PARIS — Globalstar Inc. has told prospective investors in its initial public offering of stock (IPO) that it is able to generate a profit even while billing its satellite-telephone customers between 20 percent and 60 percent less than its principal regional or global satellite competitors.
The Milpi ta s, Calif., company is seeking to raise $100 million on the U.S. Nasdaq exchange in an IPO expected to occur Nov. 2.
These funds will be used alongside existing capital to launch eight new Globalstar satellites in 2007 and to begin building a second-generation constellation of 48 low-orbiting spacecraft that would be launched between 2009 and 2013.
Globalstar’s current constellation of 43 satellites offering voice and data communications is expected to require gradual replacement. The company is promising that the new spacecraft — with more capacity and longer service lives — will be compatible with the handsets and other gear that current Globalstar customers use.
Globalstar expects to pay an average of $15 million for each of its second-generation satellites as part of an order with manufacturer Alcatel Alenia Space that is expected to occur after the IPO. The two companies have agreed to a Nov. 15 deadline for a construction contract.
Each satellite is expected to have a 15-year service life. Alcatel Alenia Space officials have said the spacecraft will look like the first-generation Globalstar satellites, but industry officials have said they will weigh 40 percent more, or around 630 kilograms at launch.
In a Web cast to prospective IPO investors, Globalstar President Tony Navarra said the company forecasts that it will be $10 million to insure and launch each satellite.
One industry official familiar with Globalstar’s plans said the company is counting on being able to launch six Globalstar satellites on a single rocket, such as the Russian Soyuz launch vehicle that will be used for the two 2007 launches.
By 2009, an enhanced Soyuz vehicle is expected to be operated from Europe’s French Guiana launch base. A $60 million price for the launch of six Globalstar satellites, including insurance, “is not out of line” assuming Globalstar makes a bulk launch order, this official said.
Globalstar’s pitch to investors seeks to position the company as a current provider of satellite telephone services and two-way data links for asset tracking, and a potential provider of high-speed two-way data links using a network of ground-based signal boosters to permit coverage in buildings and in urban canyons.
A half-dozen companies are positioning themselves to use these terrestrial signal boosters, known as Ancillary Terrestrial Components (ATCs). But Globalstar officials say they are the only company that has an ATC license from U.S. regulators and an existing network that can use the technology.
Globalstar is owned by Thermo Capital Partners of New Orleans and Denver. Globalstar Chief Executive Jay Monroe said in the investor Web cast that Thermo Capital Partners “is a very patient investor” that has already put $250 million into Globalstar since pulling the company out of Chapter 11 bankruptcy in 2003.
With much of its debt erased during the bankruptcy proceedings, Globalstar has been able to grow revenues and profit while pricing its service at about 55 U.S. cents per minute, Monroe said. This compares to 85 cents for Iridium; 66 cents for regional satellite-telephone operator Thuraya of Abu Dhabi; and $1.25 per minute for Inmarsat of London.
Inmarsat recently took over Indonesia-based Asia Cellular satellite-telephone operator and soon will offer a satellite telephone service to compete directly with Globalstar. Inmarsat does not currently have a hand-held product.
Monroe and Navarra said that key to Globalstar’s growth is a switch in the business model. Whereas previously Globalstar operated only as a wholesaler of satellite capacity, selling minutes in bulk to its regional partners, the new company is seeking to buy out its regional partners to operate on a retail basis.
Monroe said under the wholesale model, Globalstar received about $10.70 per month for each of its subscribers. The retail business, which obliges Globalstar to own and maintain its global network of satellite gateway Earth stations, brings more than $60 per month per subscriber, he said.
Navarra said that Globalstar owns nine of its 25 gateways, which serve a total of 120 nations.