U.S. Markets closed

Edited Transcript of GSAT earnings conference call or presentation 28-Feb-19 10:00pm GMT

Q4 2018 Globalstar Inc Earnings Call

COVINGTON Mar 4, 2019 (Thomson StreetEvents) -- Edited Transcript of Globalstar Inc earnings conference call or presentation Thursday, February 28, 2019 at 10:00:00pm GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* David B. Kagan

Globalstar, Inc. - CEO

* James Monroe

Globalstar, Inc. - Executive Chairman

* Rebecca S. Clary

Globalstar, Inc. - VP & CFO

* Timothy Evan Taylor

Globalstar, Inc. - VP of Finance, Business Operations & Strategy and Director

================================================================================

Conference Call Participants

================================================================================

* Jack Hartnett

* Lance William Vitanza

Cowen and Company, LLC, Research Division - MD & Cross-Cap Structure Analyst

* Spencer S. Gantsoudes

Morgan Stanley, Research Division - Research Associate

================================================================================

Presentation

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Welcome to the Globalstar, Inc. Fourth Quarter 2018 Earnings Conference Call. My name is Adrian, and I'll be your operator for today's call. (Operator Instructions) Please note this conference is being recorded. I'll now turn the call over to Chairman, Jay Monroe. Jay Monroe, you may begin.

--------------------------------------------------------------------------------

James Monroe, Globalstar, Inc. - Executive Chairman [2]

--------------------------------------------------------------------------------

Good afternoon, everyone, and thank you for joining us to discuss Q4 and full year 2018 results. Following my brief prepared remarks, Dave Kagan will go into the highlights of the business; and then Rebecca Clary will provide an overview of the financials. As always, Tim Taylor will join us for Q&A.

Please note that today's earnings call contains forward-looking statements intended to fall within the safe harbor provided under the securities laws. Factors that could cause the results to differ materially are described in the forward-looking statements and the Risk Factors sections of Globalstar's SEC filings and in today's press release.

2018 was a very eventful year, and despite all of the stress endured, Globalstar entered 2019 a considerably stronger and better-positioned company than the one that began in 2018. And despite these distractions around the proposed merger and the subsequent litigation, we advanced the satellite business by introducing multiple new products and have much better visibility into the long-term growth drivers for this business than ever before.

Satellite M2M has been successful and growing for many years at Globalstar, and as we enter 2019, both the communications industry and Globalstar's connectivity source are approaching an inflection point, one that places greater value on the low-cost, high-mobility, small bit data services that we provide. The delineation between M2M and IoT are not universally agreed. The global asset management tracking, remote monitoring of all sorts, both inside and outside of the cellular footprint, are perfectly suited to our network architecture. Dave and his team are working on a number of projects, which have the potential to eclipse the total unit volumes that we have seen in all of our years in business. Costs are decreasing. Application layers are making services much more intelligent. Connectivity demands across industry are apparently insatiable. We are well positioned to play a role on a global basis with satellites that are in service now and with service offerings at lower cost than alternatives, either cellular or satellite alternative. I'm excited to see what Dave delivers over the coming years.

Also, during 2018, our spectrum technical team achieved 3GPP standardization of our 2.4 gigahertz spectrum, which is now referred to as Band 53. This was accomplished well ahead of schedule, thanks to the hard work of John Dooley and his staff, the support of our partner, Nokia, and others throughout industry who aided Globalstar in this rapid and successful effort. 3GPP standardization is a momentous step forward and creates an immediate path for our spectrum to be integrated broadly into the ecosystem. In fact, equipment providers, Nokia and Airspan, already have pre-standard Band 53 infrastructure today and we expect that initial user terminals will be delivered next month. In the coming weeks, we plan to install this equipment and continue tests with a prospective long-term partner and are also planning several other private LTE deployments in partnership with Nokia this year both in the United States and elsewhere.

Turning to a different subject. As part of the settlement, we added 4 new board members: Tim Taylor, known to most of you, Mike Lovett, Keith Cowan and Ben Wolff. They all have long, successful careers in telecom and cable and are already providing positive guidance on the direction of the company. Tim, Keith, Ben and Bill Hasler make up a newly formed Strategic Review Committee that has hit the ground running as the company assesses balance sheet solutions. I would like to once again thank our former directors and know firsthand that they remain ardent supporters of Globalstar.

And lastly, in December, we completed a necessary equity raise through Cantor Fitzgerald. Thermo, Mudrick and Warlander all came together and back-stopped the raise, providing all shareholders with the opportunity to invest, a structure agreed upon in the settlement to limit dilution as much as possible.

And before I turn it over to Dave and Rebecca, I'd like to reiterate that while 2018 was undoubtedly trying for all of us, we entered 2019 on firm footing with a unique and very valuable set of satellite and spectrum assets and an augmented leadership team and board to help us maximize this value for all shareholders. Going forward, I intend to focus my energy on creating opportunities from the spectrum and underappreciated satellite capacity and will limit all of my other activities, including the participation on these calls, until we have material events to report.

I'd now like to turn the call over to Dave Kagan.

--------------------------------------------------------------------------------

David B. Kagan, Globalstar, Inc. - CEO [3]

--------------------------------------------------------------------------------

Thank you, Jay, and good afternoon, everyone. I would like to reiterate my gratitude for some of the achievements Jay highlighted. 3GPP, solid financial performance, the settled shareholder lawsuit, and the concurrent December financing were a lot of necessary heavy lifting and the team did a great job through it all. I was pleased to see the continued support from our largest investors as they came together to construct the top-notch board and invest the necessary capital to move forward. I believe they see the same potential in our company that I see, and my job is to now execute and deliver on the potential of these assets.

I'm very excited to report that we finished 2018 with strong operational results. We had a solid year, recording a 15% increase in revenue. Net loss for the year was $6.5 million, as compared to $89.1 million in 2017. Adjusted EBITDA increased by 26% as compared to 2017. And for 2018, it was the highest level ever achieved at $40.6 million.

From a product launch perspective, it was also a record year with 3 new products: SmartOne Solar, SPOT X and Sat-Fi2. We expect momentum to continue to build in 2019 and beyond for these devices. We're also already developing specialized products based on a new Duplex product, Sat-Fi2, targeting inland and coastal waterway markets as well as affordable solutions for remote locations. SPOT X now allows our large SPOT subscriber base to not only send one-way emergency and tracking data but to receive messages using S-band dialing services, a major gap closer in the market. The introduction of our SmartOne Solar IoT device has rejuvenated the IoT market for Globalstar. In the first 9 months since introduction, we sold in excess of 25,000 units and have a robust pipeline for this ATEX and intrinsically safe certified product. The expansion potential of this low-cost, long-lasting device is very large as we begin penetrating new markets.

We're also in the process of miniaturizing our IoT product line in order to address markets that require low-cost and small form factors. Like Jay said, this is a rapidly evolving and growing segment of the communications market, and we are evolving our product line to ensure we offer global services with an unmatched offering. When our new miniaturized IoT products are introduced into the market, we expect to take market share from cellular base providers, other satellite service providers and long-range radio solutions as well as to penetrate use cases that are currently unserved by these alternatives. Some of these use cases provide opportunities to increase sales to much higher levels than the satellite market has traditionally supported. It's my goal for the team to win a few opportunities like this in the near term, and we are already starting to see our pipeline building since we launched our newest products. We expect 2019 to be a great year for Globalstar, and we're all excited about what lies ahead for the company.

And now, I would like to turn it over to Rebecca for a detailed discussion of our financial performance, and I look forward to answering your questions during the Q&A session. Rebecca?

--------------------------------------------------------------------------------

Rebecca S. Clary, Globalstar, Inc. - VP & CFO [4]

--------------------------------------------------------------------------------

Thank you, Dave, and good afternoon, everyone. Our satellite business again produced meaningful growth from the prior year as we generated higher ARPU in all core areas of our business and continue to expand our total subscriber base. These increases drove 9% revenue growth when compared to the fourth quarter of 2017 and a 15% increase year-over-year.

Focusing on quarter-over-quarter financial performance. The increase in total revenue was due almost entirely to higher revenue from subscriber equipment sales as we introduced new products into the market during 2018. As Dave mentioned, these products were met with high demand, particularly in the commercial IoT space. Our newest IoT device is being deployed in a heavy industry application in the oil and gas market, an ideal use case for this product, and provide value-rich features, including intrinsically safe certifications, Bluetooth and solar power. We also have seen an increase in demand for our legacy commercial Simplex devices, which appeal to new resellers and end users serving a variety of business cases. Our newest SPOT product also drove interest in the market as its 2-way functionality was a much-anticipated feature by both current and prospective customers. While we experienced some cannibalization to our mature legacy devices, our SPOT X product is sold at a higher price point, driving SPOT equipment revenue to nearly double the revenue recorded in the fourth quarter of 2017. We look forward to adding new functionality to all of our recently launched products in the near future to address user feedback and optimize performance.

Total service revenue also increased from the fourth quarter of 2017 but only slightly as the incremental revenue from recent pricing changes impacting Duplex and SPOT ARPU was generally offset by lower average subscribers. Given a controlled churn level in our core markets, we look to stabilize our subscriber base through a ramp in sales of our newest products, led by focused marketing effort and enhanced functionality later in 2019.

Net loss increased from the fourth quarter of 2017 due primarily to changes in derivative valuation adjustment. Our derivative values can fluctuate widely based on various inputs but primarily are driven by changes in our stock price on the beginning and ending dates of each reporting period. Unlike 2017, there was an increase in our stock price during the fourth quarter of 2018, which drove a noncash loss as the liability increased.

Adjusted EBITDA was up 11% during the fourth quarter of 2018 due to the increase in revenue, offset partially by higher cost of subscriber equipment sales, in line with the increases in devices sold. Importantly, adjusted EBITDA reached its highest annual level ever for the company during 2018, up 26% to $40.6 million. This growth was driven primarily by a 13% increase in service revenue, with MG&A and cost of services up 7% in total after excluding EBITDA adjustment. We expect similar increases in these operating expenses during 2019 in order to support growth in the business, including investments in certain key initiatives, many of which, we believe, are significant opportunities to expand the use of our valuable satellite capacity and drive longer-term revenue growth.

And now a liquidity update. We successfully raised $60 million during equity offering in December, primarily to fund principal and interest payments due at the end of the year and maintain compliance with our financial covenants. At year-end, our current sources of liquidity included cash flows from operations and an unrestricted cash balance of approximately $15 million. We also held $60 million in our debt service reserve account, which fluctuates as the balance is required to equal the subsequent period's principal and interest payment but generally is restricted to fund the final payment due under the facility agreement in December 2022. Projected contractual obligations during 2019 consist primarily of principal and interest payments due under the facility agreement of $95 million and $25 million, respectively. Ignoring variability in our interest rate, these amounts are due in essentially equal installments in June and December.

Our cash capital expenditures are expected to be in line with 2018, around $15 million, supporting various initiatives that are planned or currently underway. We expect that our liquidity sources will be insufficient to fund our obligations and cure covenant shortfalls in 2019 under the existing terms of our facility agreement. Our funding gap is projected to be around $50 million in both June and December 2019. Our management team, together with the members of our newly created Strategic Review Committee, is focused on addressing this shortfall in a way that makes the most sense for the company and its shareholders.

In summary, we have been able to generate significant financial growth in our satellite business in recent years, leveraging our initiatives focused on maximizing high-margin, recurring service revenue in order to drive higher EBITDA. We remain dedicated to expanding the value of the satellite business from other opportunities, of which we are capable and well positioned to achieve.

I will now turn the call over to the operator for Q&A. Operator?

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

(Operator Instructions) And our first question comes from Lance Cowen -- Lance Vitanza from Cowen.

--------------------------------------------------------------------------------

Lance William Vitanza, Cowen and Company, LLC, Research Division - MD & Cross-Cap Structure Analyst [2]

--------------------------------------------------------------------------------

Jay, I think the most interesting thing I heard was the potential deployments on LTE with Nokia. And then I think you've said something about a potential longer-term usage partner, but could you -- to the extent you could sort of dive into that and flesh that out a little bit, that would be terrific.

--------------------------------------------------------------------------------

James Monroe, Globalstar, Inc. - Executive Chairman [3]

--------------------------------------------------------------------------------

Sure. We've been working with Nokia, as everyone knows, for quite some time. They were especially helpful to us in the 3GPP process, but we've also been involved with them on a global basis, working on private LTE implementation. They were the first to bring us functioning Band 53 equipment, and we expect to have them deliver a relatively meaningful amount of that equipment during the course of 2019. The projects that we're working with them on are some within the United States, some outside of the U.S. in areas where we either have spectrum approved terrestrially or where we're focused on obtaining terrestrial approval. But they're a great partner because in a private LTE implementation, spectrum is one piece of it. The infrastructure is another piece of it. But importantly, when you really diagram an implementation like that, there's an extraordinary amount of software, core, cloud and connectivity beyond the spectrum connectivity that's necessary in order to make one of those private LTE systems function. So it's great to have a partner like them that have the capabilities to provide all of those services per spectrum. And when they look at having a piece of spectrum, which is uniform throughout the world, that's what is particularly interesting to them because you can imagine, any implementation they have will use some amount of unlicensed spectrum, some amount of licensed spectrum. But if you can build an offering that is the same wherever you are in the world and it always uses the same piece of licensed spectrum, it means that their interactions with local carriers can be limited to 0. And that's really a good thing. So we're anxious to advance a few of these deployments and see how they play out. None of them, at this moment, are commercial and they're not ready for prime time so we can't really talk about them substantively now except to say that there are quite a few of them that we're involved with, yes.

--------------------------------------------------------------------------------

Lance William Vitanza, Cowen and Company, LLC, Research Division - MD & Cross-Cap Structure Analyst [4]

--------------------------------------------------------------------------------

That's helpful. I'm sure you can't say much, if anything, on this, but has there been any conversations with Nokia regarding any kind of strategic investment or solving the balance sheet problem?

--------------------------------------------------------------------------------

James Monroe, Globalstar, Inc. - Executive Chairman [5]

--------------------------------------------------------------------------------

Not specifically. We're involved with Nokia in a number of these projects. And to the extent that they prove up in the fashion that we hope they will, they certainly contribute to minimizing the balance sheet issues but through revenue and profitability as opposed to through an investment. But we have a lot of hope for the work that we're doing with them. They've been very, very quick to deliver the equipment. Next month, they expect to deliver a user equipment as well, which will be used in industrial setting, which is a big help for us because obviously, that defines the chipset of the things that people think about when they think about the final user equipment. We have additional companies that we're dealing with on chips that will result in user equipment that's pretty broad and, of course, are working with other companies like Airspan, Pivotal and others on more of the infrastructure necessary to implement these. So it's pretty -- it's gathering steam. It's pretty exciting time.

--------------------------------------------------------------------------------

Lance William Vitanza, Cowen and Company, LLC, Research Division - MD & Cross-Cap Structure Analyst [6]

--------------------------------------------------------------------------------

If I could just squeeze in one last question on the liquidity side. It sounds like with the principal and the interest payments being well over $100 million versus the $100 million need, right. So what you're saying is you're cash flow positive on an unlevered basis, I mean, before debt service. And so I guess -- I'm wondering, the constellation of the satellites that you have, what sort of the useful life left remaining before we need to start thinking about meaningful increases in capital expenditures to support your MSS business?

--------------------------------------------------------------------------------

James Monroe, Globalstar, Inc. - Executive Chairman [7]

--------------------------------------------------------------------------------

Well, the satellite constellation was launched and completed in 2013, and the constellation was engineered as a 15-year life span. As you know, we had some satellites the first time around that didn't go beyond their contracted life span, but we also have many from that first constellation that we're still operating today. So we have great hope that the engineering that we learned on the first one applied to the second one will mean that it will last a lot longer than just 15 years. That said, the nature of new satellite infrastructure is characterized by a reduced price and increased functionality. And every year that goes by before we have to begin thinking about that is another year where prices seem to get lower and functions seem to be enhanced. So we're watching and waiting. We have no urgent need to really deal with the question of replenishment right now, but we do watch that market very carefully. We do have meetings with vendors, of course, but we're not urgently looking at replacing anything in the constellation and anything like the next few years.

--------------------------------------------------------------------------------

Operator [8]

--------------------------------------------------------------------------------

(Operator Instructions) And your next question comes from Simon Flannery from Morgan Stanley.

--------------------------------------------------------------------------------

Spencer S. Gantsoudes, Morgan Stanley, Research Division - Research Associate [9]

--------------------------------------------------------------------------------

Spencer for Simon. First, I guess, can you talk about the new corporate governance structure, any benefits that are emerging from that? And if there's anything you're able to share on the Strategic Review Committee and how that shaped or changed the company's outlook on spectrum monetization.

--------------------------------------------------------------------------------

Timothy Evan Taylor, Globalstar, Inc. - VP of Finance, Business Operations & Strategy and Director [10]

--------------------------------------------------------------------------------

So I don't think it's necessary to change anything on the outlook for spectrum monetization. The first task of the SRC is to address the capital needs of the company and to do so on a permanent or relatively permanent basis. And we plan to have everything completed within the next couple of months in advance of the June principal payment to BPI. So that is the current focus. There's also focus within the SRC with regard to monetizing additional satellite capacity, but I don't think the SRC has any fundamental change to the spectrum strategy per se.

--------------------------------------------------------------------------------

James Monroe, Globalstar, Inc. - Executive Chairman [11]

--------------------------------------------------------------------------------

Spencer, I'll make a -- just a further elaboration. The 3 new members, plus Tim, are bringing a lot of additional energy to this board. There's no question about that. These are talented guys who have been around the block a lot in their careers in telecom, cable. They've run major companies. And so they do come at looking at these issues with a new set of eyes and a lot of enthusiasm. And that was evident in the board meeting that took place earlier this week. It is just -- it's great to have them. I have high, high hopes for the new participants, including Tim. The structure, which includes the SRC, I think, is going to be really, really helpful for the company. So what's evolved, I think that everybody as a shareholder of Globalstar should be pleased with.

--------------------------------------------------------------------------------

Spencer S. Gantsoudes, Morgan Stanley, Research Division - Research Associate [12]

--------------------------------------------------------------------------------

Great. That's helpful. And then I guess also on the international licensing, any progress there, any details you can add for expectations this year?

--------------------------------------------------------------------------------

James Monroe, Globalstar, Inc. - Executive Chairman [13]

--------------------------------------------------------------------------------

Sure. Much progress but not many details for a call like this. The -- we are getting closer and closer on a series of countries all around the world. And we've undertaken an effort, which will result, we believe, in a more general licensing regime perhaps in Europe. So time will tell how that all plays out, but we are moving aggressively in many, many parts of the world. And I'm very, very hopeful that in 2019, there will be many more countries that are approved for terrestrial use as well as expanding our satellite footprint in services into parts of the world where we haven't historically spent much time.

--------------------------------------------------------------------------------

Operator [14]

--------------------------------------------------------------------------------

And your next question comes from Jack Hartnett from Quadrant.

--------------------------------------------------------------------------------

Jack Hartnett, [15]

--------------------------------------------------------------------------------

My question is, I want to -- I know it's been spoken about here earlier, but I want to come back to the compliance issues that -- it doesn't sound to me, just from listening here, that would derisk our ability to be compliant with our covenants here and our agreements and whether that's -- and in order to get into compliance, whether that's going to call for dilution, whether it's going to call for partnership even with -- they're going to have to monetize some of the value of spectrum here or whether it's going to come from the company, I don't really -- I'm not clear about it and I don't know how much at risk we are because I thought initially, we were, at least last quarter, that we were on the path to derisking this shortfall.

--------------------------------------------------------------------------------

Rebecca S. Clary, Globalstar, Inc. - VP & CFO [16]

--------------------------------------------------------------------------------

Yes. Jack, this is Rebecca. Thanks for the question. So in terms of compliance issues, we can be in compliance with our financial covenants either through increasing EBITDA, which, of course, become -- through either a spectrum monetization or increased cash flows generated from our core satellite business. Or we have a mechanism within our facility agreement that allows for equity share contribution. And that can come from equity, which may or may not be dilutive as we did in December. We offer it to our existing investors at their pro rata ownership to avoid that issue, but we can also do it by issuing debt, which, of course, would avoid a dilution situation; so many avenues available to us. This has been a situation we've been in for several years and we have been able to maintain compliance thus far, and I expect that we will be able to continue.

--------------------------------------------------------------------------------

Jack Hartnett, [17]

--------------------------------------------------------------------------------

So you think it's going to be organic then?

--------------------------------------------------------------------------------

Rebecca S. Clary, Globalstar, Inc. - VP & CFO [18]

--------------------------------------------------------------------------------

Not necessarily to come from an equity share contribution, which would be external financing.

--------------------------------------------------------------------------------

Jack Hartnett, [19]

--------------------------------------------------------------------------------

Right, right, okay. Because it seems like we've been here before and it's just -- we're not derisked as far as I can see.

--------------------------------------------------------------------------------

Rebecca S. Clary, Globalstar, Inc. - VP & CFO [20]

--------------------------------------------------------------------------------

No -- sorry, go ahead.

--------------------------------------------------------------------------------

Timothy Evan Taylor, Globalstar, Inc. - VP of Finance, Business Operations & Strategy and Director [21]

--------------------------------------------------------------------------------

So Jack, I think that going forward, I would not expect the same type of structures that we've done in the past to solve either the capital needs on a 12-month basis or a 6-month basis for immediate principal and interest obligation. I think that it is most likely to do something on a more permanent basis, if not a fully permanent basis, where there would be more of a restructuring than an equity cure in a short term. I think that -- combined with an amendment with the French banks, I think that we can do something that, as Rebecca said, is very sensitive to dilution. So I do think that it's going to be fundamentally different going forward than what you've seen over the past couple of years.

--------------------------------------------------------------------------------

Jack Hartnett, [22]

--------------------------------------------------------------------------------

Okay.

--------------------------------------------------------------------------------

David B. Kagan, Globalstar, Inc. - CEO [23]

--------------------------------------------------------------------------------

And this is what the SRC is focused on. This is the first topic at hand for the SRC. They are completely focused.

--------------------------------------------------------------------------------

Jack Hartnett, [24]

--------------------------------------------------------------------------------

Last question along that line, too. If you monetize your spectrum assets here, how close are we to actually realizing upon something like that to help us with both value of the company and the perception of the value of the company in the market? Because this stock price is just not -- is not helping. But I suspect it's not going to take much to light a match into that market if, in fact you can speak to it or that you can realize some of the value here that is inherent in a company.

--------------------------------------------------------------------------------

Timothy Evan Taylor, Globalstar, Inc. - VP of Finance, Business Operations & Strategy and Director [25]

--------------------------------------------------------------------------------

Yes, it's -- that's the fundamental question at hand, of course. And if you look at the history of spectrum monetization, I think it's best described as episodic and it's incumbent on us to ensure that we have the right capital structure in place to limit dilution as much as possible so that when that episode comes and spectrum monetization event matures, we all materially benefit from it. So we're going to right the ship, fix the capital structure and be positioned for that day.

--------------------------------------------------------------------------------

Jack Hartnett, [26]

--------------------------------------------------------------------------------

Well, last quarter, we had about -- I think it was 12 NDAs signed. What's going on with those? I sit here and just say they've been signed, but the results of, I'm not clear about.

--------------------------------------------------------------------------------

Timothy Evan Taylor, Globalstar, Inc. - VP of Finance, Business Operations & Strategy and Director [27]

--------------------------------------------------------------------------------

So I think you're likely referring to NDAs that were signed during a process that was run in 2017. That did not result in a transaction at that time. But hopefully, we'll be set up well to effect such a transaction in the not-too-distant future. I don't expect it tomorrow, but hopefully, it won't be 2, 3, 5 years down the line. But we're going to have a capital structure in place so that we can realize the upside for it when that day does come.

--------------------------------------------------------------------------------

Jack Hartnett, [28]

--------------------------------------------------------------------------------

Are we talking about months here?

--------------------------------------------------------------------------------

Timothy Evan Taylor, Globalstar, Inc. - VP of Finance, Business Operations & Strategy and Director [29]

--------------------------------------------------------------------------------

I would not expect a material spectrum monetization within a couple of months. I think that that's unrealistic.

--------------------------------------------------------------------------------

Jack Hartnett, [30]

--------------------------------------------------------------------------------

No, I understand that, but at least -- as long as it's not years. It's the -- unless you have other concern here.

--------------------------------------------------------------------------------

Timothy Evan Taylor, Globalstar, Inc. - VP of Finance, Business Operations & Strategy and Director [31]

--------------------------------------------------------------------------------

Well, I think we're well positioned for -- when it does happen. I think the fundamentals of the industry are only moving further and further in our direction. I think the world continues to move to small cells, and we have the world's only dedicated small cell spectrum to be a major player as networks continue to identify.

--------------------------------------------------------------------------------

Operator [32]

--------------------------------------------------------------------------------

(Operator Instructions) And your next question comes from [Steven Arziban] from [Madeline Capital].

--------------------------------------------------------------------------------

Unidentified Analyst, [33]

--------------------------------------------------------------------------------

Congrats on reaching (inaudible). I just have -- I have 3 questions in particular. Last quarter, the company got approval internationally in a number of jurisdictions. And I don't believe those have been disclosed. Is the company prepared to go to disclose those jurisdictions today?

--------------------------------------------------------------------------------

Timothy Evan Taylor, Globalstar, Inc. - VP of Finance, Business Operations & Strategy and Director [34]

--------------------------------------------------------------------------------

We are not disclosing those jurisdictions today.

--------------------------------------------------------------------------------

Unidentified Analyst, [35]

--------------------------------------------------------------------------------

Okay. Any sense as to when the company will be able to go and disclose that?

--------------------------------------------------------------------------------

Timothy Evan Taylor, Globalstar, Inc. - VP of Finance, Business Operations & Strategy and Director [36]

--------------------------------------------------------------------------------

I think that -- and [Steven], you're obviously involved during the FCC process when a number of outside parties became active participants. I think some were not productive -- active participants, to say the least. So I think it's best for the company, long term, to really focus, not have outsiders play a role, get the authorizations, the large and valuable ones, hopefully, as soon as possible. We've had some relatively small wins so far, but we expect big wins here this year. And I think that we'll just continue to assess when we think it's right for the company to disclose the IDs of those wins.

--------------------------------------------------------------------------------

Unidentified Analyst, [37]

--------------------------------------------------------------------------------

Okay, but the larger ones will be disclosed at -- I guess, I would think those are material, no?

--------------------------------------------------------------------------------

Timothy Evan Taylor, Globalstar, Inc. - VP of Finance, Business Operations & Strategy and Director [38]

--------------------------------------------------------------------------------

Yes, absolutely. So to the extent there is any material authorization in hand, we will absolutely disclose that and have an obligation to do so.

--------------------------------------------------------------------------------

Unidentified Analyst, [39]

--------------------------------------------------------------------------------

Okay, fair enough. With regards to the capital structure needs of the company, does the company need to wait for the April 1 -- I think it's April 1, the date to approve the settlement? In that regard, I mean, is that a meaningful date as far as this process goes on [the divestment with] capital structure? Or can you do something subject to that date?

--------------------------------------------------------------------------------

Timothy Evan Taylor, Globalstar, Inc. - VP of Finance, Business Operations & Strategy and Director [40]

--------------------------------------------------------------------------------

It is not subject to that date in any form.

--------------------------------------------------------------------------------

Unidentified Analyst, [41]

--------------------------------------------------------------------------------

Okay. Then my last question revolves around the company's C-band holdings. Obviously, the company has a pretty substantial amount of C-band capacity. Does the company has a plan or looking to go ahead and put together a plan to perhaps reallocate some of that spectrum for terrestrial use?

--------------------------------------------------------------------------------

James Monroe, Globalstar, Inc. - Executive Chairman [42]

--------------------------------------------------------------------------------

[Steven], obviously, we're watching very carefully, and part of our spectrum is within the mid-band NOI. It's not the subject of the 3.7 to 4.2 slice, which is being decided right now or over some period of time, including right now, for Intelsat, [FTS] and others. But that does create a nice model for how we might go forward and how the FCC might go forward. So we're watching that. We've got a lot of other things that we're busy doing. We've talked about most of those today. And so we'll watch the C-band process. We'll participate in the mid-band NOI continuously while these things go forward, but we don't -- we haven't really been aggressive in C-band at this moment.

--------------------------------------------------------------------------------

Unidentified Analyst, [43]

--------------------------------------------------------------------------------

Does it make sense to put together the process to piggyback off of that effort that's in place? Or do you want to welcome -- sort of spearhead the effort and then hopefully use that as precedent to get something similar done in the company's holdings?

--------------------------------------------------------------------------------

James Monroe, Globalstar, Inc. - Executive Chairman [44]

--------------------------------------------------------------------------------

Sure. Well, certainly, we're doing more of the latter than the former and we're watching them. We know those people well and we do have conversations with them frequently, and there are some possibilities for us to go forward within a format that includes our spectrum within theirs. But for the most part, I think it is productive to let that thing play out a little bit and make sure that it goes through in the fashion that it did that people expect that it will. And if it does, I mean, of course, it's much, much easier for us to go back to the FCC and say, "Let's just follow that same road map." But sometimes, these things get a little bit bumpy, and it'd probably be just fine with us if it was bumpy on somebody else's [nickel]. And we were -- we watch from the sidelines, try to be helpful if we're asked but not find ourselves right in the middle of it.

--------------------------------------------------------------------------------

Unidentified Analyst, [45]

--------------------------------------------------------------------------------

Well, very true. And now that you have the 3GPP behind you, process-wise, I mean, I think most of us have been here for the value in the company's S-band. I mean, how do you see the company's S-band value proposition change over the last 2 years since we got FCC approval?

--------------------------------------------------------------------------------

James Monroe, Globalstar, Inc. - Executive Chairman [46]

--------------------------------------------------------------------------------

Well, certainly, it's not reflected in the stock price. I mean, that's clear. But importantly, we were asked by various parties to the NDAs that were discussed a little bit ago to go through the 3GPP process to make our spectrum more useful in those discussions. And we did that. We completed that here just a couple of months ago, and we're extremely happy with how that went down. And the parties that we were in conversations with and remaining conversations with are very pleased that they -- that the 3GPP went as smoothly as it did. There's a lot more work for us to do with anybody who wants to transact around the spectrum, but we're doing that work. And we're -- and again, as we mature up other pieces of spectrum in other parts of the world, it broadens the possibility that some players are more interested in what it is that we have and how we do it. But we're completely saying when -- that going through the 3GPP process was exactly right for the company, and the parties that we're in conversations with obviously thought so. So we're pleased with it.

--------------------------------------------------------------------------------

Unidentified Analyst, [47]

--------------------------------------------------------------------------------

I understand that the company's need to adjust the capital structure are paramount at the moment. It makes a lot of sense to focus on that today. But once you get past that, are there other sort of hurdles or request or requirements that have been asked by counterparties in regards to, I guess, usability of the S-band to do it -- from the company to do it before going ahead and, I guess, entertaining bids or offers?

--------------------------------------------------------------------------------

Timothy Evan Taylor, Globalstar, Inc. - VP of Finance, Business Operations & Strategy and Director [48]

--------------------------------------------------------------------------------

So [Steven], this is a very known band. It's the most widely used band throughout the U.S. and in most countries. So the physical characteristics of the spectrum are very well known to potential parties. The way that it operates within a phone, within a chipset, and it's interoperable with existing peripheral components, that is very well known. So at the -- 3GPP process was obviously an important milestone. The only final step that needs to take place is equipment certification, which is not a very difficult one but it is a very important one. So that is really the only requirement standing in the way of commercial deployment.

--------------------------------------------------------------------------------

Unidentified Analyst, [49]

--------------------------------------------------------------------------------

So is that from the handset makers, like Apple and Samsung, for example, them certifying the chipsets inside their devices?

--------------------------------------------------------------------------------

Timothy Evan Taylor, Globalstar, Inc. - VP of Finance, Business Operations & Strategy and Director [50]

--------------------------------------------------------------------------------

Yes, exactly. And at the base station level.

--------------------------------------------------------------------------------

David B. Kagan, Globalstar, Inc. - CEO [51]

--------------------------------------------------------------------------------

Thank you, everyone. 2018 was a very significant and successful year for the company. We anticipate 2019 to be a successful one as well. We're very excited about what lies ahead for the company. Thank you very much for your participation this afternoon.

--------------------------------------------------------------------------------

Operator [52]

--------------------------------------------------------------------------------

Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.