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GLOBALSTAR SELECTS MDA AND ROCKET LAB FOR NEW SATELLITES

by Jeff Foust — February 24, 2022
The new satellites will replenish the existing Globalstar fleet, illustrated
above, the last of which were launched in 2013. Credit: Globalstar

Updated 7:20 p.m. Eastern with Globalstar 2021 financial results.

WASHINGTON — Globalstar has selected MDA Ltd. and Rocket Lab to supply a set of
satellites to replenish its constellation, funded by a mystery customer.

Globalstar said Feb. 24 it awarded a contract valued at $327 million to MDA to
build 17 satellites intended to extend the life of the company’s existing
satellite constellation, which provides messaging and internet-of-things
services. The contract includes an option for up to nine additional satellites
at $11.4 million each.



MDA, in turn, awarded a $143 million contract to Rocket Lab to provide the
satellite buses. That contract includes options for additional satellites as
well as satellite dispensers and launch integration.

“The combination of these vendors offered us the best overall balance of
innovation, technical capability, schedule reliability and cost,” David Kagan,
chief executive of Globalstar, said in a statement. “We look forward to
beginning the process of bending metal and readying the new satellites for
launch beginning in approximately three years.” Globalstar will contract for the
launch of those satellites separately, with the expectation all will be launched
by the end of 2025.

In its statement, Globalstar referred to a “potential customer” as a key reason
to procure the new satellites. “Globalstar is acquiring the satellites to
provide continuous satellite services to the potential customer under the Terms
Agreement described in the Company’s Annual Reports, as well as services to
Globalstar’s current and future customers,” the company said.

That unnamed customer will reimburse 95% of the capital expenditures associated
with the new satellites as well as interest costs for Globalstar’s financing of
the system. Globalstar said it expects to have financing in place for the
satellites by August and has deferred initial payments to MDA at 0% interest
until Aug. 16.

In its 2020 annual report, Globalstar said it entered into an agreement, called
the Terms Agreement, in February 2020 with an unnamed potential customer. Under
that agreement, that customer would pay for nonrecurring engineering services
“in connection with the assessment of a potential service utilizing certain of
our assets and capacity,” and work on terms for development of operation of that
service. The report doesn’t elaborate on the service in question or identify the
customer.

Globalstar released its fourth quarter and full year earnings after the markets
closed Feb. 24. The company reported revenue of $124.3 million for 2021, down 3%
from 2020, and a net loss of $112.6 million, nearly 3% greater than 2020.
Globalstar did not disclose new information about the identity of the potential
customer mentioned in the Terms Agreement, but said that customer had provided
$111.4 million in advance payments “to be recognized into revenue as we perform
under the contract.”

Much of the industry speculation regarding Globalstar’s mystery customer has
focused on Apple. There were reports last fall that the latest version of
Apple’s iPhone would include a satellite connectivity option, with Globalstar
providing that service. However, Apple made no mention of a satellite service
when it announced the iPhone 13 line in September 2021.

Globalstar is also facing competition in providing satellite connectivity to
smartphones. Lynk is working on a smallsat constellation to provide services,
starting with messaging, to conventional smartphones, having recently tested
that capability in the United States and several other countries. AST
SpaceMobile is developing its own satellite constellation to provide services to
mobile phones, raising $462 million in a SPAC merger last April to fund work on
that system.

MDA said in a statement it will assemble and test the Globalstar satellites in a
new facility in Montreal. “Combining our deep expertise with new partners like
Rocket Lab to bring exciting capability to the rapidly growing LEO constellation
market further strengthens our position in the global satellite systems market,”
Mike Greenley, chief executive of MDA, said in a statement.

Rocket Lab, which will manufacture the buses, will leverage its growing vertical
integration by using solar panels, structures, reaction wheels and software from
companies it has acquired in the last two years.

“With this contract Rocket Lab is executing on its strategy to go beyond launch
and lead the new space economy by delivering complete mission solutions spanning
spacecraft manufacture, satellite subsystems, flight software, ground operations
and launch,” Peter Beck, chief executive of Rocket Lab, said in a company
statement.



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