Globalstar has reported a slow but steady increase in both voice and data traffic, with a broadening base of new customers among key industry targets for the quarter ended June 30, 2001. However, efforts to restructure the company are continuing with the assistance of outside advisors.

During the quarter Globalstar's marketing and sales efforts began to show growing acceptance of the service across industries and government organizations around the world with key business operational measurements – minutes of use (MOUs) and subscriber numbers – rising 33% over the previous quarter to a total of 5.4 million minutes of use (MOUs), including both mobile and fixed service.

The estimated number of mobile and fixed subscribers at the end of June was 51,600, an increase of 27% from the previous quarter. As of the end of July, there were approximately 55,000 subscribers registered on the Globalstar system.

Most major Globalstar markets continued to record strong increases in MOUs over the previous quarter, including Russia (up 95%), the U.S. (up 43%) and Brazil (up 95%). In Venezuela, MOU's rose over 300% with the installation of dozens of fixed phone units in remote communities, with each phone generating exceptionally high usage.

"Globalstar still has much work still to do in order to make this business a success, said Olof Lundberg, chairman of Globalstar, "but it is very encouraging to see that, even in this difficult environment, our customer base and minutes of use continue to grow.

"Our sales and marketing efforts are continuing, and we expect to ramp up these efforts considerably once our restructuring work is completed."

"We would expect a restructured Globalstar to have a lower operating cost base, a shorter route to our customers with non-exclusive distribution, and the gateway network integrated into this single organization.

"We are looking toward having new pricing packages and over time also new products tailored to market segments we have not reached well so far.

"Our new 2 GHz license and the recently-initiated new FCC rulemaking process promises more flexibility in the provision of MSS services which opens up exciting avenues for us for the future.

"Our ability to aggressively execute a new plan for Globalstar depends, however, on our success in finding new strategic investors," said Lundberg.