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To: Maurice Winn who wrote (27550)	4/20/1999 5:06:00 AM
From: SKIP PAUL	Respond to of 152472

GSTRF article from Individual Investor> I have discussed a number of beneficiaries of the global telecommunications boom currently underway in this column yet I have neglected one of the potentially most exciting sectors, satellite communications providers. Bermuda-based Globalstar Telecommunications (NASDAQ: GSTRF) represents the best long term play in the industry resulting from its superior technology, strong strategic partnerships and relative strategic position in the rapidly expanding marketplace. Like this Article? The company utilizes CDMA technology as I have previously stated is the best wireless delivery medium. It has partnerships with an array of the leading communications companies for distribution of signals that include AirTouch Communications (quote, chart, profile), France Telecom (quote, chart, profile), Alcatel (quote, chart, profile), Vodafone (quote, chart, profile) and Loral Space & Communications (quote, chart, profile). Those firms together with franchise partners have agreed to act as Globalstar service providers in 117 countries. That's allowed Globalstar to maintain the lowest fixed cost in the industry. Satellite telecommunications services are designed to fill the holes in the global telecommunications infrastructure that cannot be addressed by traditional land based services (landline, cellular, microwave, PCS) due to limited population density, geographic location and cost of delivering the service. To be honest, at first I was very skeptical of the opportunity offered by this industry as it did not appear to me to represent a reasonable opportunity given the significant up front investment required to launch these services. However, after I examined the potential numbers (customers) the business model is actually quite compelling. ING Barings Furman Selz projects that the mobile satellite service industry's sales will increase from its 1998 base of $411.6 million to over $15.2 billion in 2008 or 43.5% on an annualized basis. That will include an expected 2008 user base of 36.4 million from 1998's 116 thousand users. Recent statistics show that there are 42 million households on the waiting list for telephones that could afford service, 244 million households without telephone service that could afford service and 676 million households without telephones that could not afford service. The key is this affordability, which is defined as the service costing between 1-2% of annual family income. GSTRF has assembled a fairly powerful investment group in its quest to become the leading service provider. Shareholders in the firm include Loral, General Electric (quote, chart, profile) and investment guru George Soros, who holds a 10% stake in the firm. Although Globalstar has some formidable competitors, including Iridium World Communications (quote, chart, profile), GSTRF has a considerable edge over its competitors - affordability of service. GSTRF estimates that its cost of service will vary between $0.45-$0.55 per minute versus IRID's $3.00-$7.00. This is a vast disparity that provides GSTRF a considerable advantage out of the gate. GSTRF is utilizing CDMA technology versus the less functional TDMA technology which offers GSTRF's customers greater capabilities (bandwidth) which provides GSTRF with seven billion minutes of annual capacity versus 1.5 billion for IRID. Another advantage of CDMA, as in the terrestrial world is that it provides superior clarity, greater security and a broader array of services. Further, aside from the fact that GSTRF is utilizing superior technology its cost structure is vastly better than its competitors. For example, GSTRF's required wholesale charge per monthly user to cover all costs is $0.14 per minute versus $1.37 for IRID. This is very bad news for IRID and this company is DEAD in my opinion and any holders should seriously consider swapping into GSTRF before the markets realize IRID's vast cost differential relative to its peers. Last Thursday GSTRF announced the successful launch of an additional four low-earth orbiting (LEO) satellites into space, bringing the total number of Globalstar satellites that have been successfully launched to 20. GSTRF plans to have at least 32 satellites in orbit in order to start commercial service by the fiscal third quarter of 1999, and to have 52 satellites in space by the end of 1999, including four in-orbit spares. This will mark the completion of the company's complete network and allow it to focus on marketing its full communications capability. This is a very important point as the greatest risk associated with the satellite companies while they are building their network is launch failure. Each successful launch dramatically reduces the single greatest risk associated with owning these shares and move it that much closer to becoming a full service enterprise. There are approximately 15 analysts following the stock and there continues to be a great degree of skepticism surrounding the industry given its uncertain future (to most investors - who do not understand dynamics of the opportunity). GSTRF is projected to lose money for the next several years and most analysts expect the company to generate positive earnings per share by 2001 in the $0.50-$0.60 range. This is considerably better than any of its competitors and is a greater justification for its $1.6 billion market capitalization versus IRID's $377 million. Overall, I would be a buyer of GSTRF especially on any weakness as these shares have run up approximately 50% in the last month. However, as the investment community begins to comprehend the market opportunity (this realization should crystallize once its network is fully in place by the end of this year) I doubt these shares will see $20 ever again. The current valuation, although seemingly quite rich, may in fact represent a real opportunity given the expected take-up of the company's communications services over the next decade and given expected future earnings performance. Investors probably have six months to buy these shares before others fully understand the opportunity as I have presented in this column and for this reason it may make sense to be a buyer sooner than later. Copyright © 1998-1999 Worldly Information Network, Inc. All Rights Reserved.