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THE SATELLITE VALUE CHAIN© Euroconsult 2017 - Unauthorized reproduction is a copyright violation

SATELLITE VALUE CHAIN: SNAPSHOT 2018

KEY TRENDS AND INDICATORS ON SUPPLY & DEMAND OF THE WORLD COMMERCIAL SATELLITE INDUSTRY – AN EXTRACT

A Euroconsult Executive Report

THE SATELLITE VALUE CHAIN© Euroconsult 2017 - Unauthorized reproduction is a copyright violation

THE BEST OF EUROCONSULT’S RESEARCH INTRODUCTION TO THE SATELLITE VALUE CHAINTHE VALUE CHAIN CONCEPTOVERVIEW OF THE COMMERCIAL SATELLITE VALUE CHAIN IN 2017THE THREE COMMERCIAL SATELLITE VALUE CHAINS – 2017 SNAPSHOTTHE THREE COMMERCIAL SATELLITE VALUE CHANS – 5 YEAR EVOLUTIONSELECTED TRENDS ALON THE VALUE CHAIN

SATELLITE MANUFACTURING & LAUNCH SERVICESFACTS AND FIGURES 2017KEY EVENTS 2018 – SATELLITE MANUFACTURINGKEY EVENTS 2018 – LAUNCH SERVICESSATELLITES LAUNCHED OVER THE DECADECOMMERCIAL SATELLITES LAUNCHED OVER THE DECADESATELLITES LAUNCHED IN 2018SATELLITE MANUFACTURINGGEO SATELLITE MANUFACTURINGSMALL SATELLITE MANUFACTURINGLAUNCH SERVICESLAUNCH RATEGEO LAUNCH SERVICESSTRATEGIC ISSUES

SATELLITE COMMUNICATIONS FACTS AND FIGURES 2017KEY EVENTS 2018SATELLITE OPERATORSSATELLITE OPERATORS – SATELLITE CONSTELLATIONSVIDEO SERVICESMOBILITYSERVICE PROVIDERS LANDSCAPESTRATEGIC ISSUES

EARTH OBSERVATIONFACTS AND FIGURES 2017KEY EVENTS 2018SATELLITE OPERATORSEO COMMERCIAL OPERATORS - PROFILESCOMMERCIAL DATA MARKETFREE- AND LOW-COST SOLUTIONSVALUE-ADDED SERVICESSTRATEGIC ISSUES

SATELLITE NAVIGATIONFACTS AND FIGURES 2017KEY EVENTS 2018GNSS SYSTEMSGNSS DEVICE MARKETGNSS SERVICE MARKETDRONESSELECTED GNSS MACROTRENDS STRATEGIC ISSUES

TABLE OF CONTENTS OF THE FULL REPORT

REPORT CONTENT COMES FROM:

• SATELLITES TO BE BUILT & LAUNCHED BY 2027• SATELLITE COMMUNICATIONS & BROADCASTING MARKETS SURVEY• SATELLITE-BASED EARTH OBSERVATION: MARKET PROSPECTS TO 2027• HIGH THROUGHPUT SATELLITES: VERTICAL MARKET ANALYSIS & FORECASTS• PROSPECTS FOR IN-FLIGHT ENTERTAINMENT & CONNECTIVITY• PROSPECTS FOR MARITIME SATELLITE COMMUNICATIONS• PROSPECTS FOR THE SMALL SATELLITE MARKET

THE EUROCONSULT GROUP

01\

INTRODUCTION TO THE SATELLITE VALUE CHAIN

The satellite industry is an infrastructure supplier to governmentagencies and commercial companies. It operates upstream of a valuechain that flows downstream to the end-users of satellite capabilities.

The satellite value chain permits the delivery of space-based servicesreliant on satellite technology, and includes a wide diversity ofstakeholders, active at five levels of the chain:

1. Government agencies who fund space technology R&D fortheir own uses and for dual-uses: public R&D efforts remainhighly concentrated in a limited number of countries;

2. The space industry (upstream) that includes a limited number ofplayers who design and manufacture space systems and theirlaunch vehicles;

3. The satellite operators who own the satellite systems andmarket their capacities to the service providers (downstream)who deliver communications, navigation and geographicinformation services to the final users by integrating the satellitesignal into packaged solutions;

4. Ground segment and terminal suppliers, who design anddeliver a large variety of software and equipment for both themanagement of satellite infrastructure, and for the access toservices by the users. Customers stand along the value chain;

5. The final users, whether governmental (civil/military) orcommercial (business or customer), do not ask for the satellitetechnology per se but for solutions tailored to their needs,whether for better communications, navigation or geographicinformation services.


THE VALUE CHAIN CONCEPT

LAUNCHER MANUFACTURING

SUBSYSTEMS

PRIME

SATELLITEMANUFACTURING

SUBSYSTEMS

PRIME

SATELLITE OPERATORS

LAUNCH SERVICES

MIL

ITA

RY

PU

BLI

C C

IVIL

BU

SIN

ESS

CO

NSU

MER

S

SATELLITE SERVICE PROVIDERS

UP

STR

EAM

DO

WN

STR

EAM

GROUND SEGMENT

SPACE AGENCIES

INVESTORS

INSURERS

REGULATORS

THE SATELLITE VALUE CHAIN © Euroconsult 2018 - Unauthorized reproduction is a copyright violation


OVERVIEW OF THE COMMERCIAL SATELLITE VALUE CHAIN IN 2017

5

02\

SATELLITE MANUFACTURING & LAUNCH SERVICES

7

$53 BillionLaunch market value over

the decade

$4 Billion2017 commercial

manufacturing revenues

330Smallsats launched in 2017

$174 BillionManufacturing market value

over the decade

… in 74launches

141 Satellites* launched in 2017…

203Commercial satellites

launched over the decade

$227 BillionMarket value for

manufacturing and launch over the decade

66%of smallsats launched in 2017

were for Earth Observation

93% 2017 launch success rate

* Satellites with launch mass >50 kg, excluding cargo and manned missions


FACTS AND FIGURES 2017

50% of all satellites launched in

2017 were commercial

7 2017 commercial GEO

satellites ordered

$1.5 Billion2017 commercial launch

revenues

Q1 Q2

JuneISRO entrusts its private sector to manufacture 27 satellites over 3 years

JanuaryÅAC Microtecacquires Clyde Space for $35,3 million


KEY EVENTS 2018 – SATELLITE MANUFACTURING

China will provide two GEO comsats to Nigeria against an equity stake in Nigcomsat

February

Q4

DARPA announces support for Telesatbroadband constellation

November

MarchLaunch of first two Starlinkprototypes for SpaceX’s internet communication constellation

EarthNow unveilsan EO mega-constellation project, withOneWebsynergies

May

Maxar considers leaving the GEO satellite manufacturing market

July

Q3

SeptemberEutelsat orders two all-electric GEO comsats from Airbus DS


June$130 million

USAF contract for the Falcon Heavy


KEY EVENTS 2018 – LAUNCH SERVICES

JanuaryFirst failure (partial) of Ariane 5 in over 15 years and 82 launches

Q1 Q2

The main US military launch provider, ULA, selects Vulcan BE-4 engine for its launch vehicle

September

AugustRussia suspends development of Proton Medium to accelerate the transition towards Angara

OctoberUSAF awards $2 billion in contracts to Blue Origin, Northrop Grumman and ULA to develop launch prototypes

Failure of the ZhuQue-1 maiden flight (first Chinese private launch vehicle)

Q3 Q4

Successful maiden flight of SpaceX’s Falcon Heavy

ISRO unveils the Small Satellite Launch Vehicle(SSLV)

February

Successful maiden flight of the upgraded Indian GSLV Mk. III

November


SATELLITES LAUNCHED BY APPLICATION (2008-2017)

Earth Observation(26%)

Satcom(43%)

Security(8%)

1020satellites

Science(5%)

Exploration (2%)

Navigation(11%)

Technology(5%)

# satellites

Commercial

Civil government

Military


SATELLITES LAUNCHED OVER THE DECADE

SATELLITES LAUNCHED BY CLIENT (2008-2017) SATELLITES LAUNCHED BY REGION OF OPERATORS (2008-2017)

Europe(15%)

1020satellites

North America(30%)

Latin America(2%)

Russia &Central Asia

(17%)

Middle East & Africa(4%)

Asia(32%)

• A total of 1020 satellites (>50kg) have been launched worldwide overthe decade by government agencies and commercial clients, i.e. anaverage of 102 units/year. The rise of small satellites and mega-constellations in the next 10 years will dramatically increase this number.

• Governments remain the first client of the space industry, accounting for68% of the 1020 satellites launched over the decade (i.e. 692 units). Withconstellation projects, commercial clients shall surpass governments interms of number of satellites launched (but not in value).

• Telecommunication is by far the largest application with 437 satelliteslaunched over 2008-2017, while Earth observation programs accountedfor 269 satellites. Together, these two applications represented 69% ofthe total. The remaining six applications accounted for 314 satellites.

• Over 2008-2017, Asia and North America combined accounted for 631satellites, predominantly for governments. On the commercial side,North America led worldwide commercial demand, with 168 satellites, ofwhich 53 in 2017 alone.

0

20

40

60

80

100

120

140

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017


03\

SATELLITE COMMUNICATIONS

-0.5% 5Y CAGR of

satellite capacity revenue

$12.2 Billion in FSS & MSS wholesale capacity

revenue

45FSS operators offer

satellite capacity

243 Millionsatellite pay-TV subscribers

$129 Billiontotal satellite services revenue

>42,100satellite TV channels

18satellite operators offering HTS

capacity

>2.5MFixed VSAT terminals

worldwide

12% growth of mobility service revenue

4.9 Million MSS terminals worldwide

$22.2 Billiontelecom services revenue




Hispasat invests in LEOSat, becoming the start-up’s second strategic investor, the other one being Sky Perfect JSAT

June

FebruaryAirbus, OneWeb, Delta Air Lines, Sprint, and Airtel found an alliance to develop and promote in-flight connectivity technology standards

Q1 Q2

JulyEchostar abandons its attempt to acquire Inmarsat for $3.2 billion

$ Yahsat’s acquisition of Thuraya establishes Yahsat as an integrated FSS-MSS operator with a dominant presence in the Middle East, Africa and Southwest Asia

August

OctoberC-Band Alliance formed, offering a way for satellite operators to monetize spectrum assets

Q3 Q4

Iridium completes launch of satellites for its NEXT constellation

December (anticipated)


KEY EVENTS 2018


North America(37%)

Latin America(7%)

Europe(18%)


Asia & Oceania(16%)

$1.48billion

North America(20%)

Latin America(13%)

Europe(19%)

Russia & Central Asia(4%)


Asia & Oceania(23%)

$10.8billion


SATELLITE OPERATORS – REVENUE

SATELLITE OPERATORS WHOLESALE REVENUE (2013-2017)

MSS REVENUE BY REGION (2017)

FSS REVENUE BY REGION (2017)$ in billion

FSS

MSS

• Satellite capacity is the primary revenue source for both FSS and MSSoperators. After the significant drop in revenues recorded in 2015 (morethan 5% decrease), total revenue from satellite operators has continued todecrease, falling by 0.5% in 2017, to $12.2 billion. The reduction was entirelydue to a decline in FSS operators’ revenue, which accounts for ~88% of totalrevenues.

• Following a period of limited growth for the FSS industry in recent years,revenues declined by -7% in 2015, -0.8% in 2016 and -0.7% in 2017, to $10.8billion. While the strengthening of the U.S. dollar explained a significant partof the decrease in 2015, it played a marginal role in recent years, with thedecline primarily driven by the fierce price competition throughout the yearwith the oversupply of regular satellite capacity, exacerbated by the rapidexpansion of HTS capacity.

• Total MSS revenue reached $1.48 billion in 2017, with 0.9% growth y-o-y.The speed of MSS operators to adapt to the new market environments (newproduct, new pricing, new distribution, etc.) has helped MSS operators tocontrol the churn to VSAT and terrestrial competitors.

0

2

4

6

8

10

12

14

2013 2014 2015 2016 2017

Oceans (5%)


04\

EARTH OBSERVATION

EARTH OBSERVATION


193Earth Observation satellites* launched

over the decade …

… by 36 countries (plus ESA)

$15.8 BillionEO manufacturing revenues

8%Annual growth in the market

$1.4 Billion2017 commercial data market

162Non-meteorology

satellites

31Meteorology

satellites

$3.2 Billion 2017 Commercial VAS market

$861 Million2017 Commercial data market for Defense

* Satellites with launch mass >50 kg


Iceye and Ursa VAS providers forge SAR data-sharing partnership; Iceyeraises $34 million for its SAR satellites

April NGA purchases a $14 million subscription for Planet’s Dove imagery

July

<$

JanuaryChinese commercial VHR operator Superview / Gaojin launches two 50cm resolution satellites

Q1 Q2 Q3 Q4

EARTH OBSERVATION

KEY EVENTS 2018

JuneMaxar creates new EO smallsatdivision

JulyAirbus DS

announces a partnership with Planet

Launch of the first Argentinian SAR SAOCOM satellite to complete the CSK constellation

October

NovemberThales Alenia Space and Telespazio invest in NorthStar Earth and Space

$


VALUE-ADDED SERVICES MARKET (BASELINE SCENARIO)(2013-2017)

Defense

Energy

Natural Resources

Infrastructure

Disaster Mgmt.

Env. Mon.

MaritimeLBS

$ USmillion

EARTH OBSERVATION

VALUE-ADDED SERVICES

• The VAS market is growing at 5Y CAGR of 7% and is now growing at afaster pace than the commercial data market (5Y CAGR of 5%).

• The emergence of the wider availability of data sources—including freedata—and more integrated, standardized offerings are expected tostimulate services growth.

• Historically, growth of the VAS market has been impacted by thefragmented nature of this sector, including by geography and areas ofexpertise (based on specific vertical markets). There are only a few trulyglobal actors.

• There are about 1,000 service companies worldwide, the majority withrevenues less than $2 million/year attributed to VAS. Other additionalbusiness lines include GIS software licensing and development, supportsatellite operations, and so on.

• In 2017, the market for value-added services (VAS) reached $3.2 billion.This does not include the purchase of commercial data in order to developsolutions. Commercial EO data sales totaled $1.4 billion.

• Key markets for VAS do not mirror those for commercial data sales. Toillustrate, defense, while representing 61% of the commercial data market,only represents 18% of the VAS market. Defense end-users purchase datawith much of the value-added analytics performed in-house.

• Conversely, infrastructure and engineering represent only 10% of thecommercial data market, but 25% of the value-added market. Lower-cost,coarser resolution and geolocation accuracy data can be leveraged withvalue-adding to form greater value products and services.

VALUE-ADDED SERVICES AND DATA MARKETS (2017)

Infrastructure (25%)

Disaster Management (5%)

Natural Res.(15%)

Energy(8%)

Environment (22%)

LBS(4%)

Finance(0,5%)

DATA$1.4 B

SERVICES$3.2 B

61%

6%

10%

4%

2%

10%

6%

1%

Maritime (2%)

Defense(18%)


05\

SATELLITE NAVIGATION



110Navigation satellites launched by governments between 2008 and 2017, including…

$3.2 Billion2017 global government expenditures for satellite navigation programmes

2.2 Billion2017 GNSS device shipments

36By Russia (GLONASS)

23By the EU (Galileo)

24By China (BeiDou)

$1.2 Billion2017 EU spending on Galileo

11GNSS satellites

launched in 2017

$119 Billion2017 GNSS global revenue…

…of which

33%in Asia Pacific


SeptemberThe U.S. Air Force announces the selection of Lockheed Martin to manufacture the new generation of GPS

The world’s first dual-frequency GNSS smartphone is launched by Xiaomi

May

JanuaryFor the first time, Galileo provides operational services for users, including positioning, navigation and timing information

Q1 Q2 Q3 Q4

China and Russia sign a cooperation agreement for the joint use of GLONASS and BeiDoufor peaceful purposes

October

NovemberThe U.S. Federal Communications Commission (FCC) rules that US devices may access Galileo signals. In the US, Galileo can be used in combination with GPS


KEY EVENTS 2018


0

2

4

6

8

10

12

14

16

18

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

0,0

500,0

1000,0

1500,0

2000,0

2500,0

3000,0

3500,0

4000,0

4500,0

5000,0

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

GOVERNMENT GNSS BUDGET BY SYSTEM (2008-2017)


GLOBAL NAVIGATION SATELLITE SYSTEMS (GNSS)

GNSS SATELLITES LAUNCHED (2008-2017)

GNSS SATELLITES LAUNCHED PER YEAR (2008-2017)

$ in billion

GPS

GLONASS

Galileo

QZSSBeiDou

IRNSS / NavIC

IRNSS / NavIC 8(7%)

GPS 15(14%)

GLONASS 36(33%)

110 satellites

BeiDou 24(22%)

Galileo 23(21%)

QZSS 4(4%)

GPS (US)GLONASS (RUS)

Galileo (EU)

QZSS (JPN)

BeiDou(CN)

IRNSS / NavIC(IND)

# satellites

• GNSS is the infrastructure allowing users via small electronic receivers todetermine their positioning, velocity and time by processing signals fromnavigation satellites. GNSS signals are sent by a number of satellite positioningsystems and satellite-based augmentation systems (SBAS). Global and regionalconstellations include GPS (US), GLONASS (Russia), Galileo (EU), BeiDou(China), IRNSS (India), and QZSS (Japan). The SBAS include WAAS, EGNOS, andGAGAN.

• At present, the US is developing the next-gen GPS 3F. Russia is moving toGLONASS-K2. Galileo, with the launch of 4 satellites in 2017 and 4 more in2018, is on track to achieve Full Operational Capability (FOC) by 2020. InNovember 2018, the US FCC approved the use of Galileo in US territory.China’s BeiDou is expected to reach global coverage by 2020, while IRNSS andQZSS are in deployment.

• Over the past decade, governments have launched 110 satellites: Russia (36),China (24), Europe (23), US (15), India (8), and Japan (4). In 2017, 11 navigationsatellites were launched: EU (4), China (2), Russia (1), Japan (3), and India (1).

• In 2017, global spending on SatNav reached $3.2 billion, growing at an 8% 10YCAGR from the $2.2 billion governments invested in 2008, but down from thehistoric peak of $4.6 billion in 2014. The cyclical spending over the decadecorresponds to GNSS deployment and replenishment phases.THE SATELLITE VALUE CHAIN

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EUROCONSULT RESEARCH REPORTS

Satellites to be Built & Launched by 2027

Satellite Communications and Broadcasting Markets Survey: Forecasts to 2027

Satellite-Based Earth Observation: Market Prospects to 2027

High Throughput Satellites: Vertical Market Analysis & Forecasts

Prospects for In-Flight Entertainment and Connectivity

Prospects for Maritime Satellite Communications

Prospects for the Small Satellite Market

RESEARCH USED TO COMPILE THIS REPORT

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RESEARCH


ABOUT EUROCONSULT GROUP

The Euroconsult Group has 30+ years of experience in the satellite sector and its related applications.

We have conducted 1,000+ missions for governments and commercial companies to support their strategic decision making.

1983Creation of

Euroconsult France

1985First research

product on the

space industry

1986First government

client

1996First edition of

the World Satellite

Business Week

2001First valuation

of a large

satellite

operator

1998First due

diligence

1999First MoD

client

2008Opening of

Euroconsult

Canada

2010Opening of

Euroconsult

USA

2014First edition

of LATSAT

2015Opening of

Japan office

2016Acquisition of a

majority share

In SATConsult

2006Opening of a

department

dedicated to

Earth observation

2015Opening of a

department

dedicated to aero

connectivity


EUROCONSULT: CONSULTING & RESEARCH

✓ FSS Operators: Benchmarks & Performance Review

✓ Prospects for Maritime Satellite Communications

✓ FSS Capacity Pricing Trends

✓ Database of Connected Aircraft

✓ Prospects for In-Flight Entertainment & Connectivity

✓ Prospects for the Small Satellite Market

✓ Satellite Communications & Broadcasting Markets Survey

✓ Prospects for Space Exploration

✓ Satellite-Based Earth Observation

✓ Satellites to be Built & Launched by 2027

✓ China Space Industry 2018

✓ Satellite Value Chain: Snapshot 2018

CONSULTING 2018 RESEARCH

Independent business case assessments •Pricing valuations • Revenue forecasts &DCF modeling • Feasibility study

DUE DILIGENCE

GOVERNMENT POLICY

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Policy & program evaluation • Impactassessments • Socio-economic & costbenefit analysis • Internationalbenchmarking and best practices

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Market analysis & forecasts • Competitive analysis & benchmarking • Customer surveys • SWOT assessment


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