Globalstar satellite communications said on March 11th that they have slowed the loss of their two way satellite communications customers due to the degradation of its current satellite constellation. Globalstar says they will be able to grow their customer base in 2011 once their second generation satellites are put into orbit. The first wave of these second generation satellites is scheduled to be launched in September of 2010.
In July 2009 Globalstar secured financial aid of $738 million from French credit agency Coface. Iridium, Globalstar’s closes competition, continues to secure the same kind of financial aid.
Iridium is looking for a $1.5 billion package supported through Coface or Thales Alenia Space of France in which Iridium would be required to use Globalstar’s satellite manufacturer. If this falls through Iridium would look to the U.S. Export Import Bank. If this happens Iridium would use Lockheed Martin to build its second generation satellites called the Iridium Next. Iridium is looking for a 10 year delayed repayment until 2017 which would be three years after Iridium’s second generation satellites begin to launch.
Industry officials believe it will be difficult for Iridium to secure support from the U.S. Export Import Bank because Iridium is a U.S. company. The U.S. Export-Import Bank was created to support U.S. product exports and not struggling U.S. based companies.
Iridium has told its investors that $2.7 billion is needed for the Iridium Next constellation and that the export-credit agency is a key element in this project.
Currently, Iridium’s original constellation of 66 satellites with seven spares is in a healthy orbit. Iridium expects this constellation to provide full service until the Iridium Next satellites are ready to replace them. The current Iridium constellation has exceeded their life expectancy in orbit.
Globalstar also expected their satellites to stay healthy in 2006 when they signed the first agreements for the Globalstar second generation constellation. In only a few months after this the Globalstar satellites started experiencing failure of the S-band communication antenna. The S-band antenna provides two way communication which is primarily used for voice and data communication on Globalstar handheld and fixed site satellite phones. This failure did not affect their simplex or one way communication capabilities.
Trying to keep their customers Globalstar moved quickly into the simplex compunction market with their Spot Messenger product while securing financing for the new constellation.
While Globalstar’s simplex business continues to grow they believe the duplex customers, which are their largest base of customers, remains intact giving them a great platform to work from for future growth.
Globalstar’s service revenue of $50.2 million in 2009 was down 18.7% from 2008. Problems with the duplex or two way communities caused voice customers to slow or stop the usage of their phones due to a much reduced coverage area and very spotty service. But customers deactivating their phones and stopping service has remained stable throughout the year at an average of 1.3%.
Globalstar’s equipment sales in 2009 has dropped to $14 million which is a 42% drop compared to 2008. According to Globalstar this was largely due to a delayed delivery of the second generation Spot Satellite Messenger tracking device. The Spot Satellite Messenger helped increase Globalstar’s subscriber base to 13.4% by the end of 2010.
Globalstar officials have said the two-way voice communication would gradually improve four to six weeks after the launch of the second generation satellites. Starting in September of 2010, 24 spacecraft are to be launched using four Soyuz rockets from the Russian Baikonur Cosmodrome. A second launch of six satellites is planned for late 2010 or early 2011.
Globalstar officials say it will take three months after each launch for all six satellites to be on-line and integrated into the constellation.
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