Iridium delays phone-to-satellite plans

Iridium said it now expects to begin connecting smartphones to its satellites in 2024, which represents a delay from the company's initial plan to activate such connections in the second half of this year.

"We've completed our qualification work with Qualcomm, but know there's development and integration work required for these smartphone OEMs [original equipment manufacturers] that adopt this new satellite technology. We don't have very good visibility in the timing or volume of specific smartphones, but from what we do know, we now expect the first activations will move into 2024," Iridium CEO Matt Desch said during Iridium's quarterly conference call this week, according to Seeking Alpha. "Specific information ... will all come from Qualcomm and their smartphone customers in due time."

When Iridium first announced its agreement with Qualcomm in January, the companies said unnamed Qualcomm customers would begin selling satellite-capable smartphones starting in the second half of 2023. Since then, Android smartphone vendors like Honor, Motorola, Nothing, Oppo, Vivo and Xiaomi have said they would add satellite capabilities to their phones via Qualcomm's deal with Iridium.

Iridium is one of a number of companies hoping to cash in on the market for direct-to-device (D2D) satellite connections. Such connections promise to link regular smartphones to satellites operated by the likes of AST SpaceMobile, Lynk Global, Globalstar and others.

Some believe the market for such services will become significant. For example, ABI Research recently said it predicts that $124.6 billion worth of annual service revenues will come from satellite-based services to phones by 2030.

Market complexities

Analysts generally argued that Iridium is still well positioned to succeed in the market for satellite services, despite the company's warning.

"We expect FCF [free cash flow ] to accelerate throughout 2023 into 2024 and beyond and fuel significant shareholder returns," wrote the financial analyst at Raymond James in a note to investors following the release of Iridium's quarterly results.

"We also remain bullish on the intermediate growth opportunity tied to its Qualcomm partnership to enable cell phones to connect with the Iridium constellation and will continue to highlight those milestones as they occur," wrote the financial analysts at LightShed Partners in a note to investors.

The Raymond James analysts now estimate Iridium will make around $3 million from smartphone usage on its network in 2024, down from its prior estimate of around $20 million. Overall, the firm estimates the smartphone revenue opportunity for Iridium will reach $86 million by 2026, down from its prior estimate of $178 million.

"Even though we continue to think the large TAM [total addressable market] size has not changed ... the timing apparently has," wrote the Raymond James analysts.

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— Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano