Globalstar Poised for International ATC Opportunities

“Around the world, various agencies equivalent to our FCC are taking steps to implement regulations which we expect will result in similar outcomes to our ATC license in the U.S.,” Monroe said: “These are opportunities which we will exploit over the next few years.” Globalstar and Mobile Satellite Ventures are the only companies authorized in the U.S. to use their satellite spectrum on the ground under an ATC license. Globalstar’s ATC license covers 11 MHz of its 28 MHz of spectrum, split between the L- and S-bands. In the S-band, Globalstar’s spectrum adjoins satellite radio on one side and Clearwire and Sprint on the other, Monroe said. In the L-band, Globalstar’s spectrum is near the AWS and PCS bands, he said.

Globalstar isn’t the only mobile satellite services operator seeking to use MSS spectrum abroad. Mobile Satellite Ventures, Inmarsat, TerreStar and ICO have voiced interest in developing hybrid satellite/wireless systems in Europe, where they're lobbying regulatory fronts (CD Sept. 14 p9). MSS firms spent years getting the FCC to embrace the ATC concept and have said they want to see similar spectrum policies elsewhere. The international opportunity “is an evolving story,” Monroe said: “In Canada, regulations are largely in place. In Europe, discussions are under way, and several countries in S. America are undergoing the same process.”

A spectrum partnership with a wireless operator, telco or mobile content provider could take many forms, Monroe said. The simplest and least risky for Globalstar would be a spectrum leasing deal, he said: “From the perspective of Globalstar, that’s a pretty straightforward cash-in-the-door, 100% EBITDA kind of equation.” At the opposite end of the range would lie “a whole series of very complex partnership arrangements whereby we contribute spectrum and someone else contributes their business assets in order to run a system together,” he said. A joint venture would require more time, money and risk than spectrum leasing but could bring a much higher return, he said. Outright acquisition of Globalstar by a larger company is another possibility, he said.

Meantime, Globalstar is shifting from a wholesale business model to retail, officials said. The MSS operator gains 6 times more revenue from a single retail subscriber than from a wholesale subscriber, Monroe said. Its consolidation strategy is to acquire independent gateways now wholesaling Globalstar service, and to construct company- owned gateways where it has no coverage. “We have enough cash after IPO to execute our business plan,” he said.

Globalstar netted $119 million in its recent IPO, which closed Nov. 7. Separately, investor Thermo Funding said this week it will spend $32 million on 2 million more Globalstar shares. As with the IPO net, proceeds will go toward building a 2nd-generation satellite constellation, officials said. Monroe said Tues. Globalstar is “moving expeditiously” to convert a preliminary deal with Alcatel Alenia Space into a formal satellite manufacturing agreement. Alcatel in Oct. signed a $7.7 million contract to plan 48 LEO craft. Globalstar’s next-gen satellites will last it through 2025 and the fleet will cost close to $1.25 billion, nearly what Globalstar paid Alcatel for its first fleet, Monroe said.

Globalstar’s new satellite phone, which debuted Nov. 9, is getting good reviews, officials said. It’s significantly smaller, lighter and about 25% less costly to produce than its predecessor, said CFO Fuad Ahmad. “It opens up for Globalstar a true consumer market opportunity, which is something we haven’t enjoyed until now,” Monroe said. Globalstar, now introducing the phone in small quantities, hasn’t priced it yet. “We don’t have so many of them yet that we can have a broad introduction… Expect that at the end of the year or beginning of next year,” Monroe said. Globalstar ended Q3 with 255,729 subscribers and year-to-date operating income of $14.5 million.