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Craig McCaw cuts losses and abandons Iridium

U-turn leaves troubled satellite venture up a certain creek without a certain implement

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Teledesic boss Craig McCaw's investment operation, Eagle River, on Friday abandoned its plan to invest in ailing satellite comms company Iridium. Eagle River had been pursuing a stake in Iridium for some time. After a last minute change of plan, Eagle River recently said it would pump $5 million, in co-operation with Motorola, Iridium's biggest shareholder into the troubled cellphone-by-satellite operation. This sum came in place of an earlier scheme to invest $21 million from Eagle River alone. The US bankruptcy court approved that $5 million cash injection on 17 February, the sum being earmarked for keeping Iridium operational until 6 March. Eagle River then began a due diligence investigation, and it's hard not to conclude that it came across something about that it didn't like. Eagle River president Dennis Weibling said: "After careful examination of Iridium's technologies, we determined that there are closer synergies between ICO and Teledesic and the services they will provide customers worldwide." ICO and Teledesic are both now focused on providing broadband networking facilities via satellite - or, rather, that was always Teledesic's focus, but ICO changed from telecoms to data soon after Iridium went into Chapter 11 bankruptcy protection. ICO has yet to launch its satellites, which are now being converted from voice-oriented comms to data networking. By the time they're launched, they are unlikely to bear the ICO name, the company having been fully subsumed into Teledesic by then. The point here is that Eagle River always knew there would be problems integrating Iridium technology into that of Teledesic, Iridium's satellite network being already in orbit. It seems unlikely that Eagle River would have embarked on negotiations with Iridium if it felt those problems could not be overcome or successfully operated alongside but separate from the Teledesic network. That suggests, the issue with Iridium may be financial, possibly that the company requires rather more money than even loadsamoney McCaw can find to keep it going. In short, it's a liability not an asset. Surely, the decision to abandon the attempt to take Iridium over can't be because Eagle River can't get a deal it's happy with? After all, Iridium's in no position to bargain. ®

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