Globalstar Sees Uptick in Two-way Voice Calls After Five Years of Decline

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PARIS — Mobile satellite services provider Globalstar said Nov. 14 it had begun to see an uptick in the use of its low-orbiting satellite constellation for two-way voice calls after five years of declines caused by satellite in-orbit failures.

The Covington, La.-based company said the last six of 24 satellites under construction to replenish the constellation are scheduled for launch in February aboard a Russian Soyuz rocket.

By mid-2013, the company said, it should be able to offer customers about of the same level of voice service they had before 2007, when a radiation-caused failure in a part of the satellites’ payload began undermining Globalstar’s ability to handle voice calls.

The company has since created a data-messaging service, which now has 235,000 subscribers, and cut costs as it waits for its second-generation constellation to enter operations.

One of the second-generation satellites launched in 2011 suffered the loss of a momentum wheel and was taken out of service. Globalstar and its satellite prime contractor, Thales Alenia Space, have developed a software patch that enables the satellite to function with just two wheels instead of three.

In a conference call with investors, Globalstar Chief Executive Jay Monroe said the software upload, which was completed in October, permits the affected satellite to return to full functionality for 15 years. It also will give the company a ready-made solution in the event of further momentum-wheel failures.

Regaining customer confidence in Globalstar’s ability to deliver two-way voice service without asking customers to time their calls to wait for satellites to pass overhead remains one of the company’s highest priorities.

Globalstar Finance Director Tim Taylor said during the call that the average monthly revenue from voice subscribers has been climbing as subscribers notice the improved quality as more second-generation satellites are placed into service.

Monthly revenue from voice subscribers reached $18.95 in the three months ending Sept. 30, up from $16.74 in the period ending June 30 and $15.35 for the previous three-month period.

What Globalstar calls its Duplex service — two-way voice communications — reported $5 million in total revenue for the three months ending Sept. 30. The company said it had 95,000 Duplex subscribers as of Sept. 30.

Globalstar’s Spot Messenger hand-held messaging and position-location service, which had 235,000 subscribers as of Sept. 30, generated an average of $9.44 in monthly per-subscriber revenue.

Taylor said Globalstar hopes to take advantage of the price increases planned by mobile satellite handset service providers Inmarsat of London and Iridium of McLean, Va., to set itself clearly apart as the market’s low-cost option.

Globalstar’s near-term challenge, Monroe and Taylor said, is to find additional sources of cash to fund the company’s operations in 2013, and to order six final satellites from Thales Alenia Space.

Taylor said that as of Sept. 30, Globalstar had $1.3 million in cash, $3 million in a loan facility guaranteed by France’s export-credit agency, Coface, and $23 million in a contingent equity account.

The company will need $3 million of that to pay Thales Alenia Space what it is due by the end of this year, plus $20 million to pay for the final February launch of six satellites by the Arianespace launch consortium of Evry, France, which markets the Soyuz rocket, and a final $3 million in other cash requirements by the end of this year.

Globalstar has convertible debt, carrying an annual interest rate of 5.75 percent, that is callable as of next April. Monroe said negotiations with the debt holders continue and that Globalstar hopes to resolve the issue, and to raise new funds, in the first half of 2013.

Taylor said Coface and the banks that are taking part in the Coface-backed loan of $586 million determined in October that the company’s recent arbitration with Thales Alenia Space, and the resulting agreement with the satellite builder, constitute a default on the loan.

“We are currently engaged in discussions with the lending group to obtain a waiver or amendment associated with any defaults,” Taylor said. He added that Globalstar is seeking a Coface-type funding arrangement to raise the capital it will need in 2013.

Monroe said Globalstar’s recent petition to the U.S. Federal Communications Commission (FCC) to use Globalstar’s spectrum for terrestrial broadband offers an additional opportunity for the company.

Like Dish Network of Englewood, Colo., which has purchased mobile satellite companies holding similar radio spectrum, Globalstar is asking U.S. regulators to waive certain requirements that up to now have prevented the mobile satellite operators to use their spectrum for terrestrial services.

These requirements include the obligation that the terrestrial phones all be equipped with satellite antennas, and that sufficient spare satellite capacity be available to assure the continuity of the satellite service even if most of the revenue is coming from terrestrial subscribers.

The FCC is expected to rule on the Dish Network petition before the end of the year. Monroe said a favorable ruling would be a good sign for Globalstar’s own, separate request to the FCC.