Globalstar, Inc. (GSAT) Q3 2018 Earnings Report, Transcript and Summary

Welcome to Globalstar Incorporated Third Quarter 2018 Earnings Conference Call. My name is Adrian, and I’ll be your operator for today’s conference. At this time, all participants are in a listen-only mode. Later, we’ll conduct a question and answer session. [Operator Instructions] Please note this conference is being recorded. I’ll now turn the call over to Jay Monroe. Jay Monroe, you may begin.

Thank you everyone for joining today’s call. This is the first quarter where Dave Kagan joins us in his new role as Globalstar’s CEO. In his short time at the helm, Dave has brought a tremendous amount of energy to the satellite business and will all benefit from the company’s growth under his stewardship. We have structured the responsibilities such that I will continue to lead the spectrum and financing efforts, while Dave will focus entirely upon operating and expanding the core satellite business. In future earnings calls, I expect to provide an update on the efforts under my direct control. Dave will provide an operational update on the satellite business and Rebecca will go through our financial performance in detail. Pleased not 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 statement section of Globalstar’s SEC filings, and in today’s press release. I would like to begin today’s call by talking about the litigation filed a few weeks ago by Mudrick Capital and Warlander. Simply and clearly stated, the allegations in the complaint are patently false. There were different opinions from the start about whether the merger was the right solution for Globalstar’s financial and strategic path or not. A debate, which we were happy to have. In fact, we did have many thoughtful discussions with investors, some of them are on the call today, about whether the merger was the right decision for the company? The question of the risks, the costs, the opportunities presented by this merger, compared to the risks, costs, and opportunities of a stand-alone case is legitimate to debate. We believe it was the right decision and others did not see the same way. Ultimately, we terminated the transaction that should have been the end of it. The idea that the merger was some sort of a conspiracy to appropriate value from minority investors as claimed in the lawsuit is completely contrary to the truth and contrary to how Thermo and Globalstar have comported themselves for the last 15 years. We would like to resolve this litigation and fix the relationship with previously supportive investors who have brought it. But given that is a merger investor concern right now, I want to respond to the primary allegations clearly and openly, but succinctly today. A full answer would be provided in the appropriate court venue. With these answers, all investors, including Globalstar employees, can make informed decisions regarding Globalstar and its stock. All of us here, look forward to being able to get back to focusing full-time on building shareholder value, through improved financial results from both satellites and spectrum operations. It’s not clear that our responsive court filings will ever actually have to occur. Settlement could render those moved. So, up through today, the attacks on me, the board, and management have been entirely one-sided and very personal. People who have known me for years have read 113 pages about how I’ve tossed aside my fiduciary duties, which I did not and will never do. So today, to tell the story, albeit in an abbreviated form, this call might be the only way that I have a chance to set the record straight. Let’s discuss the major allegations. First, the suit alleges that our directors were bribed to approve the merger with a massive brand of stock options. This is untrue. As anyone who reads our proxy statements can clearly see, it has long been our practice to compensate our directors exclusively with stock and we make those grants on a regular cycle. The grant the plaintiffs have questioned is one of these regular, compensatory brands, and nothing more and were approved at the regularly scheduled board meeting as a matter of administrative routine. Moreover, they have alleged that these grants were worth 1.48 million per director. This is untrue. At the time of the grant, the annual compensation paid to the directors, given the three-year vesting period was about $72,000. This is very reasonable and in-line with industry standards. Why the discrepancy in the valuation? To do the math, the plaintiffs disregard the vesting period, and then assume a share price that is 700% more than it actually was at the time of the grant. And if anyone doubts the dedication of the board, consider the following. Given that their compensation has been largely stock options, and the stock price has generally gone down their work over the last 10 years has been almost pro bono. Lastly, the plaintiffs argued that the bribe was to approve a transaction. The result of which, they also claim that the stock cannot go up 700% that they used in their calculation. I think it’s enough said on this issue. Another full series of allegations is that Thermo purposefully depressed the share price so they would be able to complete the merger at a lower price. Instead there were other factors that have likely driven the stock's weakness late last year and throughout 2018, including the lack of material spectrum monetization announcement, pressure from approaching capital demands, and now of course litigation that creates significant additional risk and uncertainty. To depress the stock price, the complaint alleges that we sought to burry promising business development ideas and to only implement some ideas once the merger was completed, so that the benefits would accrue to a greater degree to Thermo. Their basis for this is an email from an out of work former mid-level employee of another company seeking a job at Globalstar and trying to distinguish himself by formulating a series of business development ideas. We received communications like this frequently and having no wish to offend anyone who eagerly is trying to be helpful, it is not uncommon for us to push these ideas of a future date. Our doing so, is in no instance an indication of wrongdoing. The complaint even goes on to allege the Globalstar deliberately sabotage the spectrum monetization process undertaken with Allen and Centerview two well-known and respected investment banking firms, presumably so that the spectrum transaction could be delayed until after Thermo had acquired a larger percentage of Globalstar. This is entirely fabricated and totally untrue. The entire team and I worked very hard to bring a spectrum monetization transaction to fruition. I personally met with the CEOs of three of the four largest US Telcos, you can guess our names. The CEO and the CFO of the two largest U.S. cable companies. The CEOs of four of Silicon Valley's largest global tech titans, along with the CEOs of numerous other major corporations who could have had an interest in spectrum. Each of these initial meetings arranged and participated in with Allen and Centerview was followed by additional meetings at senior levels within these companies. To suggest that these meetings were not in good faith is ridiculous. Confirmation of any one transaction would have permanently eliminated Globalstar’s need for financing and provided significant value for all shareholders and were pursued vigorously. The reality is that we sought out the best potential partners who had the financial wherewithal to utilize and pay for the spectrum and they, not we, determined that the time for a transaction was not right. Moreover, even after the merger agreement had been assigned, Globalstar remained open to a spectrum transaction, which the investment bankers continued to pursue, indeed the merger agreement, which is publicly available, clearly states that if a monetization could have occurred before closing, the merger would have been terminated. And about the allegation that there was some nefarious intent behind Thermo’s 2017 stock sale. Thermo had a successful outcome when it’s previously sold and separately operated telecom company was part of the Level III and CenturyLink merger creating a significant taxable gain. Thermo also owned approximately 38 million shares of Globalstar with an average tax basis of about $11 per share, well above the market price at the time. It is responsible tax planning to offset significant capital gains with capital losses. So, Thermo publicly announced in connection with the October financing that it was likely to sell these high bases of shares before the end of the year and made explicit disclosures about this in Globalstar's SEC filings and directly with investors concurrent with the Morgan Stanley October financing months before the December sale. The disclosures and discussions with investors, made the reason for this sale very clear and no one could have taken the plant sale as an indication that Thermo’s support for Globalstar was [indiscernible]. Indeed, the sale represented a mere 5% of Thermo’s ownership position, and Thermo had proved its unflagging commitment to Globalstar through the June and October fundraisings where we invested more than 76 million to purchase 45 million additional shares at materially higher prices. In fact, during 2017, the number of Globalstar shares actually held by Thermo increased even after the sale of the 38 million shares. Thermo explored multiple structures with multiple counterparties, including investment banks and investment funds for this sale and held discussions with Warlander in November. During that negotiation, Thermo was trying to obtain the highest price possible, while Warlander was fairly negotiating for structural benefits, including creative derivatives to make it more attractive for them to purchase the shares, the trade did not work out. The allegation that then going through Morgan Stanley to sell the shares in a single clean trade represents “dumping” and that Thermo conducted the sale with the intention to pressure the stock in 2018 is meritless. Another set of allegations in the complaint is that Globalstar was going to overpay for FiberLight. The plaintiff cite a valuation range for FiberLight of between $350 million and $450 million as market. They alleged that the true value of FiberLight may be determined by a news article from August 2016, the author of the article one, had no contact with FiberLight management. Two, had no insight regarding FiberLight's financial performance operations or opportunities. And three, his reported EBITDA for FiberLight was totally wrong and far lower than actual results. The complaint goes on to cite single “preliminary DCF analysis” to suggest that Globalstar's three investment banking firms did not agree with the final FiberLight valuation. This ignores the full valuation work product together with the draft and final shareholders [ph] opinions by these three firms, which elaborate on the complete and much higher value for FiberLight. To imply that one cherry picked data point represents a definitive conclusion of value is not credible. No attempt at a fair valuation for FiberLight is made in the complaint because doing so would completely undermine plaintiff's claims. So, these are the plaintiff's primary basis for alleging that the merger price was not fair. An outdated article from a reporter, who was both misinformed and uninformed, and one piece of preliminary investment banker data taken out of context. In fact, in the complaint they were relegated to a footnote there was actually a bid for FiberLight in 2016, the same year as the article. For $890 million in cash from an infrastructure fund. Since the time of that 2016 offer, FiberLight's EBITDA has materially improved, its fiber network has significantly expanded, and proceeded [ph] multiples paid in the fiber industry have increased substantially, driven by the entry of new buyers to the telecom infrastructure sector. Just the multiple expansion alone accounts for the entire difference between the 2016 and the 2018 valuations. I hope this is the last of the litigation discussions, but we’ll have to see. We are not and have never been bad actors. We want what is best for Globalstar, its investors and employees, and if operated, interested in this business, no matter how daunting it has been at times for 15 years, we will continue to deploy every ounce of our beings and continue to invest our time and capital to make Globalstar a success. In the spirit of refocusing on more productive matters, I’m pleased to report that we have made significant progress on 3GPP and are hopeful that the process will conclude in the coming months. We have worked collaboratively and successfully with participating parties in the process to resolve any perceived technical issues. Our band has been designated as 3GPP band 53 and we look forward to finalizing the process shortly. Clearly, this approval will have impact with third parties and strategic discussions. We will also continue our international spectrum approval process. In the last 30 days, we have received approval in two additional countries. This is encouraging as we work towards global harmonization. To date, the international licenses cover 16 million pops and we look forward to this materially increasing by the end of 2019. We remain actively with Nokia and other terrestrial spectrum ecosystem partners to commercialize the band in the US and elsewhere. Earlier this year, Nokia also completed and publicly reported on a significant testing regime. Today, we are in service on a study deployment with a potential partner in concert with host of equipment providers. This opportunity is particularly interesting to us because it would broadly deploy network in non-metropolitan areas allowing us to work with other partners in metropolitan and suburban markets where the spectrum is most valuable. While it is too early to celebrate, their interest is encouraging and helps validate the thesis that we will have a unique spectrum band for small cell and private LTE deployments via a coast-to-coast licensing authority. Also, the potential of this project has stoked the interest of infrastructure providers producing LTE equipment in our band, which has helped drive the ecosystem forward even in advance the final 3GPP approval. Providing tangible progress in the U.S. initially helps to provide adoption and enhanced our international regulatory efforts. Before turning the call over to Dave, I’d like to reiterate our wish to settle the litigation, which is clouding our future and complicating conversations with our lenders. I know this is an interest to all investors just as it is to Globalstar’s management and employees. Dave, will now provide an update on the company's satellite business.

Thank you, Jay, and good afternoon. I’m very excited to assume the position of CEO and I want to start out by saying that we’re proud of our revenue and EBITDA performance through the third quarter of 2018. At our current run rate, we are on track to surpass last year's revenue by approximately 20% and reach $40 million of adjusted EBITDA, nearly double that of just two years ago. My key role at Globalstar is managing a very motivated and dedicated team that has driven to realize the true value of Globalstar's assets. This mission is not going to be easy or fast, but over the next two to three years we mean to deliver on this promise. The company is focused on both its satellites and terrestrial assets and although much of the financial market focuses primarily on the value of our spectrum assets. At Globalstar, we fully believe that the MSS business has significant untapped value and we’re working to make that a reality. In order to be successful in this portal, we believe the leadership has to get into the trenches, which is exactly what the senior management team is doing. This is why we have been able to launch three new products in 2018, and we’re on track to launch another three in 2019. In 2018, much of the company’s focus has been on launching those three new products. SmartOne Solar was launched with great success in April. The product is a commercial grade solar powered IoT product used for tracking assets and inventory. SmartOne Solar is supported by a robust back office management system option, enabling geofencing and alerts, while tracking assets and inventory. We have achieved ATEX, an intrinsically safe certifications for Solar enabling it to be deployed in the fastest environments. So far this year, we have sold more than 20,000 units almost entirely in North America and we have a healthy pipeline of customer demand with significant interest from internal markets in addition to North America. This is by far the fastest ramp up of any product released to date. Our second product launch this year was Sat-Fi2, which is a satellite hotspot utilization our second-generation ground infrastructure. Our typical customer is one who needs to send and receive email and text messages, make voice calls, and efficiently surf the web when beyond cellular coverage. And Sat-Fi2 meets these communication needs when paired with our subscribers existing smart phones. We have had some early manufacturing challenges, preventing us from getting into full mass production. However, we are scheduled to do so over the next few weeks. We are also in the process of bringing commercial grade derivative products to the market early next year, which utilize the core Sat-Fi2 design and boards. One such product will be specifically designed for the Inland and Coastal maritime market, providing entry into markets almost entirely untapped today. Our third product launch this year was SPOT X, which was a 2-way messenger device aimed at the outdoor enthusiast market and is the next evolution of our very successful SPOT product family. This product is the only device designed with an integrated keyboard, providing new connectivity outside the cellular coverage. While this market has seen two other competitive products launched in 2018, we believe we have a strong competitive advantage across functionality and price and have already sold nearly 10,000 units since first launching in May. We have a number of IoT products in the pipeline and are excited about what lies ahead for this product category. Connecting devices with the low bit rate satellite products has the opportunity to greatly expand our adjustable markets allowing more and more assets to be economically tracked and our success to date is reinforcing this thesis. This is where we are focusing most of our developmental efforts. We believe our roadmap result will result and significantly increase revenue and EBITDA, while optimizing the capacity on our networks. We are working hard to bring multiple innovative IoT products to market, since our constellation is perfectly suited for these applications and solutions. Our team at Globalstar remains focused on continuing to save lives and we’ve now exceeded 6,000 life-saving events since SPOT’s inception. I’m truly proud to be the CEO of Globalstar, and I'm incredibly excited about executing on the opportunities set before us. And now, I would like to turn it over to Rebecca for a detailed discussion of our financial performance, and I look forward to answering your questions during the Q&A. Rebecca?

Thank you, Dave, and good afternoon everyone. We have reported another quarter of meaningful growth in our core MSS business as we expanded our total subscriber base to roughly 750,000 and generated higher ARPU across all major product lines. These improvements drove a 17% increase in total revenue when compared to the third quarter of 2017. Focusing on recurring service revenue, which represented 84% of our total revenue last quarter, Duplex and SPOT were each up 15%, propelled by significant increases in ARPU. Adjustments to our service pricing have continued to play an important role in driving our ARPU growth. For several quarters, we have seen year-over-year growth from price increases rolled out to our legacy base. While we expect this to end in the short-term, we do expect continued ARPU growth from new subscribers, particularly related to SPOT customers, as our current rate plans are generally higher than our historic blended ARPU rate. Another factor contributing to higher ARPU for our Duplex customers is a change in the timing of revenue recognized for our prepaid usage-based plans. With the assumption of the new revenue recognition standard at the beginning of 2018, prepaid usage base revenue is recognized as different times over the 12-month contract period compared to previous GAAP, which allowed any breakage to be recognized upon expiration of the contract. While this new accounting treatment resulted in an increase to revenue on a quarter to date basis, there was minimal impact on ARPU when comparing the year-to-date period. Regarding our total subscriber growth, voice customers continue to decline as growth activations were below the typical churn rate. However, SPOT and Simplex subscribers were up meaningfully from the prior year as both new and legacy device sales remain strong and churn was lower on an LTM basis. On the Duplex front, we continue to pursue buyback opportunities to replenish phone inventory, particularly, while resolving the slower than anticipated production and full release of our newest Duplex device. This relatively low inventory level has led to fewer activations and a 9% decline in our average duplex subscriber count, compared to the prior year. While the decline in Duplex device sales was not particularly impactful to total revenue, sales of the newish generation in our SPOT family of products, which launched in May of this year made up the shortfall and meaningfully drove the increase. As Dave mentioned, we have intense competition in this space, but we are well-positioned to compete on price and have a unique product as the device does not record require a smart phone for messaging. Sales of this product contributed over 80% of the total increase and equipment revenue and we continue to increase production to meet market demands. Sales of our recently launched commercial Simplex tracking device were also significant during the quarter. As discussed with you last year this time, we played an important role in assisting with disaster recovery efforts following the hurricanes that devasted parts of our country in 2017. As is the nature of our business, sales of our tracking devices were elevated during the third quarter of 2017, resulting in 1.3 million of equipment revenue that did not recur this quarter. However, we still reported an increase in Simplex equipment revenue, due to the success of our new solar tracking device, which launched in the spring of this year and was met with strong demand from both old and new resellers, as well as the success of our legacy commercial Simplex devices, which continues to grow as the world demand for IoT services increases. We reported lower net income this quarter, due primarily to a decrease in non-cash derivative gains recorded during the respective periods. The lower derivative gain reflects the moment and various underlying inputs and assumptions used to calculate our derivative value, including a greater reduction in the company's stock price during the third quarter of 2017. Certain non-cash items also contributed to the decrease of net income, including higher depreciation, and lower capitalized interest due to a portion of our second-generation ground infrastructure being placed into service earlier this year. Adjusted EBITDA increased 23% to $12.2 million during the third quarter of 2018. its highest level in nearly 13 years. Adjusted EBITDA was impacted primarily by a 15% increase in both service revenue and MG&A as equipment margin and cost of services were relatively flat. For purposes of calculating adjusted EBITDA, the 15% increase in MG&A excludes the costs we have incurred related to the now terminated merger and the related shareholder claims, due to the nature of these items. And now turning to liquidity. We continue to retain 53 million in our debt service reserve account, which is restricted to making longer-term principal and interest payments under the facility agreement. Our current sources of cash, include primarily, an unrestricted cash balance of 20 million, and operating cash flows generated from the business. We expect that these liquidity sources will be insufficient to fund our debt service obligations over the next 12 months. Focusing on our December capital needs, our obligations include primarily principal and interest of 53 million, additional funding to our debt service reserve account, and a relatively small amount of CapEx that is generally discretionary. We also expect that we will have to raise capital to maintain covenant compliance. The amount of this equity care will depend primarily on how much EBITDA is generated in the fourth quarter. While the exact amount of our funding GAAP depends on a number of available items, we expect that it will be approximately 50 million at year-end. We are currently evaluating various financing alternatives together with our financial advisers and senior lenders in order to address this shortfall in the most optimal way for the company. In conclusion, we are pleased with the recent financial performance of our core business and are excited about the growth potential from the important initiatives that Jay and Dave are driving. We also look forward to continuing to focus on addressing our liquidity requirements over the next few weeks in order to resolve this uncertainty and are confident in our ability to execute a financing. With that, I will turn the call over to the operator for Q&A.

Thank you. [Operator Instructions] And our first question comes from Simon Flannery from Morgan Stanley. Your line is open.

Hi, it’s Spence for Simon. Thanks for taking the questions. Just a couple. Can you remind us what the next steps are or timeline is for 3GPP? And then on the litigation, absent the settlement talk about what your expectations are for timing? Thanks.

Sure. Spencer, the 3GPP process is one where quarterly there is a final meeting, in this case December. And in December, it is possible that we could have the final approval. It’s also quite possible that just because of any number of remaining process steps, which are predominantly administrative at this point that if it doesn't get approved in December. The next time it would be approved is in March. So, we're hopeful for December, but it could be a little bit longer than that. And as I alluded, most of the steps at this point are administrative in nature and a lot of box checking and so forth, but the work that was necessary to get to this point, which involved a lot of co-existence work and other has been completed over the last nine months successfully with I think the agreement now in 3GPP of all of the participants.

Okay, thank you. And then on litigation timing?

Well, the litigation is pretty much standard litigation that’s carried on in situations like this and so it really depends upon a question pretty fundamentally of whether there is a settlement or not? If there is a settlement that can happen almost at any time. Clearly, it’s in our best interest and I believe the interest of the other parties to find a settlement because current situation is overhanging the stock so much. If it goes through a full-on litigation and doesn't get settled soon, of course it can drive on for months or even years. That would be very unusual in a situation like this one and we certainly hope it’s not the case here, but we’re of course prepared for that if that is a process. It clearly won’t be good for the stock if it goes that way.

Thank you.

Sure thing.

And our next question comes from Lance Vitanza from Cowen. Please go ahead.

Hi, thanks for taking the questions. I guess, just a follow-up on the last question, could you, what are the plaintiffs speaking here? I mean, are they looking for monitoring damages or can you sort of just summarize what they are asking for?

Yes. Lance, I would steer you towards reading the complaint. They are asking for a lot of things in the complaint, but from the perspective of Globalstar proper, they are seeking repayment of legal expenses for the most part. They have separate claims, which are directly to have the board certain employees of Globalstar, and Thermo and me, but the claims that are directed at the company are relatively modest.

So, that is good, right. I mean, so, then it should be pretty easy to make it go away, I would think. Is that sort of why you expect that there are, I don't want to put words in your mouth, did you say you – are you hopeful that there will be settlement or are you just, you know, is there a reason for you to be hopeful about that or what’s your sense there?

As we understand these processes, they are, again fairly common and there is a set of timing and points within the process where you try to negotiate the claims away. It is important to the company that that happen. Certainly, for the reasons that I said in my prepared remarks, it is important for individuals as well, but you can’t really settle the company litigation without settling all of the litigation. And that's, I think, the way – that’s the way it will go.

Okay. Let me just focus back on the business. Two questions there, if I can. The first is, is it – is there – should we be looking also at sequential trends? In other words – and again, this may be oversimplifying it, but your growth rate in EBITDA seems to have slowed into Q3. I'm wondering, if – number one, if there is something behind that, or if that's just not really the right way to be thinking about it? And number two, I guess, more broadly, is sort of $48 million the right run rate to use sort of for EBITDA? Do we think that there's potential for a lot more growth with the existing network, or is it that we want to grow, because we need to make additional investments whether it be new network, new satellites, or what have you?

Yes. Thanks, Lance. This is Rebecca. I'll cover your first couple of questions, and then maybe Dave can address from a network perspective. But for EBITDA, there's a seasonality component. So, you definitely shouldn't just take third quarter and multiply by four when you more look at the run rate for the year. We had significant growth over the past few quarters related to our pricing changes and it was much more material at the beginning as we kind of rolled that changes in our legacy base. And now since a lot of that has already baked in, that kind of incremental increases aren't as meaningful when you look at that sequential growth. So that, I think, that supports what you were saying is this slow and EBITDA appears to be the trend of late. I do expect there to continue to be increases, but we've definitely guided that the sequential growth will slow down as those price increases are fully baked. And from now, it'll be more from a subscriber growth perspective as we have – we recently launched products in the market. And next year, we’ll have a full 12 months of profitability for the products. From a network side, I think, Jay has covered a lot as far as what the opportunities are there and what he’s focused on for initiatives for the coming quarters, but you can expand maybe.

Sure. Yes, I mean, the – there’s certainly plenty of headroom in the network to handle a lot of growth in the future. And, of course, we're designing the appropriate products that we feel will, of course, help fill that capacity and drive significant EBITDA to the company. So that's certainly the primary focus of what we're doing every day and how we go about our business.

And I'm not asking for a specific guidance. But if we just sort of think generally about over the next few years, should we be thinking of CapEx as sort of on an upward trend, downward trend, or kind of the stable here?

I think of, it’s kind of flat. I mean, first of all we have a financial covenant that limits our CapEx annually to $15 million, and I think that's more than enough to accomplish what we need to do over the coming years.

Just to be clear, yes, I’m – I guess, I'm thinking about assuming that the covenant were not a constrained. I mean, I wouldn't want you to – I mean, so you're saying that even if you did have a covenant that should be enough headroom?

That's right.

Thank you. Thanks very much, guys. I appreciate it.

Thank you.

And the next question comes from [indiscernible]. Please go ahead.

Good afternoon, everybody. Can you go ahead and give a little bit of insight on the discussions surrounding additional financing – refinancing in light of the upcoming amortization payment as the company been approached by interested investors. What types of different structures are being closed?

Sure. Sorry, it’s a great question. So yes, to answer your question, we have been approached by some strategic investors, [indiscernible] capital and into the company and we're engaging in those discussions. We're also evaluating other options with support of our financial advisors and, of course, our lenders are involved in those discussions as well to look at options related to subordinated debt, which might not be able to be accomplished at this stage in the game with the December raise because of the inner part of our agreements that would be necessary for – to support such a – such capital. So, it's likely more looking like equity. And so, whether that's a fully marketed deal like we did in October for a right offering. We're just not sure, but we’re evaluating our options for the company and we’ll select whatever is most optimal.

And there was a fair amount of discussions at the beginning of last year regarding international approvals. Can you just give us some commentary on kind of what the anticipation was for a to get them for year-end [ph] are we still on track with that, or is the lion share going to happen now in 2019?

We have three approvals in hand now. I anticipate that before the year is out, we will have two or three more. And then we are hopeful that in 2019, there are a substantial list of additional approvals coming through. So, David, I think, it's safe to say that we probably were – are six months behind where we hoped we would be. At this point, we would have predicted a couple of more by this time. But I think, we're finally in a spot, where we have the attention of a lot of international regulators. I feel strongly that the work we're doing in the United States right now to include the strategic work we're doing with the third-party that I mentioned are going to give us platforms to go back to a lot of these countries who have asked the question, “Where can I see this operating? That – it’s an odd question, of course, because people may be operating in all of these countries and spectrum, which abuts us clearly their operating Wi-Fi immediately adjacent to us. And clearly, in a lot of places in the world, they're operating at 2.5 right above us. But nonetheless, I think having equipment in the band and facilities stood up and operating, will mean a lot in many of these jurisdictions. So that's the process that we're on at this moment and we'll continue to press forward with as quickly as we possibly can and we're in every continent on the planet [save Antarctica].

Okay. Can you reveal the identity of the two additional countries?

Not at this time.

Okay.

I appreciate it not at this time. We’ll – I think we'll do something more complete when we have – when we do our fourth quarter call. I think, then what we're doing and how we're doing it along with hopefully the conclusion of 3GPP and roll out that we're doing now with this other party, we can have a holistic discussion of what all of those components mean. And I think then it'll be a lot more helpful discussion than just going country-by-country. I mean, the total pops that we're talking about in the countries that are approved right now is $16 million. So, you can judge by that, that they're not all the largest countries in the world.

Understood. And just one last question regarding the litigation settlement. Has the company been in contact with the plaintiffs and have discussions happened, or has there been no communication just the court filings?

Yes. I think, David, I won't go any further than what I said already. I hope I addressed those questions in a fairly complete fashion in the prepared remarks. But I think, that's as far as I feel comfortable going at this moment.

Okay. Thank you.

Sure. Thanks.

Thank you, David.

[Operator Instructions]

Thanks for everybody asking your questions today. We appreciate it and for spending the last 45 minutes with us. Dave is being a little bit modest about what he thinks he can do in the business over the next year or two. There are a lot of initiatives and new products – he mentioned two of them that are going out the door much more rapidly than anything we've ever experienced before. And we have two products in development now that have extraordinary potential behind them. They are very inexpensive, utilize our network in unique ways that it has not been used previously and addressed a whole series of new opportunities that are – that frankly we hadn't thought about until some new people came to work at Globalstar and identified these opportunities in the last six or eight months. So, we're super optimistic about what the future brings for us, both on the satellite business and, of course, on the spectrum. So, we appreciate everybody joining the call today.

Thank you, ladies and gentlemen. This concludes today's conference call. Thank you for your participation, and you may now disconnect.