May 31st, 2010


GSAT Equity Value of $7.50 says Credit Suisse report...

...if 20MHz of GSAT's (US ONLY) Spectrum is Revalued At $0.50/MHz-POPs.

snipped from the just out Credit Suisse report regarding Globalstar via a posting at

(NBP = National Broadband Plan)
Globalstar: Equity Looks Compelling
Globalstar (GSAT, not covered) has an established satellite business in the United States that is fully funded, unlike Terrestar, SkyTerra, and DBSD. The business has suffered in recent years from satellite malfunction and degradation of service issues; however, its new LEO satellite constellation is due to launch in late 2010, which should improve the satellite phone offering. In addition, the company has a growing SPOT business.
The spectrum value story is complicated because the authors of the NBP seemed to show less appetite for Globalstar’s spectrum than other bands; however, according to management, this will likely change. We arrive at a spectrum based value of $7.50 per share (375% upside) if 20MHz of Globalstar’s spectrum is repurposed and a downside case of $2.50 (61%) if only 5MHz is repurposed.

24MHz of Big Leo Spectrum; 19MHz ATC Approved
Globalstar controls about 24MHz (8MHz lower, 16MHz upper) of Big-Leo spectrum located at 1610-1626.5 and 2483.5-2500; the company controls the entire upper band and shares the lower band with Iridium. At this point, about 19MHz has been approved for ATC service and GSAT currently satisfies all the “gating requirements”.


Upside Case: Equity Value of $7.50 If 20MHz Revalued At $0.50/MHz-POPs
GSAT has already leased spectrum covering 6MM POPs in rural markets to Open Range. We therefore value the lease, and the remaining 304MM POPs. At $0.50/MHz-POP, 20MHz of GSAT’s spectrum would be worth $3.1BN (Exhibit 35)22. The lease adds $35MM at our base case of $0.30 / MHz-POP (Exhibit 30). After subtracting out net debt of $500MM and the remaining payments on the new constellation of $272MM and adding back the value of the Open Range lease, we arrive at a spectrum based equity value of close to $7.50 per share.

Of course.. These values are only for US valuations. Globasltar has access to ~25Mhz of Globally Harmonized Spectrum through the ITU in every territory in over 175 countries around the world.