Globalstar Inc. (GSAT, Financial) provides satellite communication services and products for various industries and applications. The company was founded in 1991 as a joint venture of Loral Corporation and Qualcomm Incorporated (QCOM), and it operates a low Earth orbit satellite constellation that consists of 48 satellites. Globalstar offers satellite phones, data modems, asset trackers, embedded solutions, and emergency devices that enable reliable connectivity in remote areas and harsh environments.
Globalstar also develops innovative solutions that leverage artificial intelligence and smart data at the edge, such as the Integrity 150, a solar-powered satellite asset tracker with an integrated applications enablement platform. The company serves customers in government, public safety, transportation, energy, construction, commercial maritime, agriculture, forestry, and other sectors that require dependable communication and tracking capabilities.
Globalstar’s strategic shift toward connectivity evolution
In a noteworthy move, Globalstar Inc. (GSAT, Financial) announced the appointment of Paul E. Jacobs as the new CEO. Mr. Jacobs is renowned for his role as the founder and CEO of XCOM Labs and his past leadership as the CEO and Executive Chairman of Qualcomm. This appointment also marks a pivotal moment as Globalstar enters into a strategic perpetual licensing agreement with XCOM Labs.
The agreement not only solidifies a partnership but also opens the doors to exclusive access to pivotal XCOM technologies and personnel. Among the technologies covered by the license, XCOMP stands out as a groundbreaking innovation. XCOMP, a coordinated multipoint radio system, introduces a new era in wireless spectrum innovations. Designed to thrive in dense and complex wireless environments operating within the sub-7 GHz spectrum, XCOMP offers remarkable capacity enhancements and numerous benefits.
Implications of XCOMP and Satellite Procurement Agreement
The implications for seamless and enhanced connectivity across devices are considerable, laying the groundwork for a more integrated and efficient communication landscape. Moreover, the system boasts of low latency and high-quality transmissions, ensuring seamless and reliable communication experiences. In addition, Globalstar secured a satellite procurement agreement with Macdonald, Dettwiler and Associates Corporation to ensure uninterrupted service continuity.
Globalstar will acquire 17 new satellites under this arrangement, which will replenish and extend the life of Globalstar's existing constellation. This strategic move exemplifies the company's commitment to its user base and its anticipation of future needs. The company's global footprint extends beyond technology to encompass terrestrial authority, with secured bandwidth allocations across various countries.
Globalstar's Position in the Growing Satellite Communication Market
These strategic advancements align well with the upward trajectory of the satellite communication market. According to projections by Research & Markets, this industry is set to grow at a compounded annual growth rate of 9.7% through 2030 to be valued at $160 billion. The driving force behind this growth is the escalating demand for satellite broadband services, particularly in remote and underserved areas.
As these regions seek robust and reliable communication services, satellite technology is emerging as a key solution, bridging gaps and connecting communities. The increasing integration of satellite communication with cutting-edge technologies such as 5G networks and the Internet of Things will fundamentally reshape the global communication sector.
Globalstar's Strategic Vision and Growth Prospects
Globalstar Inc. (GSAT, Financial) is emerging as a leading force in this revolutionary landscape, positioned to capitalize on these trends to secure unprecedented growth. The company's strategic vision revolves around capitalizing on wholesale customer projects, leveraging its existing satellite capacity for strategic initiatives, particularly in IoT. With a retained satellite capacity that can accommodate both current and future clientele, Globalstar aims to grow its subscriber base by 50 times.
Additionally, the rise in 5G applications is on track to usher in a significant increase in mobile data usage. Increasing mid-band licensed spectrum is required to meet network bandwidth needs. In this domain, Globalstar’s acquired XCOM Labs' technology will bolster its terrestrial wireless business. This strategic integration accelerates the development of commercial applications and opens doors to diverse end markets.
Globalstar's Growth in IoT and 5G Evolution
The company sees more growth with Band 53 opportunities as well. Band 53 is a licensed spectrum resource that has been approved by the 3GPP as a 5G band, known as n53. This band offers versatile and enhanced wireless solutions for carriers, cable companies, and system integrators who want to improve customer wireless connectivity. Band 53 has been successfully deployed in various scenarios, such as at the Port of Seattle with Nokia.
In addition to Nokia, industry giants including Sedna, Pivotal Commware, Airspan, Qualcomm, and Global Telecom are contributing to the advancement of Band 53 toward commercialization, marking Globalstar as a formidable player in the 5G evolution. Within this landscape, commercial IoT applications deserve particular attention with Globalstar developing IoT strategies leveraging both satellite and terrestrial wireless technologies.
Upcoming Launch and Market Opportunities
The upcoming launch of two-way modules and NTN standardization is set to address the burgeoning demand for direct-to-device connectivity across various sectors and applications. Notably, as per GSMA Intelligence, this market encompasses nine sectors of interest, collectively contributing to an expansive addressable base of approximately 1.9 billion devices by 2035.
The growth momentum is also being fueled by diversification into new industries, new product launches, and strategic collaborations. For example, Globalstar's collaboration with renowned global petrochemical producer INEOS Oxide demonstrates its technology's real-world impact.
The improving financial performance
The stellar growth of commercial IoT was a key factor that contributed to Globalstar Inc. (GSAT, Financial)'s revenue growth in the second quarter. Growth was driven by a 21% year-over-year increase in the subscriber base which led to 6% growth in commercial IoT revenue. Overall, the company reported a 50% YoY increase in total revenue to $55.1 million, which highlights the strong growth in demand the company is seeing even amid challenging macroeconomic conditions that have prompted many communication companies to curb spending.
This year has marked a remarkable turning point for the company, as its unwavering efforts have resulted in positive operating profits, pushed by strong top-line performance. The 86% increase in adjusted EBITDA in Q2 demonstrates the company's strategic competence. Revenue increased by more than 60% in the first half of 2023, reaching $113 million. EBITDA, on the other hand, skyrocketed, approaching the $60 million milestone on the back of a robust 140% growth.
Takeaway
The recent change in Globalstar Inc. (GSAT, Financial)’s management has ignited a renewed interest in the company's shares among long-term-oriented investors who are hunting for mispriced bets. The notable financial progress achieved so far this year underscores Globalstar’s potential, and with the right executives leading the company, Globalstar could soon turn out to be a growth compounder that attracts investors. The company seems well-positioned for sustainable growth aided by favorable macroeconomic conditions, but investing in the company may only be suitable for investors with an above-average risk tolerance due to its rich valuation.
