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Iridium Can't Find Buyer, Seeks To Shut
Satellite-Based Mobile Phone Service

By David E. Kalish   Associated Press
NEW YORK — Barring a last minute financial rescue, Iridium LLC planned Friday to shut down its mobile phone service at midnight and send its 66 satellites eventually crashing to earth.

The company told a U.S. bankruptcy court in a written filing that it has been unable to find a qualified buyer and asked for permission to use $8.3 million of its remaining money to close down. The move would cut off service to 55,000 customers.

Iridium's filing came just hours before a scheduled hearing to determine the future of the money-losing company, which has been beset by anemic consumer demand and $4.4 billion in debts.

If the court approves spending the money, Washington-based Iridium will pull the satellites out of orbit so they can burn up on re-entry into the Earth's atmosphere.

Iridium's future began looking bleak two weeks ago when wireless phone pioneer Craig McCaw scrapped plans to expand his budding satellite empire with a bailout of the company.

The satellite network's shutdown would halt a long-running, sometimes quixotic attempt to link up the remotest reaches of Earth with powerful mobile phones.

Iridium filed for bankruptcy court protection from its creditors last August, unable to make payments on its debts, but hoping to reorganize and continue operating.

While Iridium has more than tripled its subscriber base since last summer, the customer count was still well shy of the levels needed to keep the company afloat without another cash infusion from lead investor Motorola Corp. and its other hesitant backers.

The service, launched in late 1998, stumbled out of the starting gate amid complaints about prohibitive prices — as much as $3,000 per phone and up to $7 per minute for calls — and large clunky phones.

Prices for calls and the phones were cut sharply last summer, but too late to restore customer confidence, especially with an aggressive new rival named Globalstar introducing service in recent months.

Discussions with possible purchasers for Iridium had continued through early Friday, but no big-name corporate saviors had come forward. The only known bidder was Gene Curcio, owner of Los Angeles-based Crescent Communications Inc., a privately held telecommunications company.

Curcio had wanted Motorola to continue operating the satellites for at least another two months. But Motorola, among the creators of Iridium, has said it was unwilling to keep the satellite network in operation past midnight.

In afternoon trading, shares of Motorola were down $2.12 1/2 at $149.62 1/2 on the New York Stock Exchange.

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