Eagle River Investments

, the investment group led by telecom financier Craig McCaw, said Friday that it was abandoning plans to buy the troubled satellite telephone company

Iridium

.

McCaw had been in talks with Iridium and another satellite telecommunications company,

ICO Global Networks

(ICOFQ)

, with the aim of merging the two with his own proposed

Teledesic

network to build a global satellite voice and data network.

Teledesic is currently under construction, and is expected to be completed by 2004.

Iridium originally had paid about $5 billion to build its network of 66 satellites, which began operations in 1998. The company had expected its service to grow sharply, but its revenue has since fallen flat and its subscriber base has stagnated despite price cuts.

Both ICO, based in London, and Iridium, based in Washington, D.C., have entered Chapter 11 bankruptcy proceedings.

Eagle River, based in Bellevue, Wash., said Friday it would continue to concentrate on buying ICO's partially built network because of its focus on data services, a feature expected to be a major selling point of Teledesic.

"We've made a strategic decision to focus our resources on the satellite-based data services that ICO and Teledesic can provide," said Dennis Weibling, president of Eagle River. "After closer examination of Iridium's technologies, we determined that there are closer synergies between ICO and Teledesic."

Eagle River has so far committed $1.475 billion to bail out ICO, whose network is expected to begin operations in 2002. According to documents filed in U.S. Bankruptcy Court in Delaware last week, McCaw said he planned to transfer ownership of ICO to a new company, currently called New Satco.

In early February, Eagle River teamed with Iridium's largest backer,

Motorola

(MOT)

, to commit $5 million to finance Iridium's operations through Monday.