Welcome to the Q4 2017 Globalstar Incorporated Earnings Conference Call. My name is Darrow, and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Later we'll conduct a question-and-answer session. [Operator instructions] Please note that this conference is being recorded. I'll now turn the call over to Jay Monroe, CEO of Globalstar. Jay, you may begin.

Good afternoon, and thank you for joining us to discuss Q4 and full year 2017 results. Following my prepared remarks, Rebecca Clary will provide an overview of the financial followed by Q&A when Tim Taylor will also join us too. 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. We reached several milestones in 2017 as a result of the hard-working people in our satellite business, including that the subscriber base exceeded 700,000 and our spot product facilitated its 5,000th rescue since its launch. Demonstrating how essential our technology and services are to our customers, ARPU also significantly increased during the year, driving improved financial performance. For the fourth quarter, revenue grew materially compared to Q4 of 2016 contributing to growth of over 70% in EBITDA. For the full year, revenue and EBITDA were both up significantly. More on this later from Rebecca. Like last quarter, we should caution against expecting this trajectory to continue unabated, but we are encouraged by the progress made on the MSS business and are excited to see so many of our current initiatives bearing fruit. I'd also like to take a moment and welcome back Dave Kagan to Globalstar. Dave rejoined the team in early December as President and COO and will be responsible for driving the MSS business forward. He's hit the ground running and has the full support of the entire management team who has worked with previously. If I can reflect just a bit to help frame where we are today and where we're going as a company, I think it's important to position…

Thank you, Jay and good afternoon, everyone. We've shown another quarter of meaningful growth in our core MSS business as we expanded our total subscriber base and generated higher ARPU. These increases drove 21% revenue growth when compared to the fourth-quarter of 2016 and a 16% increase on an annual basis. Focusing on quarter-over-quarter financial performance, total service revenue also increased significantly up 24%, resulting from growth in all of our primary revenue streams. Duplex service revenue, which was up 25%, was driven primarily by the nearly $12 increase in ARPU. The increase in ARPU among our 71,000 Duplex subscribers was due primarily to rate plan changes across our portfolio of customers. New subscribers are activating on these higher service plans which are above our current bunded ARPU level. While legacy subscribers are being migrated to these new plans upon contract renewal. Although annualized churn was down growth activations were also lower this year due to slower equipment sales as we had lower phone inventory available for sale. While lower activations have driven a 7% decrease in average subscribers compared to 2016 we are being as opportunistic as possible as we manage our remaining phone inventory by offering new and refurbished units at discounted prices and exchange for a rate plan higher than our current entry-level plan. Our enhanced focus on maximizing service revenue has clearly had a direct and meaningful impact on our operating results, measured by the 34% increase in Duplex ARPU from the fourth quarter of 2016 and a significant increase in adjusted EBITDA, which I'll cover in a minute. Spot service revenue improved 27% during the fourth quarter of 2016 due primarily to a 20% increase in ARPU. The ARPU increase reflected higher pricing across much of our customer base as we revised our service plans…

Thank you. We'll now begin the question-and-answer session. [Operator instructions] Okay. And we do have a question from Jim. Jim you can go ahead with your question.

Yeah. Thank you. It's Jim McIlree of Chardan.

Hey Jim.

Hey. Jay, you talked about applications for covering the 800 million pops and my question is are those -- did those 800 million include the U.S. or is that in addition to the U.S.?

This is in addition to the United States. So, it's a little bit over 1.1 or 1.2 billion when you put the United States into it Jim.

Okay. And besides the one grant that you have so far, are there any other -- are those 800 million -- have there been any applications before those 800 million that you referred to?

There are a series of applications that are in and others that are going in right now, but we never put an application in until we've had meetings with the regulatory authorities and been given a general greenlight to file. So, I think it's safe to say that when we file, we already have an understanding that the process is a process that we're willing to engage in, in countries that we think it's about worth the effort to do so. So, there are right now I can't say exactly how many we've actually filed versus those that we're about to file, but there are numerous filings that have already been made and some of those countries are very, very large and some of them are smaller, but they are broadly across every continent. So, I think in this next year should be very interesting for all of us as a few additional approvals arrive.

Right And so just to frame it in terms of round numbers, we've got 300 million in the U.S., 800 million to be filed and that there's some undisclosed number that's already been filed and that's -- it seems like that that's less than what the U.S. population is maybe about 1.5 billion or is that an incorrect assumption?

No that's a little bit off, inside the 800 million Jim, are some number that have already been filed. So, if you were kind of high grading things right now, you'd say, we've got two authorities and we have 800 million additional pops that we are bullish, as being good parts of the world for us to work in with regulators that are interested in working with us to get those approvals.

Right. Okay. I am just trying to get at what the way you guys are probably approaching it too is that you've got a pipeline of opportunities and so I am just trying to get a feel for where we are in that and still that answer is appreciated. Thank you.

And Jim, on the pipeline, that's definitely the way that we think of it. So outside of the 800 or in addition to the 800 expressed differently, there are a ton of countries that we're in discussion with right now and we haven't reached a conclusion that we're going to file, but I suspect that during the course of the next year not only will we get approvals in a lot of places, but the 800 million that we're describing will also go up a lot as we make additional filings in more countries. The objective is very obvious, when you have a series of countries that have approved it then it becomes easier and easier to get other countries to approve this youth. So, there's a bit of a flywheel effect and when they start to roll, we hope that they many, many of them roll in the course of the next year or so.

Right. Right. Got it and of those 800 million, are there a significant number where you would need to install a gateway first and offer satellite service or is that a completely separate business issue for you?

There are different regimes in different countries. There are definitely a couple of countries that had said we'd love to have you build a gateway here when you're going forward with additional services and in some countries, that's great for us, because maybe our service could be broadened if we built a second-generation gateway in some of the countries. It's by no means a standard and people say you can come here in our country, but you have to build a gateway, that's unusual, but there are certainly MSS authorities that we seek to shore up as well, because any country that we're going to, we want to make certain that we have the ability to sell the MSS products as well as terrestrial products with partners or others. So, they are in many cases going hand in glove.

Okay. And two more if I might, Jay in your commentary you mentioned Straight Path and how there was a bidding war. I'm just trying to understand the context of what you were saying there. Were you saying that this is an example of how things can quickly develop into bidding wars or were you trying to point out that maybe Straight Path absorbed some of the demand that you expected?

Yeah, yeah it was actually the former Jim. These things do all of a sudden surprise you and Straight Path was very surprising. But no, if you look at the size of a company like Straight Path, it doesn't have the effect of absorbing anything like the capital available for additional spectrum. That one was very interesting because it filled out terrestrial map for Verizon that was not otherwise full and so it was a logical fit and the bidding war itself was the battle of the titans. It was AT&T and Verizon, they went after it one, two to complete their map and wanted to foreclose that option and it went up very fast and was a little bit surprising, in fact a lot surprising to the entire industry that watched. We're not predicting that in Globalstar's case, but if those things do happen and it was certainly interesting to watch.

Yeah. Yeah. I agree I mean particularly given Straight Path negotiating position it was very interesting. And just one more, Rebecca you talked about our legacy plans in the Duplex area turning I am not sure how you phrased it, but I was trying to figure out so right now you've got, it sounds like you have two customer sets in Duplex, you have the new plants and then the legacy plans, can you kind of give us an idea about how many customers are on the legacy plans? How much opportunity there still is for those guys to switch to the higher-priced plans? And then I'm kind of assuming that as long as that dynamic exists, you're going to see kind of flat subscriber growth in the Duplex. So, one, how many are still in the legacy and then two is my assumption correct that that as long as we have that churn taking place then we'll probably see kind of flat subscriber growth for Duplex.

Sure. I think about it a little bit differently in terms of separating the rate plans from churn and impacting our average subscriber base because as the subscribers are activating on our network, they're activating on our current rate plans, which are higher than our current ARPU level and then our legacy subscribers are being migrated or converted over to these newer rate plans as their contract renews. So of course, that's going to happen over a period of time. Generally, our contacts are for a 12-month period. I don't have the exact number that hadn't been migrated yet, but I know that our base will be fully migrated by around September or October of 2018. So that's when you can assume that all of those handset subscribers are going to be on our current rate plans. And then of course you've got the mix of Sat-Fi2 customers who are going to be coming on entirely different rate plans, which are kind of still in the works in terms of how this will be defined. And then on the subscriber base we have seen some churn there during overall activations have been lower because our equipment sales have been lower. So not necessarily directly related to service pricing even though you could say that maybe the higher service pricing is impacting demand a little bit, but I think it's more just the volume of equipment sales driving lower activations. And so, I think until we launch Sat-Fi2 our next Duplex device, you're going to continue to see a decline compared to the prior period for average subscribers. Does that answer your question?

It does. It does. Thank you very much and that's it for me. Jay I've been skeptical that you'd be able to get EBITDA on the constellation this high, so congratulations on that. And good luck with the spectrum, guys. We'll talk back to you later.

Great. Jim, thank you as always.

Thanks everybody for joining us today. We really appreciate your time and hope we have an opportunity to talk to you again soon, should be in this case 60, 70 days from now and have a good day, thank you.

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