PARIS — Mobile satellite services provider Globalstar has fully accounted for the competitive threat posed by Inmarsat’s new hand-held satellite telephone in Globalstar’s revenue and gross-profit projections for 2010 and 2011, which are trigger points for the company’s package of bank loans, a senior Globalstar official said July 7.
Anthony J. Navarra, president of global operations for Milpitas, Calif.-based Globalstar, said the company, which is going through a rough 2010 as it waits for its new satellites to launch, expects to meet the terms of the $586.3 million bank facility secured in June 2009 despite the changed competitive environment.
Arranged by a consortium of French banks led by BNP Paribas, the facility was supported by a guarantee from France’s Coface export-credit agency. The Coface guarantee, equivalent to 95 percent of the bank facility, was put into place following Globalstar’s selection of Thales Alenia Space of France and Italy as prime contractor for Globalstar’s second-generation satellites.
London-based Inmarsat in June introduced its first hand-held satellite telephone, saying its principal early markets were current or prospective customers for Globalstar and Iridium Communications of McLean, Va., particularly those outside North America. Inmarsat officials say their phone will retail for substantially less than the Iridium or Globalstar products, and will cost less to use.
In a July 7 interview, Navarra said Globalstar had factored in the Inmarsat challenge when it guaranteed to its banks and to Coface its revenue and gross-profit targets for 2010 and 2011.
RELATED ARTICLES:
Globalstar Contrasts Its Situation with that of Iridium
Globalstar’s 2nd-generation System Slated To Begin Launching This September
Globalstar Trims Spending as it Awaits New Constellation
Navarra said Globalstar’s current constellation features 44 operational spacecraft in low Earth orbit. But only about 12 of these provide full two-way voice communications. Globalstar’s voice service has been declining since early 2007 when the company disclosed that the S-band communications antenna was suffering from what company officials believe is a radiation-induced service degradation.
Globalstar since then has been in a race against time to field the second-generation system before voice service on the existing constellation degrades to a point where the company can no longer maintain its subscriber base.
Navarra said the first batch of second-generation Globalstar satellites is scheduled to be shipped to their Baikonur Cosmodrome launch site in Kazakhstan by August. The first launch, of six spacecraft, is scheduled to occur by October aboard a Russian Soyuz rocket under a commercial contract arranged by the Arianespace consortium of Evry, France.
A Thales Alenia Space official said July 8 two batches of three Globalstar satellites would be sent to the Russian-run Baikonur spaceport in mid- and late August. An Arianespace official said the first Globalstar launch is currently scheduled for mid-October, and that refurbishment of the Soyuz launch pad to be used for Globalstar is on track to be completed well before then.
Similarly, a newly designed dispenser that will carry the six Globalstar satellites under the Soyuz rocket fairing and then release them in low Earth orbit has been completed and qualified for use, the Arianespace official said.
Globalstar has promised its insurance underwriters that it would fully test the new satellites on orbit before launching the remaining 18 spacecraft under construction. These satellites also are scheduled for launch aboard Soyuz rockets — six at a time — by mid-2011.
Navarra said the first six satellites to be launched will be inserted into Globalstar’s existing constellation two at a time at six-week intervals, and that voice service should improve noticeably as each new pair of satellites is put into operation.
Globalstar’s second-generation constellation, like the first, is designed to feature 48 operational satellites. Globalstar’s estimated $1.3 billion in second-generation system costs includes the construction of 48 satellites but only the launch of the first 24.
Under the contract with Thales Alenia Space, Globalstar may delay exercising the option for the second half of the constellation until June 2011 without a price penalty. The contract includes a price escalator that permits the company to further delay the start of construction of the remaining satellites until June 2012.
Globalstar also has contracted with Thales Alenia Space to manufacture so-called long-lead items — components that need to be ordered well in advance — for six satellites that could be ready for launch in 2011 in the event of a failure of one of the four Soyuz launches.
Navarra agreed that the decision by Thales Alenia Space and Globalstar to return to Baikonur for the launch of the satellites — some of Globalstar’s current satellites also were launched from Baikonur — now looks prescient.
The company had the option of launching from a new Soyuz launch pad being built at Europe’s Guiana Space Center in French Guiana. But that project has encountered repeated delays and the inaugural launch, now scheduled for late this year, may slip to early 2011.
“We are very happy to be returning to Baikonur, and to the Soyuz operations there that we know so well,” Navarra said.
