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Things changed dramatically for Iridium in late 2000 when Dan Colussy,14 came to the rescue of the company. He formed Iridium Satellite LLC (Iridium Satellite) and made a bid of $25 million, out of which $6.5 million was paid in cash, to acquire Iridium's business. This included purchasing all of Iridium's existing assets, its satellites and the satellite control network. In November 2000, the US Bankruptcy Court for the Southern District of New York approved Iridium Satellite's bid to purchase Iridium's operating assets. Following this, Colussy took many constructive steps towards positioning Iridium as the best mobile satellite service in the market. Iridium Satellite entered into a contract with aviation major Boeing to operate and maintain the 66-satellite constellation instead of Motorola, which now only provided subscriber equipment.
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He then introduced closely monitored plans to ensure a successful re-launch of Iridium's services. Having learnt its lessons the hard way, Iridium Satellite was careful not to repeat its mistakes Iridium had committed earlier. Since Iridium was bought only for $25 million as compared to the $5 billion spent to create it, the new management was not under severe cost pressures. |
Along with voice communications, Iridium also launched a series of data services, Simple Messaging Service (SMS) and paging services for its customers. The company started offering several value-added features that include:
• Flat rates for calls from/to anywhere in the world.
• Unlike cellular services where customers had to use different phone numbers for different locations, Iridium proposed to give its customers the facility of using only one phone number worldwide.
• Introduction of SIM cards15 and a host of other Internet-enabled features.
14] An aviation industry businessman who had previously served as Chairman, President and CEO of the US based
aviation major UNC Inc.; Chairman, President and CEO of Canadian Pacific Airlines and President and COO of Pan
American World Airways.
15] Subscriber Identification Module (SIM) card is a 'smart' card that allows users to make and receive calls. The SIM
card identifies the user to the network and contains a microprocessor chip, which stores unique information about the
user account, including his phone number and security number. SIM cards have many functions like providing memory
space to save up to 100 names, phone numbers and 15 short text messages (SMS).
Case Code : BSTR031
Themes: Turnaround Strategy
Case Length : 11 Pages
Period : 1999-2001
Organization : Iridium LLC
Pub Date : 2002
Teaching Note : Available
Countries : USA
Industry : Telecommunication
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