Desch continued, "We believe 2013 will be a year of accelerating growth, with a few key focus areas driving the incremental improvement. First, we continue to expect a successful contract renewal with the Department of Defense during the year. We enjoy a strategic relationship with this important customer, and are recognized as a key partner in their communications infrastructure. Second, a well-timed service fee increase in the voice business will contribute meaningfully to our commercial service revenue. Finally, through a combination of ongoing innovation for our current services and new product launches, we'll continue to benefit from healthy, organic growth in many of our key markets. All in all, we're hitting our key milestones to ensure Iridium's long-term success."Full-Year 2012 Iridium Business Highlights
Service – Commercial
Commercial service remained the largest part of Iridium's business, representing 56 percent of the Company's total revenue during the fourth quarter. The Company's commercial customer base is diverse and includes markets such as maritime, aviation, oil and gas, mining, recreation, forestry, construction, transportation and emergency services. These customers rely on Iridium's products and services as critical to their daily operations and integral to their communications and business infrastructure.
- Commercial service revenue was $51.6 million, a 2 percent increase from last year's comparable period, primarily supported by a gain in M2M data customers.
- Commercial voice and data subscribers increased 8 percent from the year-ago period to 332,000 customers. Commercial voice and data average revenue per user ("ARPU") was $41 during the fourth quarter, an 11 percent year-over-year decrease. Voice and data ARPU declined primarily due to lower voice and circuit switched data customer usage. Commercial M2M data subscribers grew 36 percent from the year-ago period to 228,000 customers. Commercial M2M data ARPU was $16 during the fourth quarter, versus $18 in last year's comparable period.
- Iridium's commercial business ended the quarter with 560,000 billable subscribers, which compares to 475,000 for the prior-year quarter and is up from 546,000 for the quarter ended September 30, 2012. M2M data subscribers represented 41 percent of billable commercial subscribers, an increase from 35 percent at the end of the prior-year period.
Service – Government
Iridium's voice and data solutions improve situational awareness for military personnel and track critical assets in tough environments around the globe, providing a unique value proposition that is not easily duplicated. The Company has a strategic relationship with its U.S. Government customer supported by differentiated and robust product offerings.
- Government service revenue was $15.2 million, a 5 percent decrease from the prior-year period, driven by a 9 percent decline in traditional voice subscribers, partially offset by 18 percent and 36 percent growth, respectively, in Netted Iridium ® and M2M data customers.
- Government voice and data ARPU was $137 during the fourth quarter, a 1 percent year-over-year decrease. Voice and data ARPU declined due to a higher mix of lower-priced Netted Iridium subscribers. Government M2M data ARPU was $18 during the fourth quarter, down from $19 in last year's comparable period.
- Iridium's government business ended the quarter with 51,000 billable subscribers, which compares to 48,000 for the prior-year quarter and is up from 49,000 for the quarter ended September 30, 2012. Government voice and data subscribers decreased 3 percent year-over-year due to reduced government spending and deployed troop levels. M2M data subscribers increased 36 percent year-over-year and represented 29 percent of billable government subscribers, an increase from 23 percent at the end of the prior-year period.
- Equipment revenue was $22.0 million during the fourth quarter, a 2 percent year-over-year decrease. Revenue decreased primarily due to lower overall unit sales.
Engineering & Support
- Engineering and support revenue was $3.5 million during the fourth quarter, down 41 percent from the prior-year period, primarily resulting from a decline in scope of work for ongoing government projects.