Welcome to the Third Quarter 2017 Globalstar, Inc. Earnings Call. My name is Eric, and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Please note this conference is being recorded. I'll now turn the call over to Jay Monroe, Chairman and CEO. Please go ahead.

Good afternoon, everybody and thanks for joining us to discuss third quarter results. Following my prepared remarks, Rebecca will provide overview of the quarter's financial followed by Q&A. Tim Taylor will also join us then. Please note that today's earning 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 statement section of Globalstar's SEC filings and in today's press release. The third quarter was another strong quarter in MSS with revenue up 19% year-over-year. Strong ARPU growth in both spot and duplex continue to be the primary drivers, but we also saw strong subscriber additions as well. Once again highlighting the operating leverage inherent in this business, adjusted EBITDA grew 68% from the same quarter last year and was 20% higher than Q2. At $9.9 million Q3 adjusted EBITDA represents the highest quarterly level in a decade. It would be challenging to find a wireless operator growing like us and even more challenging to find satellite operators doing so. While we caution against assuming this trajectory will continue indefinitely, we are pleased with the performance and it's a clear demonstration of our operating leverage. We see many opportunities ahead of us in MSS and are eager to execute on those initiatives. These begin in earnest with several new products, which we expect to release in the first half of next year. For sure, our hearts go out to those affected by the multiple natural disasters our country has faced over the last few months. The periodic destruction of land-based infrastructure is an unavoidable reality for many living in certain regions, a reality we know all too well in New Orleans. While our satellites are not suited as direct replacements…

Thank you, Jay and good afternoon, everyone. We continue to report strong financial growth from the prior year with total revenue up 19% during the third quarter, driven primarily by service revenue, which was higher in all areas of our business. Over 30% of the increase in service revenue was driven by Duplex, which was up $1.3 million propelled by a 22% increase in ARPU. ARPU has grown significantly over the past several months as we've adjusted service rates across our subscriber base. Several factors have contributed to this increase, including the refresh of our rate plan line up in our core market together with the elimination of our lowest price entry-level plan. We've been successful in this migration, while still offering some of the most competitive pricing plans in the MSS industry. We also have been strategic in the sale of our remaining first-generation inventory by encouraging higher-priced plans upon activation, while focusing sales through certain distribution channels and markets. This strategy maximizes the recurring service revenue generated from these trends but also results in a slowdown of equipment sales contributing to the 6% decline in our average subscriber count compared to the prior year. Spot service revenue also improved significantly from the third quarter of 2016, up 16% due to an 11% increase in ARPU and a 5% increase in average subscribers. The increase in ARPU reflects the changes we've made to our rate plans to bundle options, including tracking capabilities with our basic access plan. An increase in activations also contributed to higher ARPU as new subscribers joined the network on rates higher than our previous blended ARPU level. An increase in revenue generated from subscriber equipment sales also contributed to higher total revenue. This increase was driven primarily by our whole and existing with disaster recovery…

Thank you. We'll now being the question-and-answer session [Operator instructions] And our first question comes from John Petrozzi from Muller Road Capital. John your line is now open.

Hi Jay and team. How are you?

Good. Thanks.

So, I just wanted to get your thoughts, it seems like a very interesting time on the strategic side in the space generally with deals being discussed across cable, telco, wireless, among some of the larger players out there. I was wondering from a C suite level, how you view some of these perspective movements and more specifically how G-Sat fits into these potential new paradigms that are being created. And then maybe I could lead into some additional comments where you stand on the strategic side types of discussions, intensity of discussions and whatever else you may be able to feel comfortable disclosing?

I think John that what's going on right now needs to fall into place before we can answer the question of where Globalstar might fit into that changing environment. You can imagine that a Sprint, T-Mo deal if it were to occur would set off a raft of follow-on activities that would be interesting and we would of course be part of those discussions, the one that was rumored today, which is really the charter Sprint deal or yesterday is one that would set off I think different events. But each and every one of those once they begin will probably create opportunities for people that we're in discussions with to look at us a little bit more seriously in the light of the changing chairs. So, I think we're operating under the assumption that we have to stay tuned and stay flexible and in the meantime, we're doing all the work that you would expect of us in terms of making people aware of what the spectrum is capable of doing. We talked about the work that Nokia has done recently. How important that is I think the people's analysis of how the spectrum can be utilized and that's the process that I think we're in for the moment. We've also undertaken additional tests with other third parties, which are being completed now, which will provide more clarity in different operating scenarios than the work that was done from Nokia and it will be interesting to see how people take it and understand it and think about it in the context of their businesses.

Okay. Great and is the Nokia analysis publicly disclosable?

It is not? It is something that were using with other people under NDAs and it was a study undertaken by Nokia and is therefore their property and ours at this moment, but it's not something we want to disseminate it very, very broadly at this moment.

And it sounds like an exciting, an exciting review of the spectrum for sure.

You know the results of it are what you would anticipate certainly what we've talked about for a long time and so interesting to get it validated from a company that's as efficient and successful as Nokia in those realms. When you look at the results, you see pretty quickly what the value is of spectrum that doesn't have anything else going on within it and when you have a macro architecture right next to a small cell, the implications of that when it's in the same spectrum are obvious. We've talked about that for a very, very long time and I think when you see the results on paper you go, yeah, yeah, makes perfect sense. You need a lot less infrastructure in order to do a given job when you create a lot more capacity and again it's no surprise. The spectrum is completely pristine and there is nothing else that's interfering with it from a macro perspective. So, the result is pretty dramatic.

Great. Thank you very much.

You're welcome.

And our next question comes from Jason Bernstein from Cantor. Jason your line is now open.

Thanks. Hi guys. Just two quick questions. On the international side is that 16.5 megahertz at full power or are you still expecting that these approvals will be for that amount at that level?

Sure. So, it depends on the regulatory domain we have a 1 watt, 4-watt restriction in the U.S. but that doesn't necessarily apply to every ongoing form process.

And so, given that the pops there could dwarf within the U.S. How do you guys think about optimizing the international opportunity while doing a transaction in the near-term in the U.S. and what structures that can take on?

I think we're certainly interested in making certain that large international companies understand that this spectrum is able to be certified in different regions of the world because additional players come into the discussion at that moment and clearly in certain parts of the world you can find -- you can find players that are the equivalent of the Verizon's the AT&Ts in the United States. But there are a lot of tech players who are interested in more global operations and so for us to be able to prove it up in other places is important. As I said, there are multiple precedential values arranged by having this first approval in place, which we're hoping is something that we can talk about more broadly. Assume it is 16.5 megahertz and that's something of course that's a little bit different and broader than it is within the United States and something that we are seeking everywhere else we go and it will be very, very interesting to see whether and when we have this one and whether other countries around it are also willing to approve the spectrum rather quickly. We're certainly in conversations with many across every single continent. So, time will tell. Clearly though there are different parties in different opportunities for us to explore in a case where within the United States you have perhaps lease the spectrum, if you lease the spectrum at any valuation in the world familiar with that that's a lot of money every year and it creates extraordinary flexibility in other parts of the world to do more and more creative things. You don't have to do the same thing everywhere for sure.

Great. Thanks Jay.

And our next question comes from Jason Mudrick from Mudrick Capital. Jason, your line is now open.

Hey Jay. How are you?

Good. How are you?

Great. Hey I'm looking at the charter filing with the FCC from last month on the 3.5 docket which I am sure you guys have seen and reviewed extensively, and I just had I guess three questions relating to that. So I am looking at and I am sure you don't have it in front of you, but the slide that talks about how they plan on getting into mobile, they talk about MVNO, just like reselling Verizon or other carriers for coverage but then small cells for capacity and it specifically says offloading MVNO traffic to Wi-Fi small cell infrastructure is critical to customer experience and economic success and mobility and it had some diagrams here that show starting with Wi-Fi, but eventually moving to transmitting with small cell through 3.5 gigahertz if and when it's available. I guess my questions are first, how we should think about how someone like a Cable Co. could use your 2.4 to offer a mobile service like charters talking about indoors initially? Question two, sort of related, but how you would think about license 2.4 compared to what the FCC is talking about doing with unlicensed 3.5 just sort of pros and cons of comparing those two options if you're a Cable Co. or any new entrant? And then I guess the last question which is somewhat different, but related is how you guys are thinking about the competitive dynamic between Telco carriers and Cable Co when you have cable companies now actually talking about like truly getting into mobile as opposed to just offering the service that on a reseller basis and how the industry is thinking about how Verizon or AT&T or others might respond to cable guys actually coming into their business and their turf? I know it's a lot of questions, I apologize.

No problem. I'll definitely get them. So, on the question of indoors and 2.4 versus 3.5 and mobility, let me kind of put all of those together and talk about that for a moment. When it comes to true mobility, you're obviously going to get a mobile product at 2.4. It's much more challenging to have a truly mobile product at 3.5. So that's an absolute differentiation between the two bands. But importantly how do these two bands operate together, which is I believe a potent question for the cable guys. 2.4 is licensed and used the term unlicensed for 3.5 I agree with you, so others might call it lightly licensed but regardless it's not the same as a licensed piece of spectrum. We've looked at this and decided that as we get through the 3GPP process, the very first two bands that we will specify in the process as carrier aggregation bands are in fact the 3.5 and the 5 gigahertz. We use 5 gigahertz in an LAA configuration and 3.5 and in an LTE spectrum aggregation – configuration. And I think that the jury is out on whether a cable company will be able to use 3.5 and think about that as an exclusive band for their customers because it's changing, its changing in different pieces of geography depending upon how the rules come out. It's changing in time. It's definitely different in power levels. Only certain of the power levels that are high, many of the power levels are very low. And so how do you mix and match that if you're charter and you want to offer a uniform product across the United States. The answer is you can't at least you can't use it exclusively. So, you're going to want to anchor it to…

Great. That's very helpful. Thank you.

Welcome.

[Operator instructions] And your next question comes from Jack Hartnett, Quadrant Capital. Jack, your line is now open.

Hi. Good evening. Hi Jay.

Hey. How are you?

The first question I had -- fine, as you look at the improvement you've achieved on the balance sheet liquidity etcetera why don't you think the market's giving you your just due on that? Is it all technical and the market is just looking as the other calls have discussed here? Is it just the technical aspects of the company or is it the finances have come up, I am a financial guy and I look at it and I say, these guys are doing a good job. The owner puts capital in that reducing leverage, not that seems to happen and yet the market is kind of yawning at that. Why do you think that's the case and what do you think it's going to take to get them to focus on that that's question one?

It's a good question, something that we certainly battle internally here and unfortunately, I don't think that we have a complete understanding. We have a disagreement about the about that issue. We've now fortified the balance sheet; the core business is growing very well. The satellite business from an evaluation perspective used to be an afterthought I think in the average investor's mind and I think now what is a substantial run rate annual EBITDA that cannot be discounted the way that it has been in the past. So hopefully we will continue to prove that the satellite business is growing and will be at EBITDA levels that are grossly in excess of where we are today. So hopefully that trend will continue. I think we're doing the right things on that front and next year I think is a big test as we roll out two major products and hopefully that will further accelerate growth, but we do have a very good liquidity position right now. We are making substantial progress on the international front and certainly doing so on the domestic front as well. So, we're firing on all cylinders right now. Why the market doesn't totally appreciate that or see it the way that we do, we're not sure. We recently did a substantial marketing round in New York for the capital raise and got to talk to a ton of new investors and existing investors. So, I think we're telling the story and I think what's key for us to continue to hit the milestones for example everyone had substantially discounted our ability to get any international approvals and I think we're going to prove them wrong. Shortly we'll announce the first full authority and hopefully that is the first of many. So, we're going to continue to operate, continue to obtain international approvals and do it what we can control, but we see that disconnect and unfortunately, I don't agree with it.

Yeah, but there seems to be a significant disconnect there and the other last question is last quarter you mentioned that Allen & Company were on board, I don't know what investment bank you were expected there, you were working with, are you still there, are they still working with you?

We have not disclosed the advisers that we are working with. There have been numerous rumors about who that may be, but we have confirmed that we are working with the advisers on the domestic spectrum front, but we did not disclose their identities.

I had my notes Jay, last quarter we were told Allen & Company was working with you?

Again, we have never confirmed the name of the advisers, nor do we plan to do so in the future.

Okay. Thank you.

And our next question comes from John Petrozzi from Muller Road Capital. John, your line is now open.

Hey guys, just one follow-up, there was an article that came out several weeks ago after the disaster in Puerto Rico and I talk about that a little bit, but it linked you and Google together in terms of working collaboratively to help in the efforts down there. Was that in fact true and if so how did that go?

Yes, it was true and we've worked with a number of other service providers as well, but we actually disclosed that directly. It wasn't just a rumor and did a number of things with Google down there and are continuing to work with others to support continued connectivity. So that was something that was more than just a rumor, but that was confirmed by us.

And that process has gone well I assume be that there is continued collaboration?

The need down there has been both extensive and extended and that continues today. Satellite backhaul is in high demand and our total traffic over the area has increased significantly and continues to actually is not tailing off the way that we would've expected. The threshold infrastructure has not come back as fast as other precedents. So that continues in earnest today and does so with Google.

Great. Thank you.

I am showing no additional questions.

Okay. So, let me just tie a couple of things together here and make a closing remark or two. It has been 11 months since Globalstar first received the approval from the FCC. So, this time last year when we were having conversations with our investors, our EBITDA was much, much lower. We had I think skittishness by all parties about what was going to happen with the FCC process. Disbelief that we would be able to execute on the international opportunity and certainly no clarity on where we ended up with the FCC and therefore what it implied for the changes in the marketplace. So here we are 11 months later and we proved up the international were in dozens of places right now and we think that there will be more and more licenses emitting certainly over the next year that will implicate more pops than there are in the United States by a long shot. We've done tests with this spectrum based upon the approval from the FCC. We're entering into the 3GPP process and have begun that. We have tests with Nokia and we've been doing work with other chip vendors and in short, though the stock has not reacted as much as we would've hoped during that period of time, clearly, we have been knocking off the various assignments that we have given ourselves in order to be successful and we'll continue to do this. As I said in my prepared remarks, we've invested a lot of money and a lot of time in Globalstar in these efforts and the opportunity is much larger than even we would've thought a few years ago. So, look forward to having everybody on the phone, chart our progress with us during the next couple of years, and hope to have many, many more successes to talk about quarter-by-quarter over the next few months. Thank you very much.

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