Future Satellite Applications and Services in Brazil and Worldwide Blaine Curcio Senior Analyst, NSR Brasília, Brazil 17 September 2015

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1 Future Satellite Applications and Services in Brazil and Worldwide Blaine Curcio Senior Analyst, NSR Brasília, Brazil

2 Presentation Agenda About NSR The Market Today: How Much, Where, and What Kind? Future Markets for Traditional FSS Video Markets Remain the Key Revenue Generators Future Markets for GEO-HTS Data Applications Leading the Way Potential Future Markets for Non GEO-HTS Bigger Pie Due to Cheaper Slices? Bottom Line 2

Generators Future Markets for GEO-HTS Data Applications Leading the Way

3 About NSR NSR is a Global Leader in Satellite Market Research and Consulting Founded in 2000, NSR specializes in analysis of growth opportunities across the satellite industry Extensive Client Research, Consulting and Advisory Services Multi-Client Reports on Various Satellite Topics NSR s expert consultants are located globally and possess over 140 years of combined industry experience. Holistic approach to research enables NSR to anticipate trends with a higher degree of confidence and precision than the competition and stay ahead of the curve. 3

Satellite Topics NSR s expert consultants are located globally and possess over 140 years of combined industry experience. www.nsr.

4 NSR: Global in Reach, Local in Knowledge NSR features the most global presence of any satellite consulting/research company. With on the ground regional experience in established and emerging markets, NSR s multi-cultural and multi-lingual team provides industry-leading telecom market research and consulting delivering unique, actionable intelligence. 4

With on the ground regional experience in established and emerging markets, NSR s

5 The Market Today

6 The Market Today Where is the Demand? Traditional FSS Transponder Demand by Region, 2014 ~25% of traditional FSS demand from NAM/WEU SSA 7% Other 13% NAM 16% Highest growth regions remain at around 10% of the global market each SA 7% WEU 11% GEO-HTS is over 80% NAM/WEU Source : NSR EA 7% SEA 9% MENA 10% SAM 9% CEEU 11% Definite diversification in GEO-HTS markets moving forward GEO-HTS Gbps Bandwidth Demand by Region, 2014 SA 2% CEEU 2% SSA 1% SAM 2% Other 0% EA 2% SEA 6% MENA 5% WEU 8% Source : NSR An Evenly Spread Pie for FSS, But GEO-HTS Remains Largely North American NAM 74% 6

remain at around 10% of the global market each SA 7% WEU 11% GEO-HTS is over 80% NAM/WEU Source : NSR EA 7% SEA 9% MENA 10% SAM 9% CEEU 11%

7 The Traditional FSS Market Today Dominated by Video Traditional FSS Demand by Application, % 25% 50% 75% 100% Distribution DTH Enterprise Data Contribution & OUTV Gov/Mil Telephony & Carrier Source : NSR Commercial Mobility Broadband Access 7

100% Distribution DTH Enterprise Data Contribution & OUTV

8 The GEO-HTS Market Today Source: SatCom Post Source: Thaicom Source: SatCom Resources Source: Eutelsat Source: Avanti Source: YahSat Different Offerings in Different Regions with Different Target Markets 8

9 The Market Tomorrow

10 Future Satellite Applications Where Is Growth At the Highest Level? $6.5B in revenue growth across all types of capacity to 2024 Over $4B from GEO-HTS and Non GEO-HTS But what applications are driving future use? Revenue Growth by Application to 2024, All Traditional FSS and HTS Capacity Distribution 7% Enterprise Data 12% Commercial Mobility 29% DTH 14% Source : NSR Gov/Mil 17% Broadband Access 20% 10

what applications are driving future use?

Demand Growth in ALL Markets FSS & GEO- HTS Demand Growth to 2024 FSS HTS FSS HTS NAM + 90 TPEs + 814 Gbps CAMCB + 50 TPEs + 25 Gbps FSS HTS FSS HTS SAM + 54 TPEs + 95 Gbps WEU + 220 TPEs + 129 Gbps

11 Demand Growth in ALL Markets FSS & GEO- HTS Demand Growth to 2024 FSS HTS FSS HTS NAM + 90 TPEs Gbps CAMCB + 50 TPEs + 25 Gbps FSS HTS FSS HTS SAM + 54 TPEs + 95 Gbps WEU TPEs Gbps FSS HTS FSS HTS SSA TPEs + 38 Gbps FSS HTS MENA TPEs + 52 Gbps CEEU TPEs + 33 Gbps FSS HTS SA TPEs + 24 Gbps FSS HTS FSS HTS EA TPEs + 28 Gbps SEA TPEs Gbps FSS Demand (C, Ku, Ka) spread out fairly evenly GEO-HTS demand to see significant demand from NAM, WEU, and SEA (NBN), but South America will lead all other regions Non GEO-HTS not included above 11

Gbps FSS HTS SA + 104 TPEs + 24 Gbps FSS HTS FSS HTS EA + 106 TPEs + 28 Gbps SEA + 123 TPEs + 126 Gbps FSS Demand (C, Ku, Ka) spread out fairly

12 Commercial Mobility Aero & Maritime Leading the Way Mobility applications to contribute nearly $2B in new revenues by 2024 In-flight connectivity has been a huge hit, and the ceiling is a long way to go Crew welfare, asset monitoring, and M2M are driving maritime, helping contribute strong C- band demand as well as higher frequency bands Commercial Mobility Global Revenue Growth, Traditional FSS Revenues $620 30% GEO/Non GEO- HTS Revenues $1,446 70% Source : NSR 12

and M2M are driving maritime, helping contribute strong C- band demand as well as higher frequency bands Commercial

13 BYOD: Fueling Mobility SATCOM Revenues By 2023, $5 out of $10 in Retail Mobility Revenues will be from the Maritime Market, 7 out of 10 In-service Units will be on Land, and 9 out of 10 Terminals will be L-band. 13

the Maritime Market, 7 out of 10 In-service Units

14 In-service Units US$ Millions Revenues ($millions) 2º Seminário de Gestão do Espectro: Uma Visão de Futuro Enterprise Data VSATs, Backhaul, & Trunking Enterprise Data Revenue Change by Capacity Type, $600 $400 $200 $0 C-band -$318.1M Ka-band $89.8 Ku-band $247.9 Non-GEO $349.2 GEO-HTS $493.9 Total HTS Revenue increase: $843M Total Traditional FSS Revenue increase: $18M -$200 -$400 Biggest revenue increases to come from GEO-HTS Part EpicNG migration, but largely new demand Big opportunities in emerging markets for VSAT and Backhaul and Trunking, with Video Offload remaining a wildcard Global Video Offload via Satellite Market 1,500 1, In-service Units Revenues Source : NSR Source : NSR Source : NSR 14

9 Total HTS Revenue increase: $843M Total Traditional FSS Revenue increase: $18M -$200 -$400 Biggest revenue increases to come from GEO-HTS Part EpicNG migration, but largely new demand Big

15 Gov/Mil PrideSats Increasing their Presence Gov/Mil continues to be uncertain Budget cuts, shorterterm contracts, but optimism on the horizon Shorter-term contracts=higher revenues and higher per bit pricing Evolution of end user requirements Country Project Timeframe United States, Denmark, Netherlands, Australia, and others Brazil WGS widebeam Ka-band network of satellites for Gov/Mil use SGDC-1 GEO-HTS payload to be used for military & USO/broadband purposes 2007-current Japan 2x X-band military payloads Italy/France ATHENA-FIDUS Italy Sicral-1B payload also leased to Poland Turkey Göktürk

Australia, and others Brazil WGS widebeam Ka-band network of satellites for Gov/Mil use SGDC-1 GEO-HTS payload to be used for military & USO/broadband purposes

developing markets Indian growth story is slowing markedly, lots of

16 DTH Markets Growth from Multiple Fronts Content is king UHD to push up revenues in developed regions, and potentially serve as a differentiator for developing markets Indian growth story is slowing markedly, lots of inactives and low ARPUs. Does this bode poorly for other markets? Source: The Guardian 16

offer sufficient ARPUs for business cases this could potentially be removed with a

17 Broadband Markets More than Just North America Broadband via Satellite becoming viable in more regions Price remains the biggest stumbling block not many developing countries offer sufficient ARPUs for business cases this could potentially be removed with a LEO-HTS constellation targeting broadband, such as OneWeb, SpaceX Constellation, LeoSat, etc. 17

18 HTS Business Model Discussion

2014: Seeing Some Transition 3 % 10 % 23 % Commercial Mobility - $0.4B Cream on Top? More than Just Bandwidth? Government & Military - $1.3B Glory Days Behind Us?

19 2014: Seeing Some Transition 3 % 10 % 23 % Commercial Mobility - $0.4B Cream on Top? More than Just Bandwidth? Government & Military - $1.3B Glory Days Behind Us? More Conflicts = More Revenues? 64 % Data Services - $2.9B Can You Hear Me Yet? Internet for all? 2014 Capacity Revenues for FSS & HTS Video - $8.3B Watching the Big Game? More Homes? 19

More Conflicts = More Revenues? 64 % Data Services - $2.9B Can You Hear Me Yet?

20 Capacity Revenues 2º Seminário de Gestão do Espectro: Uma Visão de Futuro From Cream & Sugar to Bigger Cups & Lattes $13B 3 % 7% $16B $20B 12 % 13 % 10 % 23% 10 % 24 % 25 % 64% 59 % 50 % Traditional Markets to Data-Centric Plays The crème on top is where the new opportunities come from 20

10 % 23% 10 % 24 % 25 % 64% 59 % 50 % 2014 2019 2024 Traditional Markets to

21 GEO & Non GEO-HTS: Establishing New Markets and New Opportunities ViaSat and Eutelsat enter first-of-a-kind agreement to link High Capacity Ka-band Satellite Networks 21

22 Where Will GEO-HTS Revenues be Generated? Aero Enterprise VSAT Backhaul Consumer Broadband Maritime Military Energy Video? 22

23 HTS and Constellations Past, Present & Future System Orbit Launch Date Years to Launch Satellites Bit Rate Throughput (Gbps) Services Iridium LEO ** 72+ Low N/A Telephony, Data Globalstar LEO ** 52+ Low N/A Telephony, Data Orbcomm LEO *** 30+ Low N/A Data ICO MEO Low N/A Telephony, Data Skybridge LEO 1998 N/A 80+ High N/A Data Teledesic LEO 1990s N/A 280+ High N/A Data O3b MEO High Data, Backhaul OneWeb LEO ** 640-2,400 High 6,000 Data, Backhaul SpaceX LEO ** 4,000+ High 8,000+? Data, Backhaul COMMStellation LEO 2015? 2-3** 75+ High? N/A Data Ximwei LEO 2019? N/A 30+ High? N/A Data, Voice? LeoSat LEO ** High? 1,000-2,000 Laser Light MEO 2018 N/A 8 High? N/A Data Even one constellation needs more launcher capability than is available right now Any constellations will result in Bubble for Backhaul" more than other user segments Will the Iridium of Broadband follow its predecessor 23

24 US$ Millions 2º Seminário de Gestão do Espectro: Uma Visão de Futuro Non GEO-HTS Market Assessment 2019 as an Inflection Point Global Revenues for Leased Non-GEO-HTS Bandwidth by Application $1,500 $1,000 $500 $ Distribution DTH Contribution & OUTV Telephony & Carrier Enterprise Data Broadband Access Commercial Mobility Gov/Mil Pricing to be negatively impacted by 2019 supply glut particularly in Enterprise Data Non GEO-HTS to target broadband specifically, and to generate around $500M of revenues by 2024 If you build it, they will come, but is it a profitable business case? 24

25 USD Millions 2º Seminário de Gestão do Espectro: Uma Visão de Futuro GEO-HTS Cannibalization or Growing the Pie? IPSTAR is taking a larger share...of a bigger pie Thaicom Revenues, $300 $250 $200 $150 $100 $50 $ Source : NSR Traditional FSS Revenue IPSTAR Revenue 25

26 Bottom Line

27 Bottom Line GEO-HTS will provide the best opportunities to create new markets moving forward, frequency reuse unlocks new markets through increased bandwidth efficiency. Traditional FSS to see demand increase incrementally in some areas, though overall much more limited opportunities O3b business case continues to pick up steam, with entry of a potential LEO-HTS constellation looming in the medium-term Overall, around $6.5 billion in new revenue by 2024, for a CAGR of around 3.5%. 27

28 Questions? September 17, 2015 Blaine Curcio, Senior Analyst

29 Contact NSR U.S. Office Northern Sky Research, LLC, 1000 N. West St. Suite 1200 Wilmington, DE Phone: Fax: Online Web:

2 What Services for What Airframes

2 What Services for What Airframes The In-Flight Connectivity Market: A Boom for the Satellite Industry? ASSESSING THE OPPORTUNITY FOR SATELLITE CONNECTIVITY ON AIRPLANES October 9, 2013 Christopher Baugh, President Claude Rousseau, Senior