GSAT - NASDAQ

Good day, and thank you for standing by. Welcome to the Globalstar Fourth Quarter 2024 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 first speaker today, Rebecca Clary, CFO. Please go ahead.

Thank you, operator, and good afternoon, everyone. Before we begin, 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 Risk Factors section of Globalstar's SEC filings including its most recent annual report on Form 10-K and its other SEC filings as well as today's earnings release. Also note that management may reference EBITDA or adjusted EBITDA on this call, which are financial measures not recognized under U.S. GAAP. As required by SEC rules and regulations, these non-GAAP financial measures are reconciled to their most comparable GAAP financial measures in the earnings release, which is available on our website. I'll begin today by sharing our fourth quarter and full year 2024 results. I'll then turn it over to Paul, who will cover key business updates. Before I get into the financials, I am pleased to share 2 strategic actions we have recently completed. In an effort to enhance our stock's liquidity and marketability, we successfully completed our uplifting to the NASDAQ Global Select Market earlier this month. This milestone represents a natural evolution for Globalstar and aligns with our strategy to increase our visibility within the investment community. In connection with our transfer to NASDAQ, we implemented our planned 1 for 15 reverse stock split, which serves multiple strategic purposes. This action realigns our outstanding shares to more normalized levels relative to our peers and optimizes our trading fundamentals through improved liquidity. Importantly, our post-split shares now meet institutional minimum stock price requirements, potentially broadening our investor base. For modeling purposes, our current common shares outstanding are approximately $126.4 million. Tomorrow, we plan to file new and amended registration statements to, among other things, reflect the impact of this split. You can also find more information related to the split in our February 7, 8-K filing. Now turning to our results, beginning with the fourth quarter. Total revenue increased 17% to $61.2 million compared to the prior year period of $52.4 million. Service revenue increased 18%, driven primarily by wholesale capacity revenue. Additionally, commercial IoT increased 8% during the quarter due to an increase in both average subscribers and ARPU. We are pleased to see continued adoption of our IoT services. Fourth quarter adjusted EBITDA increased 21% to $30.4 million compared to the prior year period of $25.1 million. Adjusted EBITDA margin also increased from the prior year period due to higher revenue of $8.8 million, which was offset partially by an increase in operating expenses of $3.5 million. Turning to our full year results. Total revenue for the year increased 12%, reaching a record $250.3 million and exceeding the top end of our guidance range. Service revenue increased 16% year-over-year, driven primarily by wholesale capacity and our second full year of providing service under this contract. Additionally, we saw record annual service revenue from our Commercial IoT business in 2024, which is a testament to the growth that we are seeing with existing and new customers due to the wider variety of new use cases that have expanded our addressable market. As Paul will discuss, we look forward to expansion of our product offerings this year with the long-awaited launch of a QA device as announced yesterday. In 2024, we achieved record annual adjusted EBITDA of $135.3 million, a 16% increase year-over-year. From a margin perspective, adjusted EBITDA margin was 54%, up 190 basis points from 52% in 2023. Moving to our balance sheet. We ended the year with $391.2 million of cash on hand. Cash costs from 2024 were impacted significantly by the updated services agreements. Since the closing of these agreements in November of 2024 through the end of the year, the company has received a total investment from its customer of $913 million. including cash payments totaling $689 million and certain in-kind asset contributions. The cash payments included the proceeds from the sale of 20% equity in the Globalstar SPE subsidiary, the proceeds from the current debt repayment that were used to pay off the 2023 13% notes and certain advanced service payments under the infrastructure prepayment. A portion of the cash payments received was used to fund capital expenditures for the extended MSS network. The remaining amount of approximately $320 million was held in cash and cash equivalents as of December 31, 2024, and and will be used in 2025 to fund infrastructure for the extended MSS network. We expect additional advanced service payments under the infrastructure prepayment to continue through the duration of the construction and launch of this new network. This activity is more fully disclosed in our November 1 and 7 8-K filings and in our 10-K, which we plan to file with the SEC tomorrow after the markets close. Now turning to our guidance, which we announced at our Analyst and Investor Day on December 12. For 2025, we are expecting revenue to be between $260 million and $285 million, representing 9% year-over-year growth at the midpoint and an adjusted EBITDA margin around 50%. Our forecasted adjusted EBITDA margin reflects short-term compression driven by strategic investments to support long-term growth initiatives, primarily relating to further development of our XCOM RAN terrestrial solution and expansion of our MSS product portfolio. During the Analyst Day, we also reiterated a long-range forecast, reflecting the updated services agreements. During the first full year of service provided over the extended MSS network, we expect total revenue to double the 2024 amount, reaching $500 million and to generate robust margins in excess of 54%. This forecast excludes certain key growth opportunities that are too difficult to forecast with precision, such as large terrestrial spectrum and XCOM RAN deployments. However, this in no way means we are not confident in our future contributions. I want to emphasize that these targets factor in our expectations regarding market position, growth drivers and operational capabilities. In just over 2 years, our wholesale capacity partnership has transformed Globalstar with a series of significant planned network investments. These investments provide us with a foundation to deliver sustainable increased earnings while we position the company for future growth. We believe we have the right strategy and execution capability to deliver on these commitments while creating sustainable long-term shareholder value. Additionally, this outlook underscores several key themes. First, our ability to consistently deliver strong top line growth while maintaining healthy margins. Second, our disciplined approach to balancing growth investments; and finally, our confidence in the expanding market opportunities ahead of us. With that, I'd like to turn the call over to Paul.

Thanks, Rebecca. It's great to be on the call with all of you today. I'm very pleased with our strong performance in 2024 and the recent progress we've made on commercial and operational basis. So I'll start off with a high-level review and then update on those topics before providing an overview of our expectations for 2025. First, I'd just say it was -- it's great to be back at NASDAQ a few weeks ago to ring the opening bell and it really signifies a new stage for Globalstar. Obviously been there and experienced many milestones at NASDAQ is actually shown by pictures on the walls and some innovations that are -- been involved in developing and that's now in the museum, and we added a Globalstar satellite model into the NASDAQ museum. And so this event really marked another moment that our team can be proud of. It's clear to me that Globalstar is very well positioned in both the satellite and terrestrial connectivity markets. Both of which present significant growth opportunities for the company. We've invested billions of dollars in the satellite business, and we're happy to say that hundreds of millions of devices can connect to our satellite and that number continues to grow both for our wholesale and our direct businesses. Until now, Globalstar's 500,000-plus deployed active units have only been able to support one-way tracking and telemetry applications. So we could do tracking around the world very well but lack the ability to communicate back to the device for command applications. And I'm proud that our refocused product development team whose hard work under new leadership has enabled us to deliver the full 2-way satellite commercial IoT solutions. We have an extremely low cost structure, which leverages the investments in our wholesale business. And with our time-tested uplink and our new state-of-the-art downlink, we intend to aggressively compete for subscribers in markets that already exist and are right for disruption. We believe that our globally licensed L-S bands offer a unique asset to anyone looking to deliver connectivity. Our dedicated spectrum resource, which is almost 4x that of any other D2D player currently, and our bent pipe architecture differentiate Globalstar. Everyone else has to borrow spectrum or put up more or larger satellites to match where we already are, and we're not standing still. It's an exciting time in D2D. We've been a leader in the space with our transformational deal and we'll continue to innovate. And of course, with any new technology that's rapidly evolving comes a lot of speculation. So I just want to take the opportunity to address a few inquiries we've received First of all, we've been in development with our wholesale customer since long before other providers made their direct to sell announcements. We enabled the first commercial D2D service years ago, and we've been successfully operating it since that time. with progressively improved features. We believe that speculation about the capabilities of other services has been overstated. No other direct to cellular service provider is currently supporting hundreds of millions of devices with years of experience operating at commercial scale and none have deployed outside the U.S. across contiguous bands. While it's early days for others, we're in development for our next constellation. We've extended our initial contract with our customer, funding a significant investment for new and improved satellite constellations. Structure of our relationship is one in which we presold certain capacity, and our revenues were unaffected by utilization, except, of course, to the extent that additional satellites may be needed to provide increased capacity or capabilities in the future. As for the speculation around the regulatory landscape and the potential for sharing our spectrum, I just want to say that we've been at this for a long time. Globalstar has worked Iy with various administrations for over 25 years and these systems take years to plan and operate for decades. And there are now hundreds of millions of consumers globally who have access to light saving and convenient connectivity through our constellation. Our spectrum is being actively used to provide these and other important services available globally. And that's what regulators want to see and the regulatory landscape has fostered a wave of innovation in the satellite industry. As recent announcements have shown, there is no lack of competition in the provision of direct cellular services. We provide mission-critical connectivity that saves lives, and we continue to launch new technologies using our spectrum. Our bent pipe satellite architecture is uniquely suited to enable the rapid deployment of new innovation and the certainty of our spectrum position for over 30 years has enabled us and our customers to make billions of dollars of investments in satellites, ground networks and research and development. We believe we're well positioned with our arrangement with our wholesale capacity customer and with current and future growth opportunities. Our unique financial arrangement provides network funding, enabling us to create valuable capacity solutions at a very competitive price point. Even with our spectrum advantage and the wholesale agreements, we do remain considerably smaller than certain of our direct competitors, and we're working to close that gap and are now well positioned to do so aggressively. Now the terrestrial side of the business, Globalstar's Band n53 and XCOM RAN capabilities present partners with valuable mission-critical applications and connectivity solutions that are high performance and reliable. The XCOM RAN team has met every technical milestone put in front of them and have continued to develop technologies that will allow us to better serve our customers. We're believers in the future of automation in both consumer, industrial, enterprise and defense environment and all benefit from connectivity solutions that we are well suited to deliver. Also, the Band 53 ecosystem has advanced with XCOM RAN and other technologies is ready to generate cash. We're expanding the sales force, both internally and externally, to push both Band n53 and XCOM RAN out into the world and expect to make tangible progress this year. Now to update on some of the projects we've discussed. First and very importantly, we detailed in our November 1 Form 8-K and updated service agreement with our wholesale customer demonstrates continued investment in support of product and service development. While there are other options, our team and our assets continue to be the chosen partner. Under these updated agreements, we'll maintain 100% of all terrestrial, MSS and other revenue, while continuing to allocate 85% of our network capacity for satellite services to the customer across both existing and new satellites. The remaining 15% capacity will continue serving our direct MSS customers, ensuring we maintain our commitment to our diverse and growing customer base. Further, we've achieved a major milestone in our partnership with Parsons Corporation, successfully demonstrating our software-defined salt communication solution using our lower orbit constellation. This first of its kind demonstration in North America represents a breakthrough in providing mission-critical solutions for RF congested environment, particularly in the public sector and defense applications. Proof-of-concept initiated in early 2024 is advancing towards commercial service positioning us to capture significant opportunities in these high-value markets. As we have said, this opportunity has the potential to be a significant annual contributor to revenue and cash flow and our confidence in it remains high. Our technology leadership continues to strengthen as evidenced by our successful completion of the first 5G data call on our Band n53 spectrum, achieving impressive speeds of 100 megabits per second download and 60 megabits per second upload in 10 megahertz of spectrum. This breakthrough enables advanced applications such as robotics, autonomous vehicles and augmented reality while offering our partners a versatile fully licensed channel for enhanced wireless connectivity. On the regulatory front, we enhanced our long-term operational foundation with a 15-year renewal of our blanket mobile earth terminal authorization from the FCC ensuring continued authority to operate our mobile earth terminals with satellites throughout the United States and its territories. This builds upon the company winning terrestrial authority in Mexico earlier in the first quarter. Collectively, these developments reinforce our position as a leader in satellite communications and innovative spectrum solutions while expanding our market reach and strengthening revenue potential across multiple sectors. In summary, we believe we're well positioned to continue to execute on our long-term growth strategy. We're seeing results from investments we've made so far and are excited for 2025 in the years ahead. We've spent a significant amount of time identifying markets that we can grow in and design and proprietary solutions to address the need of customers for years ahead. Further to this, we've been increasing our team at Globalstar with professionals that know how to win, grow and scale businesses and I cannot be more excited about our future. And finally, I just want to thank all my colleagues at Globalstar for their dedication and hard work in 2024. So I'll turn the call back to the operator for a Q&A. And thanks, everybody.

[Operator Instructions] First question comes from the line of Mike Crawford with B. Riley Securities.

We did see the constellation details for the extended MSS network constellation with over 50 software defined Aurora satellites that have I believe what you refer to as state-of-the-art, where you're requesting to have alternating levels of power that you can put down. Can you -- is that correct? And can you help explain what that attribute brings?

I mean so those Aurora satellites have beam forming capabilities. And obviously, yes, we've been able to control power and it's a digital digital satellite. So there's -- the processing that can be done is minimal, but it does allow us to direct signals to different antenna elements.

Okay. And then what -- is there any update you can give on the timing of when these satellites might to launch will be fully deployed. We do know now that there's been design of the architecture for almost 1.5 years now, I think. So any update on timing of when these could potentially launch?

Yes. We haven't given an update on that yet, unfortunately.

And then related, there's a number of new ground infrastructure and gateways you'll be putting in place? Or is that something that's going to be occurring this year?

That's all underway. There's a lot of stuff that has to be done for gateways, particularly when they're greenfield. So it starts with finding the right place and acquiring the land, if it's from a ground up built from ground up or finding the right teleports and just a lot of stuff that needs to be done and then there's all the issues in getting the right amount of connectivity and redundancy and resilience and all those things. So that process is fairly long term. So yes, so that's -- all that stuff is underway.

Okay. I'll just ask 1 more, switching gears to XCOM brand. So we do know that initially that you were designing that to work with unlicensed CBRS spectrum. Now I believe you've done incorporating Band n53 into the solution more natively, but is there any progress on your 1 large retail customer or other customers that we could look to or maybe hold forth as some guidepost to work for accomplishments that we can measure you against in this year?

Yes. I mean it's like I've said before, and I experienced this in Qualcomm too. Like you have a lead customer for a new technology, you keep building. It's a great tailwind, but you you're subject to the customer's decision on when they decide to push the button and roll out, and it doesn't necessarily have to do with just the communication system. So we're in the place where we've done tremendous amount of work. We've built out to the technical requirements. And actually now, what a bunch of the team is working on is being able to cost reduce, come down the cost curve so that we can be even more effective and more competitive with other potential solutions. So we don't have to just be at the high end of the market, but also kind of across being competitive with WiFi or mesh WiFi solutions that we see or other 5G small cell kind of solutions. So we're really focused in on that as we sort of wait for the customer to make their own decisions about rollout. And then, of course, we're also working on kind of the pipeline of other opportunities as well.

The next question comes from the line of Simon Flannery with Morgan Stanley.

Rebecca, you talked about EBITDA margins facing some short-term pressures and you have the long-term guidance of getting back to the sort of mid-50s or so. So should we think about 25% being the trough on EBITDA margins and then gradually improving? Or is it more -- it will sort of stay here until you get the extended MSS? And related to that, any color you can give us on CapEx, free cash flow for 25? And then a second 1 for Paul, just on the expanded MSS you obviously have the MDA deal publicly. It'd just be really helpful if you could give us any color on what the time line looks like it's 3 years kind of a reasonable estimate from kind of signing the contract or when we start to see the constellation get launched and deployed.

Thanks for the question, Simon. So on the first 1 for the margin compression, I would say it's in the 12- to 18-month time line or certainly not waiting on the extended MSS network to be deployed since the investments are more related to XCOM RAN and MSS product development. So those we expect to generate revenue in the kind of shorter time frame. And then your second question, sorry, on free cash flow.

Yes. Just any color you could give us on how CapEx free cash might look like this year?

Okay. So the -- so operating cash, it was really strong in 2024, and you'll see more details of that when we file the 10-K tomorrow. But we did have a little bit of color in the earnings release. As we -- there's kind of each phase of the wholesale arrangement has its own nuances. So for Phase 2, some of that CapEx is funded upfront and shows up in financing and then it will get reimbursed over time. And then for the extended MSS network, we have funding that we're receiving today. A lot of that is hitting operating cash flow because deferred revenues, service payments that we'll earn over the course of the satellite's life. So it's very much a timing issue and kind of how you think about reimbursable CapEx when you're computing free cash flow. Hopefully that's helpful.

The modeling as fact. Yes, I know it's a lot of moving parts.

Yes. Right. So yes, sorry.

I thought you were done.

Go ahead, Paul. No, I was just going to talk to the next question. So in -- now I was just going to give a little bit more color, Simon. So we've incurred about $250 million to date under the Phase 2 satellites and $155 million of that has been funded by our customer, that number and the balance by us through operating cash flow and the objective through that funding agreement is to pay for the upfront CapEx 50-50, right? So we've probably got another $150 million to get through that first launch of the satellite and again, that will be split evenly. Hopefully, that's helpful with the launch still expected to happen in 2025.

Okay.

All right. Then on the MSS time line, like I said to Mike, I mean we can't really -- we haven't updated that and announced that. And certainly, customers that work with us are sensitive to the timing of their service launches. So I can't really comment too much on that.

Okay, understood. Maybe just one more on the 2-way IoT. It was nice to see that coming through, and it sounds like there's a nice opportunity there. When does that become material to the numbers? Is that something we'll see in '25? Or is it still going to be small for a couple of years until that scales?

I mean we're expecting to start...

Sorry, go ahead, Paul.

I mean we're in beta right now. So as we went into data with customers, we were looking for customers that could rapidly turn on. But I would say, this year, I think it's the beginning of the ramp. And then I would say next year, we would expect to get very well into the deployment of it. But if it turns out that somebody -- it's got something that hits, we are set up for manufacturing, and that will be ready to go. It's a little bit dependent on our partners building out their particular applications with it. Obviously, some of our customers that we're talking to have 2-way based devices already. So in some cases, relatively easy for them to swap a modem in. And so we're hopeful that some of those can come to market sooner, but I can't commit to that at this point. It's really de minimus.

It seems like you're getting good feedback from the field, yes.

We are definitely getting good feedback, which is good. We spent a lot of time hammering on this thing. It is beta, so every so often it or something, but we were able to turn those around when somebody has an issue with something or a feature request for the future, that kind of stuff. So it's been a actually quite a good beta process for us. And obviously, having some customers that know they've been banging on the downlink, which we haven't been able to supply in the past. So it's really good to see packets flying over that part of the network, too.

Next question comes from the line of Walter Piecyk with LightShed Partners.

In the filing a petition that you made to the FCC recently, you referenced basically this new satellite, this new constellation providing the essential foundation for a variety of new innovative direct-to-device satellite features on supported devices. Can you just kind of provide a little bit more color on what some of those new innovative features might be?

It's kind of the same answer I gave before. So obviously, we have a customer that -- or even a set of customers that are sensitive to kind of their feature road map or service launch timing and so forth. So the only thing that I think I could point to is just the satellite do have some new capabilities to them. And so I would expect that those will be used by our customers.

Is there a way to when you kind of conceptualize the market user demand, what that -- what those new innovative features address in terms of number of years before the consumer demands more? And does that -- how many years do you think basically, does that get you before you go to maybe Constellation 4 with potentially even greater and new features?

Gosh, projecting what the consumer is going to demand and what the price points are going to be kind of hard to do. I mean I've already talked a lot about the fact that there is a proven business model for broadband kind of Netflix and the mountains broadband out of coverage. Most people are in coverage, spend very little time out of coverage, except for maybe dead zones or something like that. So I think understanding that is something everybody is watching carefully. Certainly, there's some companies that are building kind of the field of dreams and the expectation that consumers will demand these services and they would be willing to spend significant amounts of incremental dollars. As you know, back in Qualcomm, we built a video service in 3G days called MediaFlow and it was an incremental cost to your service and limo drivers in Vegas loved it, but not that many other people are willing to pay extra for that kind of an incremental service. So maybe it's a little bit like that, how much will you pay for video service outside of coverage. I don't think that we've seen that, that model is proven at all. So until we see that, we see other kinds of demand. I think it's unknown. Obviously, there are investors who believe heavily in this and are investing heavily in this, but you and I have been through a number of these technology cycles. So it's not clear which ones take off and which ones don't. And I think what is proven is that there's clear benefit for safety and security, and it's being used, it's saving lives. That's good, whether there's -- people are willing to pay incremental dollars for more multimedia in their messaging not known yet. Obviously, we want to be able to serve those kinds of things, if necessary. And beyond that, I mean Globalstar and Iridium went bankrupt decades ago, trying to do voice and relatively low speed data outside of cellular coverage, now admitted that was with a separate device. But still, the demand was fairly nichey so I think that, that's a cautionary tale. And we've been through it as a company in the past. So I would say that we are quite focused on finding those parts of the business that are able to generate revenues and profitability that can fund constellations. Fortunately, we have the wholesale business, which does a very good job of funding the constellation. Others, I think, have to prove that their business model will do that.

I know it's still early, but is there any indication in terms of location of usage on the direct-to-device stuff, meaning that the often used example is the stranded hiker in the middle of Utah, but where I'm using it is in Westchester County, and it's helping me text on locations where have kept sulfates, do you have any -- even if it's anecdotal indication where the product can be used so far since being activated?

I mean the ones -- the anecdotes you hear are often around something where there's been a natural event or something where the self service has gone down over a wide area. And that makes sense because that's where there's a lot of people. Like even cellular dead zones are relatively small geographic region. So -- and certainly, uncovered areas are uncovered because not that many people go there. So you're not going to generate massive usage through that. You will provide peace of mind to people. I think that's super important. But then when you have sort of a a natural event, fire or some weather event. That's where you can see large numbers of people wanting to have some connectivity but obviously, that's very, very infrequent and relatively constrained geographical areas.

Maybe I'll ask the question in a different way. I don't disagree in terms of what the consumer might be willing to spend for that infrequent use at that time it's in that location. I guess have you -- and again, maybe you just don't see this data but has there been usage that has extended beyond just in the desert and beyond perhaps the things that I've been hitting here? I mean, is it being used in multiple locations? Or is it only being used in situations where there's been kind of like a power outage whatever it is national security or?

No, sorry, I didn't mean to say that it was only being used there. I think we have we have examples of people that got rescued from being in the mountains and things like that. So I think there is usage. And look, I think that the opportunity to charge a lot to somebody who's in need exists. I don't know whether it's the nicest thing to do, but kind of a onetime usage thing, but the question is, does that build a business model that supports billions of dollars of satellite constellation investment.

So one last one. Yes, sorry.

I was just going to say, I mean, the model that seems clear to me for any handset manufacturer is if they can reduce a replacement cycle time on a large volume, large installed base, that's real money, like small changes in the placement cycle time. So it's really, I think, the business model around having new features and a road map of new features is kind of a proven 1 that certainly can work. Obviously, the T-Mobile advertisement was the Super Bowl ad was talking about providing service to customers of other cellular networks. So there's -- clearly, they're looking to try and create some churn, whether that actually is something that can create churn. I don't know. That remains to be seen, but I'm personally a little skeptical of that. Just sort of given the fact that there are hundreds of millions of people that already have connectivity over our constellation. So all these things really do remain to be seen. There are some lessons that we can draw from history, and you and I have been at this long enough that we can draw these lessons.

Just one last one. Just kind of drawing upon your long history and as you pointed out my history as well. Iridian has talked about having their technology now that they've actually finally gone to the 3GPP standard, it goes into the chip and theoretically, that makes it easier for the Android world, Samsung, I guess, specifically to do for Samsung what you have effectively done for Apple. Is it as easy as it -- I don't want to put it on them that they describe it that I think is expected, meaning that, okay, you've got the standard Qualcomm stick it in the chip. It's available. Samsung says, yea or nay, and they just light it up, and there's no very little incremental cost and that they can implement relatively quickly to get Galaxy's with the same functionality that Apple has been able to achieve with you guys?

I guess I don't -- obviously don't know exactly what they are what they've done. I guess I would say NTN so the cellular standard is somewhat complex. It's certainly not as efficient because it was intended to extend off of existing protocols and existing chipset designs and so forth. So we've been looking at that quite carefully in terms of what -- how much overhead gets added by that and it's substantial. So that will then possibly require some additional follow-on changes to the standard to make that work better. And then I would also say that there's people out there talking about doing geo-based NTN services already. So I actually have not looked at it specifically, but that's what I believe the claim is for the the Google pixels that they have satellite capability from GEO. So they're going to LEO actually takes some additional effort that was put into some later parts of the standard the chip manufacturers that we've had some discussions with about that, there was extra work to be done. So it wasn't just a very simple thing to implement in the and the chips for -- to go from Geo to Leo also because you have the movement and so forth.

The next question comes from the line of Chris Quilty with Quilty Space.

Paul, can you explain to us what's going on with the big LEO MSS spectrum and some of the filings and deliberations there?

Yes. I think it's relatively simple that there are certain providers to have a spectrum solution, which is less than optimal, particularly those that are using mobile network operator spectrum. And there's all sorts of opportunity cost issues and potential interference issues because the beams are wide and make an overlap terrestrial networks and so forth. So I think there's just efforts by some other operators to find spectrum. And we're in a good position. We've been here for 30 years. using the spectrum, our spectrum has sort of the highest priority when it comes to coordination. And so I think we're in a good position, but there are those who see this position that have come in to this market later and they're trying to find any way that they could potentially get access to spectrum.

That was perfectly clear even in type.

Thanks.

Last question comes from Lyman Delano with Beck, Mack & Oliver.

I have three questions sort of related to the upcoming launches and you have 17 satellites coming from MDA beginning this year, I think it was the right to 9 additional satellites and all of that was to upgrade the current existing constellation. And then in February, earlier this month, you announced the new contract with MDA for the 50 Aurora satellites and I'm just sort of wondering is are these satellites? Are they related to the existing Constellation? Or would you say it's more of a new constellation. And then my final question is, if you could update us on the application made in Germany back with the ITU in December of 2020. Now it's over 4 years ago, and that was a later registered in May of '22. And the constellation was for 3,080 satellites and 10 orbital planes at 500 to 700 kilometers. And can you give us any color on what that is all about?

Okay. So the first question, just about the Aurora satellite. Yes, so that's -- I guess you can say that it's a new constellation but it is in the same altitude using the same spectrum and it works together with the satellites that are already out there. So there's ways that these satellites can inter-operate or cooperate with each other, and that's because we're controlling the -- both sets of satellites, and we can run the technologies over them. They're both been pipe style satellite. So that allows us to do a lot of stuff. So in terms of the filing in Germany, as we know, filings are something that are a lot of people make. It gives us some optionality, obviously, for larger constellations and so forth and had a regulatory Barbee Ponder can -- if you want, I can follow up with you and give you a little bit more detail, but it was really -- it's a question of just giving us optionality for the future.

One moment for -- we do have one more question. The next question comes from George Sutton with Craig Hallum.

Very nice to see the move forward with the 2-way device. So can you just talk about examples of 2-way use cases and what we might see there?

Yes. So I mean, the main thing for the 2-way is now that you can do commanding down so we can actually control things. I mean if it turned out you need to turn a valve or you need to make something respond. So if you're controlling something that's a remote asset, you can do that. Now it's not a real-time thing. It's still the same kind of packet delivery, we can get a little more throughput through it. And then as I look to the future, because we put additional processing capability built into the modem, one of the things that I like a lot is that you can imagine a remote at asset out in the field running a local program that's monitoring that asset, maybe some AI on the edge. And it could send an alert if it sees something out of normal operating parameters and then the system could then or the the company that's running that asset or monitoring that asset could then send back, okay, we need to know more, send us data on this or send us data on that or so forth. So you can sort of control it so that you can not have all assets sending all of their information, their sensor data back, you can just have it at the 1 that actually needs to be talked to and sensor data back can send it back, but most of the work can be done on the local processing. And that's an area that I'm super excited about and going forward.

Got you. And then I was certainly used by the presentation you had with Parsons at your Analyst Day. Can you, again, in the same kind of light, give us some sense of what kind of use cases they may be deploying with you? And how exactly will that go to market work?

Okay. So the go-to-market is through their channels. And obviously, we haven't been much of a government service provider in the past. And so we don't have all the same depth of relationships that somebody who's been in that area for a long time has so they are building a pipeline and they're -- they have their people that can do field support and so forth. So that's a great go-to-market strategy for us. It's another company that could come in, put their technology on the constellation because of the vent pipe and bring that to market. And we provide certain capabilities to them that they then leverage. And the use case, I can't say the specific things because I think we're actually finding more and more things, but I can't say what the first one that they came in was, but it is specifically to provide resilience of communication in RF challenged environments, which seems quite clear why the government would be interested in that kind of capability. So we're quite excited about it. The initial tests went off extremely well. It was quite easy for them to get their technology up and running, really very short period of time, then we did a lot of testing. And the process now is to be doing some of that work in other markets at this point. So all kind of moving ahead very well, and I think the relationship between the companies is extremely strong.

This concludes the question-and-answer session. I would now like to turn it back to Paul for closing remarks.