|
Financial Times article from the AOL LOR thread.
Subject: Re: Globalstar
Date: Mon, May 17, 1999 3:26 AM
From: Kelcon
Message-id: <19990517072607.09786.00001465@ng37.aol.com>
Here it is:
Globalstar, the US satellite phone group, is planning an aggressive strategy of low tariffs and subsidised handsets in an attempt to kick-start the use-anywhere phone market when it launches its $3.5bn service later this year.
The plans follow the disastrous start made by Iridium, the first to launch a satellite phone service enabling users to make or receive calls on their mobile handsets anywhere in the world.
It has attracted just 10,000 users in its first six months and has been forced to reschedule $800m of its $2bn debts.
Tony Navarra, chief executive of Globalstar, said the group would be setting its tariffs at between 35 and 50 cents a minute. He expected its service providers - the local phone operators that will market and sell the service in the various countries - to charge about $1 to $1.20 per minute. This compares with the $7 a minute being charged for some Iridium calls.
Iridium handsets are retailing for more than $3,000, Globalstar's phones will cost $800, but with subsidies from service partners. Mr Navarra said the price could fall to as little as $350. The group, which is backed by Loral and listed on Nasdaq, is planning a big marketing campaign.
Bernard Schwartz, chairman of Loral and Globalstar, said: "Our biggest challenge is marketing. But our partners, which include Vodafone, France Telecom and Air Touch, have invested in us and are very committed to making this a success. "They have given every indication, both financially and managerially, that they are on board," he said.
Globalstar will target the business traveller and developing countries, which have little or no telecoms infrastructure.
Analysts said Globalstar's plan echoed that of Iridium. "The pricing points are a definite positive, but the reliance on so many service partners, only two or three of which are large operators, leaves me cautious," a Wall Street analyst said.
The plan sees 220,000 subscribers by the second quarter of 2000. This would bring in enough revenue to cover operating expenses. By the end of the third quarter, 500,000 customers are forecast, which would generate income to cover interest payments.
By this time Globalstar will be facing the challenge from ICO Global Communications, which is promising to be the lowest priced operator.
News of the move sent Iridium shares down 28 per cent to $10 7/16 on Friday, compared with a high of $72 a year ago. |
