Embracing our industry in full transitionPres… · Improvements in satellite technology and...

Embracingourindustryinfulltransition

JohnFinneyDec5,2017

proprietary

ThesatelliteindustryisstagnatingespeciallyinfixedsegmentandthisalreadyimpactstheEBITDA

Confidentialproperty 1

Satelliteindustryrevenueevolution,USDbillion

2017YTD

66%73%-6%

74%

2014

72%

20162015

EBITDAmarginsoftop5players,%

12.3 12.4 11.2

4.8 5.5 6.2

17.9

2014

17.1

-3%

2015

17.4

2016

TransponderAgreements(2)ManagedServices(1)

Consumer

5.0

3.6

4.64.2

3.43.31.8

2015

1.9

2014

9.99.3

+7%

10.6

2.0

2016

Mobile SatelliteRadioSatelliteBB

FixedCapacity

Consumersegmentshowsahighgrowthwhereasfixedsegmentshrinks

…andEBITDAmarginsoftopplayersareunderpressure

1)IncludesVSAT,mobility,andin-flightconnectivity,2)IncludescapacityforDTHsatelliteTVandsomemobilityserviceplatformsSource:SatelliteIndustryAssociation(SIA),Companies’AnnualReports,Strategy&analysis

• Evolvingvideo/datarevenuemix

• StagnatingDTHrevenues

• Inherentlowermarginsondata

Satelliteservices:USD120bn vs.USD5.6trillion

interrestrial

proprietary

Whileeveryonetakesconnectivityforgranted,substantialvariationexistsininternetusageacrossregions…


75- 100

50- 75

25- 50

0- 25

TheAmericas65%

Europe79%

Africa15%

ArabStates42%

Asia&Pacific42%

CIS67%

Worldwideinternetusage,2016%ofindividualsusinginternet

KeyFacts

• Bytheendof2016,53%ofworld’spopulationisoffline

• 9millionhouseholdsinEuropestillremainunconnected

• Fixedbroadbandpenetrationremainsatbelow1% inAfrica

Worldwidedigitaldivideheatmap

Source:InternationalTelecommunicationUnion(ITU),ESOA,Strategy&analysis

proprietary

…andeveninmaturecountriesmanyhouseholdsarelackinghighspeedbroadband


EventerritoriesasdevelopedasCaliforniastillhaveunder-servedandun-served“whitespots”

Digitaldividecasesinmaturecountries

States >4Mbps >10Mbps

Delaware 98% 86%

NewYork 93% 77%

Arkansas 81% 47%

%oftotalHouseholdswithBBintheUS

75- 100

70- 75

65- 70

0- 65

ServedUnder-servedUn-served

Broadbandavailability(California)

Thereisalsovariationininternetspeedacrossregions

Fastbroadband(30Mbpsorhigher)CoverageinScotland

Scotland

SubstantialvariationexistsinfastbroadbandcoverageinScotland

Note:2015figures,126millionhouseholdsintheUSin2016,Source:CaliforniaPublicUtilitiesCommission,USNationalTelecommunicationsandInformationAdministration,Akamai– “StateofInternet”,Thinkbroadband,Statista,Strategy&analysis

Poorlyconnected:

16millionUShouseholds

proprietary

However,connectivityplaysanincreasingroleinpublicandpersonalmobility andIoT enabledapplications


DemandforConnectivity

Anywhere Anytime

Anycontent Anyspeed

• Globalizedeconomywithcross-border commercialrelationsdemandingconnectivity

• Airtravelisexpectedtodoublein20yearswithgrowingpassengerdemandforbandwidth

• Moreandmorepeoplearetravellingwithcruises• Moremaritimeroutesareopening

• Millennialsdemandthesamedigitalexperiencethroughhigh-speedconnectivity

• Globaleconomyneverstops• Digitalenablede-commerceleadingtocomplexsupply

chainandlogistics• Increasingneedfortrackinggoodsandpeopleatany

timeleadingtonumerousIoT appsandusecases

• Consumptionpatternevolvedtowardsrichcontentsuchas (e.g.videoandaugmentedreality)

TheCoolShipTheAugmentedManual HighspeedWidecoverageDesignantennasAugmented

realityappasausermanual

TheProductiveShip

FullyoptimizedsupplychainReal-timetracking

ConnectedHelmet

Connectivitydrivers

Source:Strategy&analysis

proprietary

AlreadytodayweseeIoT enabledapplicationsthataretransformingthetraditionalmobility


Land

Entertainment

Monitoring&softwareupdates

Navigation

Safety&security

Smartphoneintegration

• Fleetmanagement• Remotetracking• Drivingassistance

Weatherreports

CARGO CARGO

CARGO

Tracking&Monitoring

High-speedWi-Fi

AISsystem

PassengerEntertainment

Onboardsales&services

Onlineauction

Reporting

• Enginemonitoring• Tracingoffishingvessels• Assistingcaptain

ConstantEngineMonitoring

ConnectingFlightInfo

ElectronicFlightBag

Real-timeWeatherReports

PassengerEntertainmentPassenger

WiFi access

• Inflightrepairreport• Inflightmealchoice• Real-timecardprocessing

SampleIoT enabledapplications


proprietary

Thereareevenmassmarketapplicationswhichfavoursatelliteoverterrestrialtechnologyforconnectivity


Geo-Localization DTH SatelliteRadio

KeyFacts&Figures

• Accuracyingeo-localization• Globalcoverageandcontinuous

geo-localization

• Covering450cities• 50millionriders and1millionrides

onaverage

BenefitofSatellite

• Majorsourceofgeo-localizationforfitnessappsissatellites

Examples of fitness applications

2016

31%

75%

2015

28%

2014

71% 75%

24%

PenetrationrateofSiriusxmSatelliteradiointheUS

UsedcarssoldNewcars

Longtermagreementswithmajorautomakersthrough2020

Satellitetechnologyensures:• Widecoverageandcontinuous

connectivity• Protectionagainstfrequency

interferences

DTHLiveTVathomethroughsatellites

DTHworldwidepenetrationrate

…9% 9%

12% 15% 15%

8%

2012 2015

21% 23%

2016

24%

PayDTH FreeDTH

Singlegeosatellitecoversupto35%ofearth)whichallowscompetitivelypricedDTHservices

Majormassmarketapplicationstoday

Source:Uber,Sirius-XMAnnualReports,Statista,Strategy&analysis

XM-Siriusrevenues

USD5Billion

proprietary

Untilrecentlysatelliteindustryhasfocusedonusecaseswithverycleareconomicbenefitsofthebroadcastingfeature


• Continentalorregionalcoveragefromsingleorbitallocation

• Widecoverageprovidesflexibilitytoservedemandanywhereincoveragearea

• Costeffectiveforbroadcaster/end-user• DeployingbroadbandinlargeterritorieswithdispersedpopulationsissignificantlyhigherthanbroadcastingTVthroughsatellite

WideCoverage

HigherAffordability

LowCapex

• One-offcapexinvestmentvs.accumulatedcapexinvestmentinterrestrialbackhaul

• Themoreruraltheregionthelesscosteffectivetheterrestrialbackhaulbecomes

LowTimetoMarket

• Unifieddeploymentvs.stagedterrestrialdeploymentbymultipleunsynchronizedparties

Industryorganizeditselfaroundthekeyleversas:

• Pureconnectivityproviderfordifferentverticals(e.g.enterprisemaritime,O&G)

• Directselltobroadcasters(e.g.DTH,satelliteradio)

• Simpleserviceprovision(e.g.reselling/retailing,billing,gatewayconnectivitytofiber,installation,maintenance)

Keylevers Description Ways-to-play


proprietary

2011-2017InstalledCapacityHighestgrowthscenario,HTSthroughput,Tbps

After10yearsofdeployment

5.06.3

2025

67.8

20172015

0.6

2013

0.3 0.8

2012

0.5 1.91.7

2011 2014

0.2

56.5

2016

1.20.2

Improvementsinsatellitetechnologyandavailabilityofspectrumnowenablestheproductionoflargeconstellations


2025InstalledCapacityForecastHighestgrowthscenario,HTSthroughput,Tbps

Whilemuchofthiscapacityisstillin

planningphase,itislikelytocausemajormarketdisruptionwithlowpricecapacity

A smaller,cheaperandfastermodeofproduction

• Needfor“cheaper,replaceableandlowerlifetime”tokeepupwithrapiddigitization

RapidDigitization

• Advancedindigital payloadtechnologyenabledfrequencyreuse

• Gimbaledtechnologyenabledlowerorbitcommunicationssatellitetocomealive

AdvancesinManufacturing

• Inanever-connectedworld,usersaskforfasterdatatransferandlowlatency

Search forreducinglatency

• LargequantityofuntappedspectruminMEOandLEOinKa andKu,andsooninQ/Vbandopensuppossibilities

Availabilityofspectrum

Beyond2025

ThisshouldleadtosmallSats allowingquickadaptationandtrackingdemandmoreclosely

KeydriversfornewHTS/constellationprojects Futurescenarioonsatellitesupply

Potentialof400– 700Tbps

Beyond2025Assumptions:30GHzinKu,Ka,Q,Vbands,30Kbeamstocovertheearth,frequencyreusefactorof3.5and2bitsperhertz,therangereflectsconstellationoperationalefficiencySource:BusinessInsider.nl,Spacenews,SpaceIntelReport,CISCOVNI,Strategy&analysis

vs.858Tbps in2021interrestrial

LEOHTS

GEOMEOHTS

proprietary

FuturevaluepropositionswillbebasedonGEO,MEO,LEOoramixthereof

December4,2017Confidentialproperty 9

GEO MEO LEO

L/C/Ku/Ka bandLargeSatellite(1)HighCapExperbit

Ku/Ka bandVeryLargeSatellite(1)LowerCapEx perbit

Ka bandsmallerSatellites(12-24)LowCapEx perbit

L/Ku/ka bandsmalltoverysmallsatellites(>800)LowCapEx perbit

Futurevaluepropositionsofsatelliteorbits


GEO:“WideRangeBroadcasting”• LowequipmentCAPEX• Largechoiceofequipment• Masscoverageforbroadcasting

MEO:“High-performanceconnectivity”• High throughputwithlowlatency• Nearglobaluniformcoverage• LowOPEX

LEO:“BroadbandforEveryone”• Highthroughputwithverylowlatency• Globalcoverage• LowOPEX

GEO:Trunking,Enterprise,Government,ConsumerBroadbandinternet,aero,maritime,O&G,emergency

MEO:Enterprise,Backhaul,maritime,energy,aero,Government/NGO,trunking,mobility

LEO:Broadbandinternet,backhaul,NGO,government,aero,maritime,O&G,vehicles,schools,mom&pop st.

Valueproposition

Majorapplications

proprietary

Chipmaker Terminal EquipmentManufacturer

User/MNO

User/FMCG Broadband operator

Non-satelliteplayers(Cocacola,Qualcomm)haveunderstoodthehugepotentialandstartedtoinvestintoHTS


NewClassofInvestorsarelookingformarketopportunities

Strategicinvestorsinsatelliteindustry

PrivilegedaccessTerminalSales

25millionpointofsalesaroundtheglobe,includingremote ruralareas

InvestsinOneWeb tobridgethedigitaldivide toexpanditsreach

Establishekocentres inAfricatosellsoftdrinksandprovideconnectivity

CocaColaplanstoempower5millionwomenby2020

Connectivity willenablewomentosupplementbusiness(e.g.cashregisterwithiPad)

70%Hasnoaccesstointernet

India’sDigitalDivide

1.4%Hasfixedbroadband

50%Mobileunconnected

Bhartiairtel investsinsatelliteindustrytoprovideaccesstoaffordablehighspeedconnectivityforallIndianswhoareunconnected

Inthenearfuture,anyBhartiuserwillroamontothesatellite networkwhenwalkingnearaterminal

TheconnectedMom&PopStore

Source:ITU,Oneweb,Bharti,Spacenews,Coca-Cola,Strategy&analysis

proprietary

Theindustryiscurrentlyfocusingonhighvaluesegmentswhereasmassmarketsofferhighgrowthpotential


Valuesegmentationofsatelliteopportunities

Highvaluesegments

MassMarket

Traditionalsegments

AirlinesSuperYachtCruiseshipsBusinessjetsGov.Military

Consumerhigh- speedbroadband

IoT enabledapps

MobilityEnterprisebroadband

Governmentaeronautical

landandmaritime

Connectedcar5G

Untap

pedpo

tential

Curren

tFocus

Lowervalue/highervolumesegment

DTHandintheUSsatelliteradioaregoodexceptions

SmartVillage


>30BillionIoTdevicesby2020

proprietary

Entertainment High-speedWi-Fi

Thesatelliteindustrystillneedstoadaptitsgotomarkettoseizethehugepotentialoflatentdemand


Keygrowthdriversacrossvaluechain

SatelliteOperators

ServiceProviders

PointofService

Endusers

EngineMonitoring

RepairReport

Real-timeProcessing

ElectronicFlightBag

Entertainment


High-speedWi-Fi

TrackingReporting

RemoteControl


AutomatedTollCollection

HomeSmartLighting

Water&ElectricityInfrastructureMetering

Enduserscareabout:• Competitivepricing

• Easyinstallation/connectivity

• Lowmaintenance costs

• Lowpower consumption

• Continuity ofservice

• Suitablelatency, coverage,throughput

Pointofserviceownersareinterestedin:• Costeffectiveservice

• Easyintegration

• Flexiblecommercial schemes

• FlexibleaccesstomultipleQoS

• Future-proofaccesstechnology


SmartVillage

ServiceProvider

GEO

MEO

LEO

ILLUSTRATIVE

proprietary

Newserviceofferingshavethepotentialtochangeperspectiveonsatelliteandcreateaparadigmshift


Keygrowthdriversacrossvaluechain

SatelliteOperators

ServiceProviders

PointofService

Endusers

GEO

MEO

LEO

Satelliteoperatorsneedavailabilityof:• Lowercostandsmallersizehighthroughputterminalsto

bridgesupplygap

• Equallydisruptive groundsystems

• Distributionofchannelmatchingwithmassmarket

Serviceprovidersshould:• Becomesatelliteagnostic

• Haveaccesstocheapcapacity

• Understandverticalneeds

• Keepinventory ofterminals

• OfferchipreceiversallowingswitchingbetweenLTEandSAT

Inthenearfuture,

MNOscouldgointothismarketandaddresstheneedsforhybridconnectivityofferingSATandLTEcoverage

MNOsServiceProvider

Entertainment High-speedWi-Fi

EngineMonitoring

RepairReport

Real-timeProcessing

ElectronicFlightBag

Entertainment


High-speedWi-Fi

TrackingReporting

RemoteControl


AutomatedTollCollection

HomeSmartLighting

Water&ElectricityInfrastructureMetering


SmartVillage

ILLUSTRATIVE

proprietary

Serviceproviderscouldapplyavarietyofflexibleschemestoservedifferentconsumptionneeds

Innovativeschemes

Flexible commercial schemes

Flexibleaccesstocapacity

Capacityprioritizationbasedonlatencydemand

Widecoverage(roaming)

FlexiblecommercialschemesEntry-LevelLow Usage

AdvancedHigh Usage

Pay-as-you-go

Per MB

Per Minute

Charge on data consumption basis

Charge on time consumption basis

Time-based Pricing

DailyDay / Night

timeWeek /

WeekendMonthly

Charged on a per day basis

Special tariffs and data bundles for different periods

Hour or Data

Volume Pricing

Monthly Hour Volume

Monthly Data Volume

“Unlimited”

Provide set number of hours during a month

Provide set data capacity during a month

Provide unlimited data with fair usage policy

• Roamingwithinspotbeamsofoneoperator

• Roamingacrossmultiple operators/differentregions

Flexibleroamingschemes



proprietary

Theindustryneedstogetitsacttogetherandcontinueinnovateinthewholevaluechain


Keytakeawaysforthesatelliteindustry

Satellitebydefault,fallbackonterrestrial

1

2

3 A paradigm shift is looming in the perception of satellite for many use cases

Industry is stagnating whereas there is huge latent demand and satellite operators are already preparing huge capacity increase

Industry should come up with new commercial schemes and terminal technology, with the buy-in of external strategic investors

Don’tfearit,embraceit

Embracing our industry in full transitionPres… · Improvements in satellite technology and...

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