Globalstar Telecommunications Limited GSAT Message Board

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Microcap & Penny Stocks : Globalstar Telecommunications Limited GSAT

GSAT 56.80

+0.2%

Nov 21 9:30 AM EST

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To: Serendipity who wrote (6991)	8/29/1999 4:34:00 PM
From: Valueman	Read Replies (1) of 29987

Why do I fret about a delay? Costs. G* says operating breakeven is $180 million in revenues(200K subs X 160 minutes/month X 12 months X $.47/minute). Add to this the estimated(my estimate) $270 million in interest costs. Add also another $100 million they plan to spend for sat manufacturing before startup. So, at their subscriber use rates, we need another ~400K subscribers on top of the 200K they estimate to just cover the basic costs. Add in delays-----from the 10-Q:Substantial additional financing will be required if there are delays in the start of service and, in any event, after the start of service and before positive cash flow is achieved. Each additional $100 million in debt needs another ~11K subs to cover the costs. The real squeeze comes if we assume lower minutes of use and lower charges. I am encouraged by the fixed site use levels for services like Xpress, where users are doing 800 minutes per month. I am not encouraged by Iridium users doing something like 20-40 minutes per month. Nobody knows the numbers that G* will get. I can pull 100 out of my ass just as easily as G* pulled 160 out of its virtual ass. Do all the studies you want, and still nobody knows for sure. Going to 100 minutes per month and $.30/minute requires 500K subs for operating breakeven and an additional 742K subs to pay interest costs. Going the other way, if users average 200 minutes per month(just 7 minutes per day), at $.47, we need only 160K subs for breakeven, an additional 237K for interest coverage. We might get numbers even better than this if we get a high percentage of fixed terminals and vertical market users(I've read that these types use 400, 500+ minutes per month). We shall see how it comes out.

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