Hi Kyros. I don't know what url you are seeing, but if you go to globalstarusa.com you will see prices which are almost acceptable and have been slashed.
I'd like to see at most 10c a minute for all minutes. But given the constellation problems, dropped calls etc, I think free minutes between Globalstar phones and 2c a minute for others might be better, with toll calls where applicable [to other countries, to other carriers]. Make money from selling phones and signing people up.
Prepaid would be better, but that has issues.
I bought GSAT for the same old rationale. I think there's a huge number of people who will want to buy the service when the minute prices, constellation strength, and handset technology are good enough.
The current situation is a LOT better than when I originally paid $12 a share in 1995 at a time when it was all just pie in the sky, CDMA was not even considered functional by many, there were no gateways, handsets were huge, clunky and expensive, the constellation was just in planning stages, spectrum hadn't even been allocated everywhere, there were zero customers and wouldn't be any at all for 3 or 4 years [or 5 as it turned out] and it was all still in the imagination phase.
Now, there are over 200,000 subscribers, lots of data customers, new, smaller, technologically improved handsets which don't get a flat battery in a few hours are being sold, spectrum is allocated around the world, gateways are built giving very extensive coverage, with more planned, the constellation actually exists and has been proven as a technology for years, voice quality being excellent, there's money in the bank, growth is good. Technological development opportunities abound - such as ATC and upgrades to EV-Dora, Dorb, OFDM, 10,000 km satellites for global coverage, etc.
The big gap is that they have NOT moved to low price minutes [though much improved over the absurd $3 a minute initially charged with $1500 and more for handsets] and have not yet proven sufficient demand to make it all worthwhile. Thermo should have used the last 3 years to really get demand going in a very big way to prove how many people want the service.
I didn't want to wait until everything was proven, or I'd have to pay $50 a share, or $100. I'm prepared to carry the risk in exchange for the rewards. While most people see huge risk, there are rewards available. When everyone can see it's a success, returns will be low.
Plus, more funding might be necessary, so I can take part in rights issues to help ensure it succeeds.
Since so many of the satellites have conked out, capacity must be a LOT less than the original 10bn minutes, but I have no idea what the capacity is. Since they originally claimed something like 4 million could use it, I guess they have got a lot of spare capacity still. They must have, or they wouldn't be slashing minute prices to boost demand.
Add up the assets and see if you get to the market capitalisation:
Cash [less debts]
Gateways
SOCC and GOCC [two of each] [satellite and gateway operating control centres]
Residual life of satellites
Money paid for the next constellation and upcoming launches
Designs for the next one
Handset and other designs, intellectual property
250,000 subscribers
Spectrum
Ancillary Terrestrial Component rights
A going concern [staff, contracts, leases, organisation]
Contracts with QUALCOMM
Compare functionality of the next constellation with that of competitors - Iridium, Inmarsat, Thuraya, Orbcomm, terrestrial networks, etc. Remember that a lot of competitors never launched due to the big bust, so, ironically, the opportunity is a lot bigger than in 1998 when every man and his dog were going to launch. Remember Teledesic for example.
My guess is that Iridium, when their satellites are dead, will not have the economic foundations and technological pathway to the future to replace their system. Their satellite to satellite system will NOT like holes in the constellation, which Globalstar can cope with. Putting computers in the sky makes them difficult to upgrade. Globalstar can plug boards of electronics into gateways, and hey presto, it's an upgrade to the latest technology.
The big question is the gap between now [with a decomposing constellation] and the 2009 when the next one is supposed to be launching. I would NOT want either of the April/May launches to go bung. Even with those launches succeeding, it's a long time until 2010 when the next constellation is supposed to be humming.
A lot of satellites could fail in that time.
They are now 8 years old and their design life was 7 years. Plenty have failed already. Plus, they degrade over time as photovoltaic panels get knocked off by seagulls flying too close and aliens pinching them.
It is NOT a slam dunk. I consider my investment risk money. But, of course, I consider the risk worth it.
Look at terrestrial coverage maps around the world and you'll see holes everywhere. Not to mention horrendous roaming rates where service providers depend on others to provide coverage.
There is quite a business opportunity to compete with them on a combination of coverage and price.
Mqurice |
