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News
December 2, 1998
For ImmediateRelease
Bernard L. Schwartz
Chairman of the Board and
Chief Executive Officer
Dear Globalstar Shareholder:
I want to bring you up to date on the progress Globalstar has made towards the deployment
of the system and initiation of service since our last correspondence.
Launch Status
We are ready to go on our next Globalstar launch on a Soyuz rocket.
The satellites are at the launch site in Baikonur, Kazakhstan.
Our special launch readiness review team, which includes outside experts, reports a
"go" condition.
The relevant inter-governmental approval process is underway and it is our understanding
that there are no significant impediments to the launch approval. We expect such approval
within days, at which time we will begin a 30-day processing and fueling procedure leading
to launch.
The balance of the Soyuz and Delta launches, each with four satellites, are expected to go
off on schedule, resulting in 32 satellites in orbit by July 1999 and 52 satellites in
orbit by December 1999.
To further bolster an already robust launch back-up capability we have entered into
negotiations for an additional launch on board an Ariane rocket in September 1999. If this
launch is not required at that time, it will be reassigned by Loral to another mission.
System Testing
Globalstar's first eight orbiting satellites continue to perform beyond expectations and,
in concert with our five operating gateways and pre-production handsets, have generated a
wealth of positive system test data.
During the third quarter we conducted the first public demonstration of a satellite call
during an industry conference in Paris. Numerous test calls conducted over the system
since have proven that both call connectivity and voice quality are excellent.
Service Rollout
Beginning in the third quarter of 1999, Globalstar service will rollout on a
region-by-region basis as gateways are deployed.
Currently, five gateways are in operation; 36 gateways have been manufactured, 11 of which
have been shipped to their sites. Sites are being selected and prepared for the balance of
the 38 gateways on order. All gateway hardware will be available for shipment by the end
of this year.
Approximately nine gateways will be operational and accepted by service providers by the
third quarter of 1999 providing for initial service in areas including the United States,
China, Canada, France, Italy, Russia, Argentina, Korea and South Africa. Ramping up from
there, we expect to provide service covering 45 percent of the world with 16 gateways in
place by the end of 1999. By March 2000, Globalstar service will be available virtually
worldwide.
Already licensed for satellite-based telephony service in 32 countries, Globalstar expects
additional licensing to be secured as the system is further deployed.
User Terminals
Orders have been placed for more than 300,000 user terminals, approximately 80 percent of
them mobile handsets, from manufacturers Ericsson, Qualcomm and Telital.
By the end of 1999 the production rate is expected to reach 40,000 units per month, with
all 300,000 terminals in the market by the end of the first quarter of 2000.
Service providers will place additional orders for user terminals as marketing plans are
finalized.
Marketing
Preceding service rollout, the company and its in-country service providers will conduct
extensive marketing and advertising campaigns, already in development, directed at
consumers in their respective target markets.
According to our service providers, early usage of the Globalstar system will center on
the mobile market where users will rely on Globalstar as an extension of existing cellular
or terrestrial systems to fill in the gaps where there is no available coverage.
Approximately 25 percent of initial use will serve the fixed telephone market in areas
where there is inadequate or non-existent service.
Financing
Globalstar has raised $2.9 billion to date of the funds needed for the design,
construction and deployment of the system.
Approximately $600 million more will be needed to meet our cash requirements to complete
the system and commence service.
Globalstar will seek additional financing during the first quarter of 1999 to meet its
requirements through the third quarter. Depending on market conditions at that time, we
will select from a number of financing options available to us, our first preference being
the debt market.
We are confident that the appropriate resources will be available to us as needed.
We will keep you abreast of Globalstar's progress on all fronts through additional
shareholder mailings, press releases and postings to our web site. Your continued interest
in our company is appreciated.
Sincerely,
Bernard L. Schwartz
Chairman of the Board and
Chief Executive Officer
Note: Shareholders with access to the Internet are encouraged to visit the Globalstar web
site at www.globalstar.com where all of our press releases and shareholder communications
are posted within 24 hours of release. Because launch schedules are subject to
fluctuation, we will not post advance schedules. Instead a press release will be issued
shortly before each launch.
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