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Globalstar is prioritizing customer ‘desires’ for two-way connectivity: CEO

Globalstar CEO David Kagan joins Yahoo Finance Live to discuss Apple's investment in Globalstar for its Emergency SOS.

Video transcript

[WHOOSHING]

- All right. Well, Apple announcing a $450 million investment to bolster emergency SOS software in both the iPhone 14 and iPhone 14 Pro, with a majority of it going to Globalstar. Well, joining us now is David Kagan, Globalstar's CEO. David, good to have you on the show. So when you have Apple really stepping up investment in this space, what does that mean for a company like Globalstar?

DAVID KAGAN: Well, it's fantastic. It's just an absolutely incredible development for the company, for our employees, shareholders, and all the stakeholders at Globalstar. It's been a great development for us and really catapults us into a whole different stratosphere for where the company is going. Certainly, a company that has a 30-year history of operating in the satellite sector, and now we have a great trajectory for the future of the company.

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- And clearly, you already have good momentum. You've called the third quarter of 2022 transformational for Globalstar. Walk us through why.

DAVID KAGAN: Well, really we're starting to recognize some of the revenue associated with the relationship with Apple. It will start accelerating when they go into service, which is expected to be in this quarter. Sometime in November is what we've been told. And also, our core business is also growing at the same time. We're starting to see acceleration in what we call our "commercial IoT segment," which we're experiencing insatiable demand for our products. And we're very excited about what the future holds for that line of our business as well.

- And a lot of people were hearing about satellites, especially in light of the Ukraine war, seeing what Starlink was doing out there. How do you see yourself being positioned in the satellite industry?

DAVID KAGAN: So we're very specifically focused on what we call "low-bit data rate services." So we're not a broadband company, but we do focus on the Internet of things; small-bit data; information, whether it's tracking, assets, helping our customers look at sensor reporting and drive their business, drive the efficiencies in their business, whether it's in the oil and gas sector, the agriculture sector, or transportation. And so we just stay focused in the lane that we know our satellites are capable of operating and the great services and information that will help our customers drive their business as well.

- And looking ahead at what the future customers are looking for, as a next generation telecom infrastructure provider, what sort of innovations are you going to focus on and what sort of investments do you plan on making there?

DAVID KAGAN: So very importantly, we believe right now the desire of our customers and future customers are to have two-way connectivity. Up to now, in our commercial IoT market, it's been a one-way service. So in other words, we can report, for example, on a pipe that has too much pressure and then someone at our customer's headquarters or remote offices would have to take action on that information. Whereas opposed to, in the future, we'll be able to say that pipe pressure is too high and automatically remotely, through our system, shut down that pipe or get that pressure under control, just as an example. That's one of the key investments we're making, is in two-way technology.

Additionally, we're using our terrestrial spectrum, which is known in the 3GPP community as "Band 53," to also provide fantastic services. And in that case, it will be broadband services over terrestrial networks that will be developed with our solutions in markets that we don't serve today.

- And what are some of the future markets that you're hoping to explore? And on top of that, obviously it's been a tough year for tech, but Globalstar has been bucking that trend. You're actually up about, I believe, 6% year to date. What do you attribute that to?

DAVID KAGAN: Again, I attribute that to just people really recognizing the value of the company now. We've been discussing the capabilities and the assets, the core assets that we have in the company. And I think with the validation of the Apple deal is now coming to fruition and people are starting to recognize we're going to do what we say we're going to do and we're going to deliver on the Band 53 asset, as I mentioned, as well as the growth that we have with our commercial IoT line of business. So I think investors are starting to realize, in fact, this company has legs and we are going to continue to deliver and do what we say we're going to do.

- Exciting to see where the business goes from here. David Kagan, Globalstar CEO, thank you so much.