Emma Kelly/LONDON

Loral Space & Communications is to sink a further $500 million into its struggling satellite telephony business, Globalstar. The move coincides with the purchase of the assets of Globalstar's former competitor, Iridium, by a new company, Iridium Satellite, which aims to offer a scaled-down service to the US Government and industry.

Loral has already invested $1 billion in Globalstar, but has been forced to underwrite the new three-year secured credit facility in order to see the venture through to next May, at which point chairman and chief executive officer Bernard Schwartz claims it will "have proven its viability".

Globalstar, which previously had just $286 million in the coffers, has experienced slow subscriber take-up (21,300 users buying 2.3 million minutes by the end of the third quarter) and suffered a $652 million net loss for the first nine months on $2.5 million revenues.

Schwartz admits growth has been "unacceptably slow", and is steering Globalstar into new markets. It is aiming to fill a void left by Iridium by teaming with Arnav Systems to offer low-cost satcoms for corporate and general aviation, and is aligned with In-Flight Network, the Rockwell Collins/News Corp joint venture, to provide in-flight passenger entertainment and communication services.

The takeover of Iridium's 88-satellite constellation, terrestrial network and property for a nominal $25 million was approved by a US bankruptcy court earlier this month. Headed by former Pan American World Airways chief executive Dan Colussy, Iridium Satellite aims to provide mobile satcoms to Washington, heavy industry, and the maritime, aviation and "humanitarian" sectors.

Boeing will operate and maintain the satellites while Motorola, founder of the original Iridium - which failed in August - will provide subscriber equipment "on commercially-acceptable terms". Motorola had previously planned to de-orbit the satellites, having failed to find a buyer for Iridium, the collapse of which cast doubt over the future of the low-Earth-orbit mobile satcoms sector.

• The 144 member governments of Intelsat have approved the privatisation of the global satcoms system operator. The privatisation deadline has slipped from April to 18 July to allow some members to seek legislative approval. All assets will be transferred to Intelsat Ltd, a Bermuda-based holding company, with an initial public offering to follow within a year.

Source: Flight International