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Microcap & Penny Stocks : Globalstar Telecommunications Limited GSAT -- Ignore unavailable to you. Want to Upgrade?

To: Jeff Vayda who wrote (25071)	7/23/2002 8:26:32 AM
From: Jeff Vayda	Read Replies (2) \| Respond to of 29987

Skeptics Question Globalstar's Plans Jul 22, 2002 Serious doubts exist among satellite industry observers about plans unveiled by San Jose, Calif.-based Globalstar L.P. last week to build a next-generation satellite phone system. Space Systems/Loral (SS/L) was named as the manufacturer of Globalstar's next-generation system, which will total 30 satellites, even though the satellite phone company is operating under Chapter 11 bankruptcy court protection. Globalstar said it expects to begin launching its 60-satellite system in 2006. "This [next-generation constellation] has got to be a pipe dream," said Ahmad Ghais, president of the Mobile Satellite Users Association (MSUA). The impetus for the contract appears to be the need for Globalstar to comply with the Federal Communications Commission's July 17 deadline for the company to sign a satellite- manufacturing contract, Ghais said. "It remains to be seen whether the FCC will find this 'contract' credible," Ghais said. "The last time I remember [this happening] is when a similar move by Ellipso did not impress the FCC, which withdrew their license." Globalstar's rush to sign contracts highlights a potential problem with the FCC's satellite licensing process that requires companies to satisfy construction and deployment milestones, even if the satellite system has little chance of being put in place. D.K. Sachdev, president of SpaceTel Consultancy, of Vienna, Va., said regulatory considerations appear "once again" to be setting the pace for Globalstar, rather than strong underlying business fundamentals. The chief business concerns for Globalstar are its survivability in a cellular-dominated wireless world and the viability of recovering the significant investment to build and deploy 60 satellites, associated infrastructure and new handsets. The pact between SS/L and Globalstar calls for a new constellation of 56 low-Earth-orbit (LEO) satellites, supplemented with four geostationary orbit (GEO) satellites that would provide data applications and coverage to remote areas, company officials said. Globalstar's current 48 LEO satellite constellation and related ground infrastructure cost billions of dollars to build. Company officials offered no information about the potential cost of the proposed next-generation system or how it might be financed. Marshall Kaplan, director of space practices at Rockville, Md.-based consulting firm Strategic Insight, said that by awarding the contract to SS/L, "Globalstar keeps its future options open regarding the new system and allows Globalstar to retain a potentially valuable FCC license for some period of time. On the other hand, given the state of the telecom industry, it is highly optimistic to assume that funding will be available anytime soon for the new system." Globalstar - a joint venture backed by SS/L's parent Loral Space and Communications [LOR] - intends to offer broadened services and higher capacity with its proposed new constellation by using spectrum in the 2 GHz band, company officials said. SS/L would design and build the 2 GHz system to provide enhanced capacity and services when the new constellation is fully deployed toward the end of this decade, company officials said. The FCC previously granted Globalstar's 1997 application to use the newly available 2 GHz mobile satellite radio spectrum and the company seems determined to hang onto the allocation. Globalstar realistically has little chance of gaining financing for a new constellation. The satellite phone service provider has fallen woefully short of achieving its customer subscriber targets. And it has yet to put forth a reorganization plan, even though it filed for bankruptcy back in February of this year. Roger Rusch, president of the TelAstra consultancy in Palos Verdes, Calif., opined that Globalstar is an "improbable customer" for SS/L. "The Globalstar system is arguably the least successful of the handheld MSS systems," Rusch said. "Its growth rate has been half as rapid as Iridium, ACeS Garuda or Thuraya. Not only has the system filed for bankruptcy, but the subscriber growth rate has been decreasing over the past year." Globalstar's remaining funds have dwindled to $46.4 million in cash as of March 31. The average revenue generated per user (ARPU) is only about $15 and total revenues for 2001 were only $6.4 million compared to over $40 million for resurrected Iridium Satellite and $440 million for profitable Inmarsat, Rusch said. For the first quarter of 2002, Globalstar posted a net loss $129 million. The hefty loss ironically was the company's smallest since it began commercial operations in 2000. Also in the first quarter, Globalstar recorded a total of 6.8 million minutes of use, marking a 3 percent decrease in traffic from the previous quarter, company officials said. Globalstar had an estimated 69,000 mobile and fixed services subscribers at the end of March, an increase of 5 percent from the previous quarter. Globalstar's modest subscriber growth slowed in the first quarter largely due to ongoing restructuring activities involving several of the company's service providers that disrupted business development efforts, company officials explained. --Paul Dykewicz

To: Jeff Vayda who wrote (25071)	7/23/2002 12:10:28 PM
From: Pierre	Respond to of 29987

"This consolidates the two," Jeffery said. "You get one phone number, one bill, and it's a more efficient use of the spectrum. Rather than having two chunks of spectrum for two different systems, we're using just one chunk of spectrum for both." Rings hollow to me. Europe G* already has one number. Sounds like a straw man to divert attention from real value of ATC to G, saleable terrestrial spectrum. I see no technological advantage to it at all. My (USA) phone already works in buildings, and I could have one number if G and Verizon decided to do it (maybe it's a licensing problem, but it's not a technology problem). Even the cell / sat hand off, I've been informed. can be achieved seamlessly as is - if it were warranted. I still think G* sees ATC as a carrot to attract investment from a terrestrial supplier who needs spectrum. BWDIK. Pierre