Globalstar hints at life after the iPhone

Globalstar's top executive said the company is in "deal mode" now, and is working to drum up more business beyond its landmark agreement with Apple for the iPhone.

"So stay tuned," said Globalstar's top executive Jay Monroe during his company's recent quarterly conference call, according to a Seeking Alpha transcript.

Globalstar has already made progress in expanding beyond its deal with Apple, though details remain scarce. According to Monroe, Globalstar has already signed an agreement for a private wireless network using its spectrum holdings across the US and Canada. And the company expects to ink a second deal, covering Canada, in the next few weeks. He didn't name the company's new customers.

Figure 1: (Source: NASA)

"These deals represent the two examples of the type of ongoing discussions we are having and closing," Monroe said. "We expect to be able to replicate this exact opportunity in many other geographies."

A developing sector

The developments are noteworthy considering Globalstar has long suffered through financial difficulties in its attempts to profit from its satellite operations. But the company rose to prominence last year when it confirmed it would be the satellite operator powering Apple's new emergency messaging service for its newest iPhone.

That offering has sparked a broad market rush toward the "direct to device" (D2D) sector, whereby standard smartphones connect directly to satellites. Such technology represents a major change from traditional cellular connections between phones and ground-based cell towers. Today, Qualcomm, Iridium, EchoStar, SpaceX and others are working to sell D2D services.

"We believe Globalstar has proven its ability to successfully meet unique customer demands," the financial analysts with B. Riley Securities wrote in a note to investors following the release of Globalstar's first quarter earnings. They pointed out that Apple recently expanded its Globalstar-powered emergency messaging service to six new countries, an indication that the service is meeting Apple's expectations.

The analysts estimated that Globalstar's deal with Apple is worth around $22 million per quarter in wholesale capacity service revenues. And they noted that Globalstar expects to generate millions of dollars in additional revenues from its new private wireless agreements.

Overall, Globalstar's total revenue in the first quarter of 2023 increased $25.9 million, or 79%, to $58.6 million.

A debate over size

Other executives in the D2D sector acknowledged Apple's early moves in the D2D arena. But they argued that it's unclear how big the overall sector could grow.

Apple's satellite-based emergency messaging service "is not a particularly great business model, long term," said Tim Last, VP and general manager of Iridium's Americas business, during a session at the Connect X trade show in New Orleans this week. He noted that Apple is offering the service for free to its customers – making the development of revenues difficult.

Iridium is working with Qualcomm to develop D2D services for a growing number of Android smartphone vendors.

Iridium's Last said it's unclear exactly how the D2D space will grow beyond emergency messaging services, and how business models might develop to support the sector. He also noted that traditional, ground-based cell towers will remain the primary connection point for smartphones now and into the future.

But EchoStar's Robert Rehg, the company's SVP of corporate and business development, suggested that the D2D sector could grow into a "huge" opportunity in the months and years to come. He said Internet of things (IoT) services could help generate more revenues for players beyond emergency messaging for smartphones.

"The business cases are broad and diverse," he said.

Regardless, there's clearly plenty of turmoil in the satellite space. Just this week UK regulators approved the proposed merger of Viasat and Inmarsat.

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— Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano