MUMBAI, MARCH 18: Indian financial institutions and Videsh Sanchar Nigam Ltd (VSNL) would be the biggest losers following the Iridium closure as both had made substantial investments in Iridium's Indian subsidiary. While Indian FIs - especially ICICI - exposure in Iridium were over Rs 50 crore, VSNL had invested over $ 40 million in the company. Iridium is set to switch off its services as a financial bailout plan did not take off. Though Subhash Chandra of Zee was planning to participate in US entrepreneur Craig McGraw led consortium, it later backed out. In fact, VSNL was so bullish about the satellite telephony that it went ahead invested in Zee group's yet to be launched Agrani satellite telephony project. VSNL has also invested in the failed ICO satellite telephone project. In India, Iridium did not have any substantial subscribers base, but its brick-shaped telephones were used widely during Orissa cyclone and Kargil war. Of the total 55,000 connections worldwide, the company managed to sell less than a 1,000 connections in the country. Its high tariff of Rs 75 per minute was one of the biggest stumbling blocks to sell more phones in India. The company faced innumerable problems from Indian government agencies which had not given its no-objection certificate till the last minute. The company had to apply for more than 40 NOCs before it could start its services. The Iridium's $ 7 billion failure is sure to hit satellite telephone projects planned by both Reliance and Zee group. While Zee has already managed to get over Rs 1,000 crore commitments from domestic financial institutions, Reliance is concentrating more on its cellular phone circles, pushing the satellite phone project into backburner. Telecom analysts say that in order to make satellite phones projects successfull, service providers will have to compete in tariff with cellular phone industry where the tariff for corporate customers is as low as Rs 2 per minute. Besides, the size and weight of the phones will have to scaled down from the present suitcase size, as in the case of Inmarsat and brick-sized Iridium phones.
