IDB Mobile Suffers Significant Losses, Sparks Concern Among Investors

Strategic Insights -

IDB Mobile, a joint venture between IDB Communications Group Inc. and Teleglobe Inc., has reported significant losses in its first six months this year, totaling $4.8 million. This is a substantial increase from the $1 million loss reported during the same period last year. IDB Communications has expressed concerns about its management role in the venture and has hinted at the possibility of selling its investment in IDB Mobile. The company's president, Jim Jansco, attributes the losses to increased competition from land stations in the Indian Ocean Region and Europe, as well as the refusal of Comsat Land Mobile to pass along rate reductions received from Inmarsat.

Key Takeaways:

  • IDB Mobile reported $4.8 million in losses during the first six months of this year, a significant increase from the $1 million loss reported during the same period last year.
  • IDB Communications has reduced its management role in IDB Mobile, allowing Teleglobe to increase its influence in the venture.
  • The joint venture's losses are attributed to increased competition from land stations in the Indian Ocean Region and Europe, as well as Comsat's refusal to pass along rate reductions received from Inmarsat.
  • IDB Mobile's liabilities have increased to $62.5 million at the end of June, compared to $56.4 million at the end of 1993.
  • The company's assets barely rose to $63.3 million by June 30, compared to $62 million at the end of last year.
  • IDB Communications' decision to reduce its management role in IDB Mobile may have been necessitated by its auditor, Arthur Andersen.
  • IDB Communications has agreed to be bought by LDDS Communications Group Inc. in a $700 stock swap.

Statistics:

  • IDB Mobile reported $4.8 million in losses for the first six months of this year.
  • IDB Communications lost $1 million during the same period last year.
  • IDB Mobile's liabilities increased to $62.5 million at the end of June, a $6.1 million increase from 1993.
  • IDB Mobile's assets barely rose to $63.3 million by June 30, a $1.3 million increase from the end of 1993.
  • IDB Communications agreed to be bought by LDDS Communications Group Inc. for $700 in stock.

Sources:

  • IDB Communications Group Inc., "Quarterly Report" (source not specified in the original text)
  • Comsat Mobile, "Statement from Jack Hannon, vice president of legal affairs" (source not specified in the original text)
  • Teleglobe Inc., "Statement from a Teleglobe spokesman" (source not specified in the original text)
  • IDB Mobile, "Press Release" (source not specified in the original text)
  • SATELLITE NEWS, "Interview with Jim Jansco, president of IDB Mobile" (source not specified in the original text)
  • LDDS Communications Group Inc., "Press Release" (source not specified in the original text)