Globalstar Works With Advisers to Explore Potential Sale

Updated on
  • Company won FCC approval for wireless spectrum use last year
  • Sale would follow Verizon’s $3.1 billion Straight Path deal

Globalstar Inc., which won U.S. approval to use its satellite airwaves for mobile broadband service, is working with financial advisers on a potential sale, people familiar with the matter said.

Shares climbed 15.2 percent to $2.20 in New York at 1:35 p.m., giving the company a market value of about $2.5 billion.

Globalstar could attract interest from major wireless and cable companies, one of the people said, asking not to be identified as the details aren’t public. Deliberations are at an early stage and there is no certainty a deal will be reached, the people said. Chief Executive Jay Monroe III said in an interview in January that he would probably lease his spectrum, adding that the company “is considering all strategic options.”

Globalstar owns LTE wireless spectrum that can work with existing chips inside smartphones and wireless carriers, Monroe III said at the time. The airwaves aren’t the same as the swath that Verizon Communications Inc. agreed to buy Thursday from Straight Path Communications Inc. for $3.1 billion.

Representatives for Covington, Louisiana-based Globalstar didn’t respond to requests for comment.

Shares of Monroe’s Globalstar Inc. are up 11 percent since the U.S. Federal Communications Commission in December gave the company permission to use its satellite airwaves for mobile broadband services, which can attract more than a niche base of customers with satellite phones.

Straight Path

The bidding war for Straight Path also pumped Globalstar shares, as investors predicted the value of the company’s spectrum licenses will keep climbing. But the two companies’ airwaves aren’t created equal.

Straight Path owns high-frequency spectrum in the 28 gigahertz and 39 gigahertz bands, within the range above 24 gigahertz approved for 5G use by the FCC. Globalstar’s airwaves are much lower, at 2.4 gigahertz, and it only owns about 11.5 megahertz.

Wireless carriers, Globalstar’s potential buyers, have estimated they will need channels at least 60 megahertz wide to meet the requirements for the next generation of high-speed mobile phone networks.

Globalstar is one of several companies trying to convert old satellite airwaves licenses into something more valuable. They include Ligado Networks, formerly known as LightSquared, which went through bankruptcy after critics including airlines, the military and makers of GPS gear warned of interference. Charlie Ergen’s Dish Network Corp. built a stockpile of wireless airwaves by acquiring spectrum from the bankrupt satellite companies, and hasn’t offered a detailed use plan.

Globalstar requested FCC approval for the more ambitious plan in 2012. The unprofitable company has struggled with high costs of launching rockets and maintaining networks to serve satellite devices. In 2002, its predecessor company filed for bankruptcy protection.

— With assistance by Paul Barbagallo

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