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Old 02-01-2017, 10:51 AM
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Morgan Stanley:

Telecom Services: Globalstar Meetings Highlight Spectrum Optionality

Globalstar recently received FCC approval for terrestrial use of its 2.4 GHz spectrum. With no build-out requirements, this could be another option for carriers evaluating their spectrum position following the completion of the Broadcast Incentive auction.

Holders of 2.4 GHz spectrum. We recently met with Globalstar management and gained additional perspective on how their 2.4 GHz spectrum could fit into the rapidly changing wireless environment. The company appears keen to ?derisk? the business by partnering with somebody who can deploy the spectrum in their business in the US, and possibly internationally. In the near term, Broadcast auction anti-collusion rules limit conversations.

Newly approved spectrum has no build-out requirements. Globalstar received FCC approval to use its 11.5 MHz of 2.4 GHz S band spectrum for terrestrial purposes on Dec. 23, after scaling back a more ambitious proposal to combine this spectrum with unlicensed spectrum. We note there will be no terrestrial build-out requirements, allowing targeted use in dense urban areas. The company believes that this spectrum will be suitable for indoor and outdoor small cell deployments by carriers, cable companies or tech companies. Using the TD-LTE standard should shorten the deployment cycle to include the chipsets in transceivers and devices. The company has already filed applications for terrestrial authority in three other countries, with more to come initially targeting an additional 375M pops.

Their satellite license from the ITU covers some 194 countries, they also have spectrum holdings in the 1.6, 5 and 7 GHz bands. Separately, Globalstar continues to push forward with leveraging their new upgraded satellite constellation with new product launches in the pipeline.

The wireless industry can evaluate spectrum options after the auction ends. The company is open to a variety of solutions to ?derisk? the business including leasing the spectrum via a traditional lease or a prepaid lease. We believe the rapid growth in mobile data is creating demand for additional spectrum, with Verizon and T-Mobile potentially the most interested in adding to their spectrum portfolio. Globalstar is but one potential option for these companies, with Dish, Ligado and unlicensed spectrum also in the mix. Once the spectrum auction ends, we could see a flurry of strategic activity in the wireless space.
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