Iridium Communications’ (NasdaqGS: IRDM) constellation of 66 low earth orbit satellites provides wireless communications everywhere on earth.
The network is designed to operate as a fully meshed network. This means that a call from a Iridium-provided phone on the ground can get a connection to a satellite regardless of the caller’s location.
The satellites are “cross-linked’ so they communicate with each other to route the call across the network and deliver it to the called party in any other location on the earth’s surface.
The company claims its call quality and completion rates outperform other satellite systems with unmatched reliability. It cites this capability as one of the main reasons that the U.S. military relies on the Iridium network.
In February 2019, Iridium completed deployment of its next generation of LEO satellites, dubbed Iridium NEXT®. (see, Iridium’s High Flying Wireless Act). The NEXT constellation uses the same interlinked mesh architecture as the first-generation constellation and supports all end-user equipment currently in use.
Until NEXT became operational, data connections were only possible at kilobits per second transmission speeds. With NEXT, Iridium’s CERTUS® broadband supports broadband connections up to 1.4 Mbps.
NEXT already is paying off for the company.
Service revenues for the first six months of 2020 were $229.3 million, up 5 percent from $217.7 million in 1H19. Commercial services accounted for $179,3 million or 78 percent of the total while Government services contributed $50 million, the remaining 22 percent.
Operational EBITDA grew by 9 percent on a year-to-year basis to $177.3 million.
At the end of 2Q20, Iridium recorded 1,362,000 billable subscribers, an increase of 12 percent over the 1,213,000 subscribers at the end of 2Q19.
Commercial services comprise a mix of customers’ uses and applications.
Traditional voice and data services which accounted for 47 percent of the total were down 1 percent to $84 million on a year-to-year basis reflecting some impact from COVID-19.
IoT Data, basically a fixed service, accounted for 26 percent of the total, was flat with 1H19 at $46.3 million.
Broadband, at 10 percent of the total, exhibited strong demand increasing by 21 percent to $17.2 million from $14.2 million in 1H19.
Hosted Payload and other data services do not have traditional billable subscribers. Hosted payload services consist of hosting and data services to payload customers, namely Aireon and Harris. Other data services include the company’s one-way satellite timing, location, and authentication services (STL) which provides position, navigation and timing technology.
Hosted Payload and Other Services in 1H20 were $31.7 million, up 23 percent over $25.8 million in 1H19 and accounted for 15 percent of the total.
Government service revenue consists of voice and IoT data subscription-based services provided to agencies of the U.S. government through various contract and subcontract.
Iridium’s prime contract with the U.S. government is the Enhanced Mobile Satellite Services contract, a seven-year $738.5 million fixed price contract with the U.S. Air Force Space Command signed in September 2019. Under EMSS, Iridium provides specified satellite airtime services.
The company provided a positive outlook for full-year 2020 with total service revenue growing 1-2 percent over the $447.2 million and EBITDA of $340 million, a 3 percent increase over $331.7 million in full-year 2019.
By John Celentano, Inside Towers Business Editor