Desch continued, "We're also pleased to have recently closed on a large, multi-year agreement with Caterpillar, the world's leading heavy equipment manufacturer, for satellite M2M services. This agreement strengthens our leadership position in our fastest-growing business line, which now accounts for 41% of our customer base and 18% of our total service revenue. Finally, we remain on track for a contract renewal with the Department of Defense during the third quarter of 2013, as we expect they'll continue to rely on our robust product portfolio for global, secure, low-latency communications."
Iridium Business Highlights
Service – Commercial
Commercial service remained the largest part of Iridium's business, representing 60 percent of the Company's total revenue during the first 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 $53.7 million, a 5 percent increase from last year's comparable period, primarily supported by a gain in M2M data customers.
- Commercial voice and data subscribers increased 6 percent from the year-ago period to 332,000 customers. Commercial voice and data average revenue per user ("ARPU") was $43 during the first quarter, a 4 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 30 percent from the year-ago period to 238,000 customers. Commercial M2M data ARPU was $16 during the first quarter, versus $18 in last year's comparable period.
- Iridium's commercial business ended the quarter with 570,000 billable subscribers, which compares to 496,000 for the prior-year quarter and is up from 560,000 for the quarter ended December 31, 2012. M2M data subscribers represented 42 percent of billable commercial subscribers, an increase from 37 percent at the end of the prior-year period.
- Government service revenue was $15.1 million, a 4 percent decrease from the prior-year period, driven by a 10 percent decline in traditional voice subscribers, partially offset by 11 percent and 42 percent growth, respectively, in Netted Iridium ® and M2M data customers.
- Government voice and data ARPU was $136 during the first 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 $19 during the first quarter, up from $18 during 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 unchanged from the quarter ended December 31, 2012. Government voice and data subscribers decreased 6 percent year-over-year due to reduced government spending and deployed troop levels. M2M data subscribers increased 42 percent year-over-year and represented 33 percent of billable government subscribers, an increase from 25 percent at the end of the prior-year period.
- Equipment revenue was $17.3 million during the first quarter, a 20 percent year-over-year decrease. Revenue declined from the year-ago quarter primarily due to lower overall unit sales.
- The Company continues to believe that its equipment business will make roughly the same contribution to consolidated operating results in 2013 as it did in 2012 due to a strong committed order book.
- Engineering and support revenue was $3.1 million during the first quarter, down 40 percent from the prior-year period, primarily resulting from a decline in scope of work for ongoing government projects.
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