Globalstar Telecommunications Ltd. said its money will run out in five months unless it gets help. In the meantime, ongoing efforts to establish a worldwide network and begin widespread commercial service contributed to the mobile satellite service operator’s increased first-quarter losses.
United Kingdom-based Inmarsat added further pressure to Globalstar’s efforts to get its network up and running by announcing last Thursday it will invest an additional $700 million in its high-speed data satellite network.
Inmarsat said the new network will be 100 times more powerful than its current 64-kilobits-per-second network, with access speeds of up to 432 kbps. The network is expected to cost $1.4 billion and be operational in 2004.
Globalstar reported a net loss of $216 million, or 98 cents per share, for the quarter ended March 31, compared with a loss of $40.4 million, or 78 cents per share, for first-quarter 1999.
The company’s revenues for the quarter totaled $609,000, however it noted service did not begin in any significant degree until March, which accounts for the low levels of service use during the quarter.
Globalstar recorded 550,000 minutes of billable service. Full commercial service began in seven countries during January and 10 more countries during February, Globalstar said. Canada and Brazil had full commercial service for only a few weeks during the quarter.
Vodafone Australia, Globalstar’s service provider there, began service March 30 and announced May 10 it completed its full commercial rollout of the mobile satellite system across the country.
This rollout gives Australia, where only 5 percent of the country is covered by terrestrial cellular service, nationwide coverage.
Globalstar USA said it completed the rollout of its international roaming service May 11, adding a gateway in Aussaguel, France, which will allow customers to roam in 17 additional countries around the world.
The addition of the gateway in France brings to 35 the number of countries outside North America where customers can make and receive satellite phone calls.
“We experienced start-up changes normal for any new service introduction,” said Bernard L. Schwartz, Globalstar chairman and chief executive officer. “But these issues have been addressed and solved, including the establishment of a consistent telephone production schedule and implementation of international roaming agreements.”
He said problems with production and shipment of handsets has been solved, and production is expected to meet the company’s business plans and objectives for 2000.
The official statement of Globalstar’s ailing financial status came a week after the European Council of Ministers, an executive arm of the European Union, postponed its decision on a coordinated approach on the matter of satellite phone frequencies until the end of 2003. Council members will be given more time to evaluate the subject, including its practicality in the wake of Internet-enabled phones and third-generation services. A decision had been due by May 13 under a procedure begun in 1997, according to Total Telecom.
