Market Overview

This Was 'Clearly Negative' For Globalstar

This Was 'Clearly Negative' For Globalstar

Globalstar, Inc. (NYSE: GSAT) failed to get enough votes in the five member commission to get special rights to unlicensed spectrum in the 2.4 GHz band. Commissioner Ajit Pai disclosed in a statement on Thursday he voted against TLPS after reviewing the record of the Chairman Wheeler's proposal. Chardan Capital Markets believes this is clearly a negative factor the company.

The brokerage said, "Lobbying has continued by the National Cable & Telecommunications Association, Cox Enterprises, Microsoft, Nintendo, the Entertainment Software Association arguing TLPS "has the potential" to degrade service to video game consumers and more testing is needed."

Chardan said if the Report & Order is approved it seems that Globalstar could be limited to 825 sites where a site could be a big campus with multiple access points if the Report & Order was approved, for essentially a year-long testing period before given full authority, assuming those tests result in limited interface to the incumbents in the Wi-Fi band adjacent to Globalstar's spectrum. That would be a favorable step but would make it more difficult for the company attracts partners.

The investment firm believes time was not with Globalstar as liquidity was there for the year only and would get much tighter next year. According to the brokerage's estimation, the company needs $62 million this year for different payments. However, it has $12 million in cash, an estimated $25 million in EBIDTA and $53.5 million available on an equity purchase agreement with Terrapin. It would jump to nearly $118 million next year.

According to Chardan, TLPS is still the key driver to valuation. The proceeding has taken far longer than we expected as the FCC was concerned about possible interference and the company worked hard to dispel such concern. Its price target would depend on the value of L-Band spectrum as spectrum value would double if the global market was as big as the domestic market.

The brokerage said, "We assume the company is worth a higher spectrum value given it in effect will have access to a full 22 MHz of spectrum, potential build-out costs will be low, and time to build out a network short."

Shares of the company traded 61 percent down on Friday.

Latest Ratings for GSAT

Aug 2018DowngradesBuyNeutral
Apr 2018Initiates Coverage OnEqual-Weight
Feb 2017UpgradesNeutralBuy

View More Analyst Ratings for GSAT
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Posted-In: ChardanAnalyst Color News Analyst Ratings Best of Benzinga


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