Globaltouch West Africa Limited a Case for Reinvestment Toward Profitability

8/13/2019 Globaltouch West Africa Limited a Case for Reinvestment Toward Profitability

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Globaltouch West Africa Limited: A Case for Reinvestment toward profitability

INTRODUCTION2013 was meant to be a year of milestones at Globaltouch operationally, financially andstrategically. Tremendous progress should have been made in advancing the companys threefundamental drivers of value creation! low"cost second"generation constellation# upcoming

innovative products# and our valuable spectrum assets. $y leveraging last years cost reductioninitiatives, Globaltouch should be turning the corner to profitability.

COMPLETED LAUNCH OF LOW-COST SECOND-GENERATION CONSTELLATION%n &ebruary ', 2013 Globalstar successfully completed a fourth launch campaign with atechnically perfect launch from the (osmodrome in $ai)onur, *a+a)hstan. ll previouslylaunched second"generation satellites are in commercial service, and the satellites from thefourth launch have successfully completed initial testing. The satellites from the launch arecurrently being placed in service thereby creating a path for profitability.This important milestone distinguishes Globalstar as the first - provider to launch a second"

generation constellation of /% satellites, at a fraction of the cost of its first"generation networ),and places Globalstar years ahead of the competition, especially ridium.

n addition, the significant cost benefits and networ) performance enhancements of the newconstellation create a strong and defensible position for us to offer the best value proposition toour customers. s coverage and uality improves with each new satellite placed into service, wefully epect our customers and potential re"sellers to continue to re"engage with us and ourvoice and data minutes of use and 456 to rebound. 7ith the restoration of full service,Globalstar will become once again the preeminent provider of affordable, reliable high"ualitymobile satellite voice and data service.

BUSINESS OVERVIEWGlobaltouch is partnering with Globalstar, nc. who is a leading provider of -obile atelliteervices 89-:; including voice and data communications services globally via satellite. Thiscapability provides Globaltouch with resources to provide wireless services in areas not servedor underserved by terrestrial wireless and wireline networ)s. 7e see) to meet our customers,000 additional miles for G% satellites, which introduces considerable delayand signal degradation to G% calls. &or our competitors using cross"lin)ed satellitearchitectures, which reuire multiple inter"satellite connections to complete a call, signal


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Commercial Simple O!e-Wa" Tra!#mi##io! Pro$%cimple service is a one"way burst data transmission from a commercial imple device over theGlobalstar ystem that can be used to trac) and monitor assets. %ur subscribers presently useour imple devices to trac) cars, trailers, tan)ers# to monitor utility meters# as well as a host of

other applications. t the heart of the imple service is a demodulator and 4& interface, calledan appliuC, which is located at a gateway and an application server located in our facilities.The server receives and collates messages from all imple telemetry devices transmitting overour satellite networ). imple devices consist of a telemetry unit, an application specific sensor,a battery and optional global positioning functionality. The small si+e of the devices ma)es themattractive for use in trac)ing asset shipments, monitoring unattended remote assets, trailertrac)ing and mobile security. (urrent users include various governmental agencies, including the?(8 ?igerian (ivil viation uthority;, the ?igerian =efense Deaduarters, 5ower Dolding(ompany of ?igeria, as well as other organi+ations, including *45(E??5(. 7e designed ourimple service to address the mar)et for a small and cost"effective solution for sending data,such as geographic coordinates, from assets or individuals in remote locations to a centralmonitoring station. (ustomers are able to reali+e an efficiency advantage from trac)ing assetseven in places with no terrestrial networ) coverage. %ur imple units, including the enterpriseproducts --T and -4T%?, are used worldwide by industrial, commercial and governmentcustomers. These products provide cost"effective, low power, ultra"reliable, secure monitoringthat help solve a variety of security applications and asset trac)ing challenges.

D%ple T'o-Wa" Voice a!$ Da&a Pro$%cThe upgrade of the gateway we see) will bring alive the -obile Foice and =ata atellite(ommunications capability of Globaltouch. 7ith this capability we will provide mobile voiceand data services to a wide variety of commercial, government and recreational customers for

remote business continuity, recreational, emergency response and other applications.ubscribers under these plans typically pay an initial activation fee to an agent or dealer, amonthly usage fee to us that entitles the customer to a fied or unlimited number of minutes,and fees for additional services such as voicemail, call forwarding, short messaging, email, datacompression and internet access. tra fees may also apply for non"voice services, roaming andlong"distance. 7e will regularly monitor our service offerings in accordance with customerdemands and mar)et changes and offer pricing plans such as bundled minutes, annual plansand unlimited plans. 7e will offer our services for use only with euipment designed to wor)on our networ), which users generally purchase in conAunction with an initial service plan. 7eshall offer the G5"100 phone, which includes a user"friendly color /(= screen and a variety ofaccessories. The phone design represents a significant improvement over earlier"generationeuipment that we believe will facilitate increased adoption from prospective users. 7e alsobelieve that the G5"100 is among the smallest, lightest and least"epensive satellite phonesavailable. 7e are the only - provider using the patented Hualcomm (=- technology thatwe believe provides superior voice uality when compared to competitive handsets.

The upgrade will provide capability for fied voice and data services in rural villages, at remoteindustrial, commercial and residential sites and on ships at sea, among other places, primarilywith our G5"2I00 fied phone. &ied voice and data satellite communications services are in


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many cases an attractive alternative to mobile satellite communications services in environmentswhere multiple users will access the service within a defined geographic area and cellular orground phone service is not available. %ur fied units also may be mounted on vehicles, bargesand construction euipment and benefit from the ability to have higher gain antennas. %ur fied

voice and data service plans are similar to our mobile voice and data plans and offer similarfleibility. n addition to offering monthly service plans, our fied phones can be configured aspay phones installed at a central location, for eample, in a rural village.

The upgrade will also bring to fore our atellite =ata -odem ervices. n addition to datautili+ation through fied and mobile services described above, we will offer data"only services.=uple devices have two"way transmission capabilities. sset"trac)ing applications enablecustomers to control directly their remote assets and perform comple monitoring activities. 7eshall offer asynchronous and pac)et data service in all of our =uple territories. (ustomers canuse our products to access the internet, corporate virtual private networ)s and other customerspecific data centers. %ur satellite data modems can be activated under any of our pricing

plans. 7e shall provide store"and"forward capabilities to customers who do not reuire real"time transmission and reception of data. dditionally, we offer a data acceleration andcompression service to the satellite data modem mar)et. This service increases web"browsing,email and other data transmission speeds without any special euipment or hardware.The G5"120 is a satellite voice and data modem board with multiple antenna configurationsand an enlarged set of commands for modem control. This board is attractive to integratorsbecause it has more user interfaces that are easily programmable. This ma)es it easier forGlobaltouch to integrate the satellite modem processing with the specific application, such asmonitoring and controlling oil and gas pumps, electric power plants and other remote facilitiesthereby providing customi+ed solution.

Up(ra$e o) &*e Ga&e'a"

The upgrade of the gateway will support both eisting and new products and services. Theupgrade is necessary so as to euip the gateway with the full capabilities to harness to thefullest the potentials of the new constellation and it is referred to as the ?et"Generation -Ground ?etwor). Globalstar currently has a contract with Dughes ?etwor) ystems, //(89Dughes:; under which Dughes will design, supply and implement 8a; the 4adio ccess ?etwor)8@4?@; ground networ) euipment and software upgrades for installation at a number ofsatellite gateway ground stations and 8b; satellite interface chips to be a part of the 6serTerminal ubsystem 896T:; in our various net"generation Globalstar devices. Globalstar also

have a contract with ricsson, nc. 89ricsson:; to develop, implement and maintain a groundinterface, or core networ), system that will be installed at various satellite gateway groundstations. The core networ) system is wireless 3GE>G compatible and will lin) our radio accessnetwor) to the public"switched telephone networ) 895T?:; andEor nternet. This new corenetwor) system will be part of our net"generation ground networ).7ith Globalstar


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multicasting# advanced messaging capabilities such as -ultimedia -essaging ervice 89--:;#geo"location services# multi"band and multi"mode handsets# and data devices with G5integration.

UPGRADE COST&6// 65G4=

4adio ccess ?etwor) 4? 8 nstallation. ntegration and Testing; " +,...... (ore ?etwor) (? " G?, GG?, EE5 ((&, =?, -G7, -G(, G, D/4ED, ll pps

erver 8nstallation and Testing, ; + /,..... Dughes 4? 5ayment 5lan!

20K at order 20K at site surveys completion 20K at ship to gateway 20K at installationEtesting completedEaccepted 20K at over"the"air testing completedEaccepted

%ther (osts! nterconnection (ost " +0,.... nnual 4? 7arranty " +11234 Learly (? support +055...

?T4-=T 65G4=$ut the current euipment and setup of the gateway can still render high grade services with thenew constellation. ll that is reuired is a selective and customi+ed upgrade.

nterconnection (ost" +0,....

nnual nterconnection ubscription" +2..... oft witch nstallation" +,.....

I!$%#&r"7e compete in the mobile satellite services, -, sector of the global communications industry.That sector is not fully developed in frica, especially ?igeria. -obile satellite service operatorsprovide voice and data services using a networ) of one or more satellites and associated groundfacilities. -obile satellite services are usually complementary to, and interconnected with, otherforms of terrestrial communications services and infrastructure and are intended to respond tousers< desires for connectivity at all times and locations. (ustomers typically use satellite voiceand data communications in situations where eisting terrestrial wireline and wirelesscommunications networ)s are impaired or do not eist.

7orldwide, government organi+ations, military, natural disaster aid associations, event"drivenresponse agencies and corporate security teams depend on mobile and fied voice and datacommunications services on a regular basis. $usinesses with global operating scope reuirecommunications services when operating in remote locations around the world. -obile satelliteservices users span the forestry, maritime, government, oil and gas, mining, leisure, emergencyservices, construction and transportation sectors, among others. 7e believe many suchcustomers increasingly view satellite communications services as critical to their daily


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operations. %ver the past two decades, the global mobile satellite services mar)et haseperienced significant growth. ncreasingly, better"tailored, improved"technology products andservices are creating new channels of demand for mobile satellite services. Growth in demandfor mobile satellite voice services is driven by the declining cost of these services, the

diminishing si+e and lower costs of the handsets, as well as, heightened demand bygovernments, businesses and individuals for ubiuitous global voice coverage. Growth in mobilesatellite data services is driven by the rollout of new applications reuiring higher bandwidth, aswell as low cost data collection and asset trac)ing devices. (ommunications industry sectorsthat are relevant to our business include!B mobile satellite services, which provide customers with connectivity to mobile and fieddevices using a networ) of satellites and ground facilities#B fied satellite services, which use geostationary satellites to provide customers with voice andbroadband communications lin)s between fied points on the earth


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bodies of water more completely than Globalstar. ccordingly, nmarsat is the leading providerof satellite communications services to the maritime sector. nmarsat also offers global land"based and aeronautical communications services. nmarsat generally does not sell directly tocustomers. 4ather, it mar)ets its products and services principally through a variety of

distributors, who, in most cases, sell to additional downstream entities who sell to the ultimatecustomer. Globalstar also compete with nmarsat in several )ey areas, particularly in maritimemar)ets. nmarsat has launched a mobile handset designed to compete with both ridiumsmobile handset service and Globalstar

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Globaltouch West Africa Limited a Case for Reinvestment Toward Profitability