ICO Global raised $4.5B for satellite phones — and bankrupted before a single call

ICO Global Communications was founded in 1995 to build a satellite phone network using a constellation of 12 medium-Earth-orbit satellites. The idea was compelling: a single global standard for mobile phone service that would work anywhere on Earth. Investors poured in more than $4.5 billion — one of the largest private financings in history at the time. ICO contracted Hughes (later Boeing) to build the satellites and signed up partners around the world.

The timing could not have been worse. ICO's project was running years behind schedule and billions over budget. Meanwhile, its rival Iridium — an even more ambitious 66-satellite low-Earth-orbit system — launched its service in 1998 and promptly collapsed into bankruptcy in August 1999, unable to attract enough customers to cover its massive debt payments. ICO, which had not yet launched a single commercial satellite, was caught in the same downdraft. Investors fled the entire satellite phone sector. ICO filed for Chapter 11 bankruptcy protection on August 27, 1999.

Craig McCaw, the cellular billionaire who had sold McCaw Cellular to AT&T for $11.5 billion, stepped in to rescue ICO out of bankruptcy. The company emerged as New ICO in May 2000, but the damage was done. Its first satellite was destroyed in a Sea Launch rocket failure in March 2000. After years of litigation against Boeing over the failed satellite contract — a case that eventually won ICO $603 million in damages — the company was renamed Pendrell Corporation and effectively became a licensing shell. The original investors lost nearly everything.