Oct. 21, 2013
Iridium Communications Inc. has been
awarded a $400 million, multi-year, fixed-price
contract with the Defense Information Systems
Agency (DISA) to provide satellite airtime
services to meet the communications needs of the
U.S. Department of Defense (DoD) and their
federal partners. This five-year contract renews
the provision for delivering Enhanced Mobile
Satellite Services (EMSS) airtime effective
October 22. Iridium will provide unlimited
global secure and unsecure voice, low and
high-speed data, paging and Distributed Tactical
Communications System (DTCS) services for an
unlimited number of DoD and other federal
government subscribers.
The renewed EMSS contract extends the U.S.
Government's (USG) existing relationship with
Iridium and ensures the continuation of service
through new terms which offer program stability
and the best value to the DoD to expand services
supporting its critical missions. Both the
multi-year and fixed-cost terms allow an even
greater number of government subscribers to
fully take advantage of the current capabilities
as well as the enhanced services that will
become available with Iridium NEXT -- the
Company's next generation satellite
constellation scheduled for first launch in
early 2015 — without concern for incremental
cost increases based on usage changes or growth
in demand.
The Company's U.S. Government service revenue
for the full-year 2012 was $61.8 million. The
EMSS fixed-price rate in each of the five
contract years is $64 million in fiscal year
(FY) 2014, $72 million in FY 2015 and $88
million in FY 2016, 2017, and 2018.
"Iridium is proud to continue its
longstanding relationship of providing global,
mobile communications to the Department of
Defense, our largest single customer," said
Scott Scheimreif, Iridium's executive vice
president, government programs. "We expect the
DoD's needs for satellite communication services
will continue to grow over the next 5 to 10
years. At a time when the U.S. Government is
operating under greater fiscal constraints,
Iridium is confident that both our service and
contract terms will provide an optimal solution
for our warfighters and other federal partners
to communicate effectively now and in the
future."
In 2012, USG services and support made up 20
percent of Iridium's revenues. USG subscribers
on the Iridium network have grown from 32,000 to
over 51,000 during the last five-year contract
period as services grew from basic voice and
paging, to data and Netted Iridium®
with growing applications across all the
services. According to the Defense Business
Board fiscal year 2013 report to the Secretary
of Defense, commercial satellite communications
currently supports about 40 percent of the DoD's
satellite communication needs. Northern Sky
Research (NSR), a global leader providing
satellite industry market research, predicts
this requirement will grow by 68 percent over
the next decade. The report concludes: "SATCOM
is critical to supporting the warfighter, and
DoD will require additional capacity in the
future as new missions evolve and communication
technologies further develop. To meet DoD's
needs, the commercial satellite sector is a
cost-effective source for obtaining
technologically advanced services."
Iridium operates the world's largest
commercial satellite network offering coverage
anywhere in the world, including the polar
regions. The Iridium NEXT program is a $3
billion investment to upgrade the network
through the launch of 66 low-Earth orbiting
(LEO) satellites, six in-orbit spares and nine
ground spares, which will extend Iridium's
position as a critical communications provider
by offering substantially greater bandwidth,
improved data speeds and continued global
coverage to more than 275 government and
commercial partners and consumers. Iridium NEXT
will also serve as a platform for AireonSM,
a global aircraft-monitoring service using a
space-based ADS-B hosted payload, as well as for
the Company's newly announced Iridium PRIMESM
offering, a turnkey solution for hosted payloads
which will service all elements of a successful
hosted payload mission at an estimated cost
savings of 50 percent or more compared to
current stand-alone solutions.
