Globalstar Eyes 2011 Return to Full Service With New Satellites
LONDON — Mobile satellite services providerInc. on Nov. 8 reported slightly higher revenue but sharply increased losses for the three months ending Sept. 30 and said it has stabilized its base of voice customers as it prepares to return to full service with a new generation of satellites.
The company said it has managed to hold onto 105,000 voice subscribers, in part by offering limited-time deals including a new Qualcomm-built handset and 12 months of unlimited calling for less than $750.
In a conference call with investors, Globalstar Chief Executive Peter Dalton said the company, which in October launched the first six of a planned 24 second-generation satellites, will return to full two-way voice capability in mid-2011 once the remaining 18 satellites are launched.
Globalstar’s first-generation satellites, with the exception of eight that were launched in 2007, have all lost two-way voice capability as a result of degradation believed to have been caused by radiation exposure in their 1,414-kilometer low Earth orbit. The new satellites are better protected against radiation and are built to last for 15 years, double the design life of the first generation.
As it has struggled to maintain a voice service, notably by providing customers with a Web-based facility that allows them to predict when voice capability will be available in a given area up to several days in advance, Globalstar has expanded its consumer-products presence with its Spot GPS hand-held terminal to provide location and emergency-rescue.
Globalstar has booked some 273,000 orders for these Spot terminals since they were introduced in 2007 and added nearly 18,000 subscribers to this service in the three months ending Sept. 30.
Total subscribers, combining the core voice and Spot data terminals, numbered 431,732 at Sept. 30. The two-way voice subscriber base, at 105,000, was down from 110,000 in the previous quarter, but Dalton said subscriber defections have slowed to 1 percent per month of late. Globalstar’s subscriber churn averaged 1.3 percent per month in 2009.
Average monthly revenue per two-way voice customer was $23.89 in the quarter. Revenue for the Spot and data service averaged $6.68 per month.
Anthony J. Navarra, president of Globalstar operations, said the first six second-generation satellites are healthy in orbit. The first of those satellites should be operational by late November. Two more will enter operational service by January, with the remaining three in April, he said.
The second batch of six second-generation satellites is scheduled for launch in February or March, with the exact timing depending on how testing proceeds with the first six, Navarra said, adding that Globalstar will be deorbiting first-generation satellites as they are replaced with the new spacecraft.
Milpitas, Calif.-based Globalstar reported an asset impairment charge of $1.9 million in the three months ending Sept. 30 as it wrote down the value of its equity investment in Open Range Communications of Greenwood Village, Colo., a wireless broadband provider.
Globalstar had been providing its radio spectrum for Open Range to use in a terrestrial-wireless service. The U.S. Federal Communications Commission (FCC) earlier this year ordered a stop to the service until Globalstar meets its satellite-service obligations under its U.S operating license. Those obligations will not be met before all 24 second-generation Globalstar satellites are in service in late 2011.
Globalstar reported revenue of $18.2 million for the three months ending Sept. 30, up 4 percent from the previous three-month period. EBITDA, or earnings before interest, taxes, depreciation and amortization, was negative $2.2 million, against a negative $300,000 in the previous quarter.