITL is setting up a gateway at Dighi near Pune at a cost of Rs 130 crore with VSNL investing Rs 50 crore in equipment.

The premises also belong to VSNL. IITL vice-president T K Sridharan said work on building the gateway is progressing steadily and it will be ready for installation of equipment soon.

According to Sridharan, the department of telecommunications has assured the company that it will be given an operating licence, besides a frequency spectrum and licence for handsets.

Staiano said the system was targeting the international business traveller and 90 per cent of its revenues would accrue from this segment.

The company estimates the number of subscribers in the first two years at 3000. This is likely to go up to 30,000 by the year 2002. About 2.5 per cent of the service will be offered free to various governments for disaster relief and emergency services.

Apart from cellular operators all over the world, transient units like railways, hotels airlines and shipping is also being targeted.