Good day, and thank you for standing by. Welcome to the Globalstar Fourth Quarter 2022 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jay Monroe, Executive Chairman.

Thanks for joining Globalstar's fourth quarter and full year 2022 investor call. Please note that today's 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 and risk factors section of the Globalstar's SEC filings, including its annual report on Form 10-K for the financial year ended 2022 and in last week's earnings release. It's been some time since our last earnings call, and we're pleased to be back at it. We have been busy developing, executing, announcing a long list of critical developments in the interim involving our spectrum, wholesale services, powerful, long-term partnerships and so much more. We also provided a full update and presentation during our Investor Day in November and plan to host similar events when the time is right. On this call and on future earnings calls, we plan to keep our prepared remarks comparatively brief, hitting the highlights for the prior periods and moving directly to Q&A. Today, Dave Kagan, Rebecca Clary, Kyle Pickens and Tim Taylor will be available to answer your questions. As has been our policy even before September 17th -- 7th announcement, we will not be able to answer questions about our wholesale business partner or any of their future services. Instead, we will focus on the other aspects of our business. But what we can say is that the September announcement is the foundation of the company's wholesale satellite plan. We will continue to execute our own satellite opportunities, utilizing our retained capacity, including finalizing the work at 3GPP for our new NTN band class, which we expect to finish this September. Standardization with NTN allows for the proliferation of chipsets and devices able to operate on both…

[Operator Instructions] Our first question comes from Simon Flannery with Morgan Stanley.

I was wondering if you could just talk to your prior 2023 guidance and any more updates or color you can provide to that? And particularly, any comments around CapEx and comments around free cash flow, to what extent the revenues will be coming out of your deferred revenue balance versus new additional cash inflows?

Sure, Simon. It's Rebecca. So our 2023 guidance that we issued in September and reaffirmed, I believe, in the third quarter earnings release in November, we still feel confident about that revenue range of $185 million to $230 million. There's nothing that has changed that would have impacted those projections from the prepay agreement that we signed last week. So CapEx, though, has changed, obviously. So now we're committed to funding about $250 million of the CapEx for the new satellite through primarily operating cash flows. And so that will be funded over the next couple of years. And then on the favorable side, we are saving quite a bit of interest by not having to raise $500 million of senior debt at astronomical rates, as you guys know. So depending on the assumptions, we're saving upwards of $150 million over the construction period. But again, offsetting that from a cash flow perspective, we're spending $250 million more in CapEx. That is a timing issue just in terms of the repayment of that CapEx investment will come to us over the Phase 2 service period after those satellites are launched. So again, it's an upfront investment and just the timing of cash flow issue.

And anything on what your revenues, how you use the deferred revenue balance this year? Is that going to grow this year or decline?

So we still have to do a little bit of study in the gas to figure out how the new prepayment will work as far as that will be deferred revenue or debt classification on our balance sheet. But regardless, it will turn into revenue when we earn it over the Phase 2 service period. Now the $94 million that we received in prior years, that is sitting in deferred revenue, that will be recognized over the service period that started in November.

Right. And it's been about a year since you signed the deal with MDA to build a new constellation. Could you update us on the progress on the manufacturing of the satellites? And I think you said before delivery and launch by the end of '25. Is that still looking good?

Yes. Yes, I'm happy to -- go ahead, Tim.

So we've been working on the contract, the one-year anniversary was a few weeks ago. So we're a little over 12 months into it. And a major milestone in the first year of the construction contract is the completion of PDR, which is the preliminary design review. That happened a few months ago. And that's the initial design leading up then for a period of about eight months or nine months until you get to the critical design review. So we're on schedule, on budget and lined up well for launches in 2025.

Great. Good to hear. And then just one last one. The FCC seems to be taking an active interest in the satellite terrestrial intersection. Could you just talk about how you see what's being proposed as position -- Globalstar's positioning relative to competitors?

Yes, I can take that. Generally speaking, Simon, there are a number of changes that are going on in the industry right now, and everybody is watching those. And so the FCC will have to address a series of regulatory issues related to that. Obviously, Globalstar is a heavy user of all of its satellite spectrum especially under our new arrangements. And so it's unlikely that we will have any direct action that I think will be -- that will survive the FCC process if someone wants to mount something to utilize ours. But generically, there are changes that will happen in the industry over the next year or so that the FCC will have to wrestle with, for instance, how will SpaceX and T-Mo deal with their spectrum questions in front of the FCC, and there are a number of those. So we anticipate ongoing discussions that will take place and ongoing regulatory proceedings, which, of course, we're extremely cognizant of every single day. And given that we have globally harmonized spectrum, our issues will be, I think, issues that are not settled only within the FCC context, but more our 25-year history of operating on a global basis and, therefore, in front of the ITU for -- in a lot of cases.

Our next question comes from George Sutton with Craig-Hallum Capital.

Jay, at the Analyst Day -- and by the way, thanks for doing this call. I think it's great. So at the Analyst Day, you had suggested the potential for a significant agreement with a new partner you were hoping by year-end. You reiterated that this morning, I believe. Can you just give us any sort of update on the progress you're making towards this partnership and what we should be expecting?

George, no doubt, you read one of those -- yes, actually two of them in the last week. We're constantly looking to expand our terrestrial footprint. Spain was a very important part of that. And of course, now we'll proceed across the continent with many more of those types of authorization. That's the foundation by which you roll out terrestrial. Then there are other categories of relationships that we are pending right now and trying to bring to a conclusion. Those include leases for the terrestrial spectrum as well as new business models for our retained satellite capacity. All of those were alluded to in the Investor Day that we had some of which those two that I mentioned have come to fruition now. But I think we can look forward to more in the near term, which are both terrestrial and satellite.

Got you. And perhaps next question is best for Rebecca. But the refinancing of the first lien facility, can you just give us a sense of how that's being marketed or what the structure we should be expecting from that to be?

Sure. So we've been working with Goldman for quite a few months. It's a challenging environment, as you guys know. And so I know it's taken a little bit longer than some of you would like. But as we demonstrated last week, we're obviously have the shareholder value as our most fundamental priority and or if it takes more time to get it done. We're going to take more time to get it done. So they were a few days away from this upcoming deadline. But hopefully have some faith in it. So while we are not prepared to make an announcement right now as far as the tax form or size or timing, just know that we're working every day on it, and we've got options at the table that we think that are favorable to the company and we hope to announce something there.

Fabulous. And last, Jay, the concept of borderless spectrum is quite unique. What are the best types of use cases that you would suggest?

So go ahead, Kyle.

Yes. Hi, George. So look, I think there are a lot -- a number of large multinational companies that have operations in various geographies where we have terrestrial rights. And so the ability through a partnership like we have now with strategic collaboration that we have with Qualcomm we'll be able to go to those types of parties. And so here is a solution that works seamlessly across all of your operations. That's -- I think that will be very attractive to a variety of different industries, including OEMs, large equipment manufacturers, mining companies, transportation, several different industries like that, that we'll be going after. One of the things that we've talked about in the past, I think there's, I guess, to maybe cut off some questions at some point. But we've said that we think that the terrestrial opportunity is several hundred million dollars, many hundreds of millions of dollars a year in potential lease revenue. We think that the Qualcomm agreement that we've announced yesterday really moves us dramatically forward in that effort. I don't even know the last -- the release that we did this. But a while ago, we talked about how this -- the process to get terrestrial spectrum where it's deployable. This agreement and the work that Qualcomm is going to do is really kind of the last step in the development of the ecosystem. And we're very excited to see how, now that we'll soon have completely a solution that we can offer to the world, how fast that starts to grow. I mean, I'm starting to think of how do we manage kind of the inflow of opportunities whereas until today, it's really been how do we get the ecosystem to the point where we can start to do that.

Our next question comes from Mike Crawford with B. Riley Securities.

Just to continue on that last topic in the earlier statement that you're in negotiations on hundreds of millions of terrestrial spectrum leases. Can you break that out, that opportunity out by geography?

Jay, do you want to take that or you want me to take it?

No, go ahead, Kyle.

Yes. So it's -- there are a lot of different opportunities that we're in various stages of negotiation in terms of -- I don't want to get too specific on any of them. But to get to the hundreds of millions of dollars, that would definitely implicate the United States, but it also could be global. So there's a variety of different opportunities at various stages. And cumulatively, they add up to quite a large number, but I can't be specific right now.

And given your ongoing satellite operations with your Band 53, is this something that really needs to be leased? Or would there be -- are any of these discussions turning towards possible sale of the spectrum? Or could you even do that still operate your satellite business?

Well, it's hard for us to sell the spectrum in kind of the traditional sense. There's lots of different ways that leases can be structured, but all of the conversations are around leasing the spectrum.

So Anterix likes to qualify its pipeline in terms of three stages, kind of early, middle and final stage. Is there any clarification of that sort you could do?

Yes, it's hard for us to do that at this point. I mean it's -- I feel like often we feel like we're towards the very end of things and then they drag out and then people get disappointed. So there's -- we have a lot -- this -- we're in 11 different countries. We've got a full ecosystem. I think there are a tremendous amount of opportunities ahead of us, but it's -- I don't want to kind of start to get too refined on where we are in the pipeline. Yes.

Okay. And then just to switch topics. So now that you've finished the preliminary design review of the constellation, can you share any of the characteristics of what kind of power output, throughput capacity capabilities you'll be expecting from the replacement constellation?

Yes. And unfortunately, Mike, we won't get into too many of the specifics there. We have said that the main point of launching the satellite is for the continuation of service and that we were not ever planning on taking any major technical risk. So beyond that, though, the specs and all details of the satellite's payload and [DUTs] that's not something that we're going to be discussing at this time.

[Operator Instructions] Our next question comes from Jason Bernstein with Cantor.

Just to add one -- a couple of questions actually around the new Qualcomm news. Could you sort of simply -- is there a revenue opportunity through Qualcomm? Are they going to go out and sell the ecosystem and potential revenues come through there? Or people sort of buy the small cell ecosystem and then come to Globalstar to lease the spectrum? I guess maybe that's for Kyle.

Yes. So the way that it works, so Qualcomm has been working on a complete solution for private networking for a while now. And they look at this as the ability to have a spectrum resource that goes across borders is very attractive to them, I believe. So the way that it will work, they're doing all of the engineering to make sure that the chipsets work, they'll do all of the interoperability work to make sure devices and the radios work together. And then they're going to go with us, but they have a global -- they're obviously a huge company with global reach, and they'll go to their system integrator partners and say, here is a full solution with spectrum and all the equipment that you would need for whatever private network you're wanting to deploy. And so then those system integrators would work with us on a case-by-case basis to work, to do the licensing agreement and the lease. So the revenue is -- will be coming from other parties, not from Qualcomm. Qualcomm will get revenue from selling equipment, and we'll get lease revenue from the people that they introduce us to.

Got it. Got it. And one more, if I could. In the 10-K there’s a line on the Germany and larger constellation applications being accepted by the ITU. Is that a separate -- when you say larger satellite constellation that we have today, is that the 17 satellites MDA is working on? Or is that a future constellation that we really haven't delved into yet?

We have no comment on that one at this time.

Okay. I look forward to the next call then.

And this concludes the Q&A session. I'd now like to turn the call back over to Jay Monroe for any closing remarks.

Thank you all for joining today. We appreciate the attendance from investors, analysts and others, and look forward to doing this again. As always, we are available for follow-up questions. For those who asked questions today and want to go deeper and always, of course, talking to our investors anytime you want to reach out to us. Thank you very much for joining. We look forward to doing it again soon with more important news. Thank you.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.