Welcome to the First Quarter 2017 Globalstar Incorporated Earnings Conference Call. My name is Fiona and I will be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] Please note that this conference is being recorded. I will now like to turn the call over to Mr. Jay Monroe, Chairman and CEO. Mr. Monroe, you may begin.

Good morning. And thank you for joining us to discuss our Q1 results and operational highlights. Following my prepared remarks, Rebecca Clary will provide an overview of the quarter's financial results followed by Q&A when Tim Taylor will also join us. Please note that today's earnings call contains forward-looking statements intended to fall within the Safe Harbor provided under the securities laws. Factors that could cause the results to differ materially are described in the forward-looking statements section of Globalstar's SEC filings and in today's press release. This release which is available on our website also includes a reconciliation of the non-GAAP financial measure adjusted EBITDA to net income and loss, its most comparable financial measure calculated under GAAP. After the operational discussion, I will provide information on the status of our international spectrum progress. Our drive to continue the growth of the core satellite business resulted in adjusted EBITDA increasing 23% over the first quarter of 2016. This came on the back of significant service revenue increases, which were in large measure from the increases in ARPU, in both our SPOT and Duplex offering, and continued expansion into new markets. Our operations produced meaningful top line growth with a 13% increase in total revenue and continued improvement in ARPU across all of our major revenue types. Duplex ARPU was up 26% during the first quarter, contributing significantly to the increase in adjusted EBITDA. When we have our new products, which are running behind schedule, we expect to continue the significant increases in ARPU and EBITDA. The development effort of our new one-way and two-way products is continuing with teams of both internal and external resources. And we look forward to rolling these out in the near future. We have demonstrated again that we can leverage our current operating expense…

Thank you, Jay. Good morning, everyone. We generated another consecutive quarter of strong revenue growth with total revenue of 13% from the first quarter of 2016, resulting primarily from increases in ARPU across all four revenue streams. While equipment revenue was in line with the prior year's first quarter, total service revenue increased significantly, up 15%, due primarily to growth in Duplex and SPOT. The 20% increase in Duplex service revenue resulted almost entirely from higher ARPU. This ARPU growth was due to a combination of factors, including new subscribers, selecting rate plans higher than our current blended ARPU level, the discontinuation of certain lower-priced rate plans, increased revenue from prepaid usage based contracts and a greater number of revenue generating subscribers in the base. With maximizing high margin service revenue as our focus, we have executed on several initiatives over the past few quarters, including designing our sales promotions to require high ARPU plans upon activation and adjusting rate plans to ensure they are appropriately priced and consistent across the base. To that end, we have increased Duplex ARPU by 26%, while maintaining a loyal customer base. Partially offsetting the ARPU increase was a 5% decline in our average subscriber account. This decrease reflects those of tighter collections process that promptly deactivates non-paying customers, and fewer activations as higher entry rate plans are required for service. We also recognized higher SPOT service revenue, which improved 14% due to a 10% increase in ARPU and a 4% increase in average subscribers. SPOT activations were up this quarter on the heels of a successful holiday rebate campaign during the fourth of 2016, contributing to increases in both ARPU and average subscribers. Consistent with the trend over the last several quarters, these new subscribers were primarily activating our SPOT Gen3 device, which…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] We have a question from John Petrozzi from Muller Road Capital.

Hey, Jay.

Hello, John. How are you?

I'm good. I'm good. Thanks. Appreciate the call. I was wondering if you can make any comments just drawing the parallel between kind of bidding more than that seems to have broken out over the straight-pass [ph] assets relative to the GSAT assets, and well, not comparable in terms of placing the band. How you think about that from the larger macro sense of capacity constraints, spectrum constraints and now that there is really no more auctions in the future? And all additional spectrum being held in private hands, what that kind of means in your strategic thinking as you go forward?

Well, I think, what it shows without a doubt is that licensed spectrum matters. There is much ado of - and we've heard it for years and years and years about how the 3.5 band will obviate the need for licensed spectrum, but this clearly not the case. The XO acquisition a year ago was to get millimeter wave spectrum. Obviously, what's going on today in the transaction that you were talking about is all about licensed spectrum. So people can talk their own book on unlicensed as much as they like. But the proof is in the pudding. And what's happening in the market is that licensed spectrum is being snapped up. When you look at what happened for spectrum that is closely situated to us from a propagation and a capacity carrying perspective, you have to go to the AWS-3 auction. I mean, it was clear there was not a scrap of that that was left un-purchased. And I think that's just the reality, big carriers and big cable companies need to have their services secure and over licensed spectrum, and that bodes well for us. I don't think that's any different in the United States than it is elsewhere. And it's not to say that unlicensed spectrum doesn't get used, because it does - I mean, we all live on Wi-Fi every day, but can't run a service that you want to charge out reasonable amount of money for over unlicensed spectrum. We saw that also in the whole white space area over a few years, the white space was going to be the savior, right, long distance Wi-Fi. And it just never really developed, because it's unlicensed. So I think that's the critical take-away from the one that we're watching right now. And the second take-away of course is that there are a lot of people that are - and a lot of companies that are involved in that transaction they've identified to, but we know for a fact at the beginning of that process, which yielded the first AT&T deal, that there were three involved in it. So it's just not a one-off situation.

Right. Okay, great. Just one follow-up if you'll allow me. As far as the capital raise goes and kind of follow along the numbers in terms of liquidity and having a little extra to get through the end of the year, et cetera, Thermo, you have been very, very supportive of this enterprise for a long time now. Is it accurate to assume that if the financing happens to go the way of Thermo or Thermo and a strategic partner that Thermo would most likely retain its pro rata share of ownership in the company?

I think, yes, I do. And it could be - there could be some rounding that's a tiny bit different if there was another participant that was a strategic involved in something like that. But, yes, we would expect to retain what our percentage in the company for sure. And if you look at it now, what we're talking about raising is so limited that that the relative changes in ownership are modest if - almost, no matter how you share the percentages of a new raise, the company is large enough, the market cap is high enough and the dilution low enough that it's not going to have a material impact on us.

Yes, and I guess, just to add to that, it would leave very little overhang in the stock from a, quote unquote, issuance perspective, so just to point that out as well.

Yes, we definitely agree. And we don't see this as a difficult issue. We see it as an issue, something you have to do and something you have to work through. But everyone knows from past experience that the relationship we have with our banks is excellent and we have cultivated that for a decade now. And it pays great dividends to us when we have to go back and have a discussion with them about massaging some terms or conditions in the loan agreement, which we've done a couple of different times and always with an excellent result for the company. So I think it's - I think it will all work out just fine.

Good, perfect. Thank you very much. I appreciate it.

[Operator Instructions]

It looks like we have no other questions this morning. Thank you all for joining. We appreciate the time. We will get back together again in roughly another 90 days and bring you up to speed on where the company is at that time. Thank you all for joining.

Thank you. Ladies and gentlemen, this concludes today's conference. Thank you for participating. You may now disconnect.