PARIS — Mobile satellite services provider Globalstar said its upgraded ground segment, which allows customers to take full advantage of its second-generation satellite constellation, should be in service late this year in North Amercia, with Brazil and Europe to follow.
Covington, Louisiana-based Globalstar needs the terrestrial upgrade to provide subscribers with the faster data delivery that the company hopes will distinguish its service from that of the competition.
In a March 2 conference call with investors, Globalstar Chief Executive Jay Monroe — whose family-owned Thermo companies have provided life-saving cash to Globalstar on multiple occasions — said the ground hardware will give Globalstar customers data throughput speeds that are 25 times their current levels, and “100 times faster than the competition.”
Globalstar operates a fleet of 44 satellites, including four spares, in low Earth orbit. The second-generation constellation of 24 satellites was integrated into the older constellation as of mid-2013, making 2014 the first full year of second-generation service.
With the satellites now launched, 2014 marked the start of Globalstar’s repayment obligations to a consortium of French banks, whose $582 million in loans were 95 percent guaranteed by the French export-credit agency, Coface. Staying within the terms of this debt facility has been a challenge for Globalstar and at times it appeared the company was either in or on the verge of default.
In a March 2 filing with the U.S. Securities and Exchange Commission (SEC), Globalstar said that in February it had used $10 million in cash provided by Terrapin Opportunity LP to keep the company within the Coface-backed facility’s requirements for Dec. 31, 2014. There was $14 million remaining in the Terrapin-provided account after this $10 million payment.
Globalstar Chief Financial Officer Rebecca Clary said in the conference call that the company needed $56 million in 2015, half to service its debt and the other half to continue paying its ground-network builders. Globalstar said it had $7.1 million of cash on hand as of Dec. 31.
For 2014, Globalstar reported an operating loss of $96 million on $90.1 million in revenue. The revenue line was up 9 percent from 2013. Operating cash flow was $4 million.
In recent months, much of the attention on Globalstar has focused on its attempts to get U.S. regulatory approval to use its satellite spectrum to provide a Terrestrial Low-Power Service (TLPS), a commercial WiFi network that Globalstar maintains will remove WiFi congestion for those willing to pay for it.
Monroe said the company planned to demonstrate the TLPS to the U.S. Federal Communications Commission the week of March 2 but had not released a statement about the results as of midday March 6.
Globalstar’s current business requires a ramp-up of customers using the company’s two-way voice service. It is this so-called Duplex service that provides the most revenue per month per subscriber and is the most profitable.
For the 12 months ending Dec. 31, Duplex service revenue totaled $27 million, up 18 percent from the previous year. The number Duplex subscribers was more difficult to calculate.
Globalstar said it had 75,800 Duplex subscribers as of Dec. 31, down 10 percent from a year earlier. But Globalstar in early 2014 stopped service for 26,000 subscribers for nonpayment. Removing these from the figures, the company says, results in Duplex subscribers at 62,433 as of Dec. 31, up 8.6 percent from the previous year.
Per-subscriber Duplex revenue averaged $36.03 per month in 2014, up 9 percent from 2013.
North America has always been the predominant business area for Globalstar. Monroe said the completion of the ground network by late this year in North America will permit the company to focus on Central and South America, Europe, and Africa.
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