Inmarsat — Investor Day (October 2016)
32 slides from Inmarsat's investor day presentation, October 2016
Slide 1: Fundamentals and Dynamics of the Satellite Communications Business
FUNDAMENTALS AND DYNAMICS OF THE SATELLITE COMMUNICATIONS BUSINESS EUROCONSULT FOR INMARSAT CAPITAL MARKETS DAY 2016 Prepared by Pacome Revillon CEO INMARSAT CAPITAL MARKETS 2016
Slide 2: Euroconsult
EUROCONSULT www.euroconsult-ec.com INTERNATIONAL LEADER IN THE SPACE SECTOR FOR: Support to strategic decisions, market analysis, due Most extensive research diligence, independent available on each level of the assessments value chain Our due diligence missions have supported decisions on over $30b
Slide 3: Overview of the Business Model of Satellite Operators
OVERVIEW OF THE BUSINESS MODEL OF SATELLITE OPERATORS SNAPSHOT OF ORBITS AND FREQUENCIES FROM SATELLITE TO THE GROUND DYNAMICS OF SATCOM SERVICES AND VALUE CHAIN – FOCUS ON MOBILITY SEGMENTS SOME UPCOMING TECHNOLOGIES INMARSAT CAPITAL MARKETS 2016
Slide 4: Four pillars of the business of satellite operators
Four pillars of the business of satellite operators Spectrum Space infrastructure Satellite operator Solutions and Ground services segment INMARSAT CAPITAL MARKETS 2016
Slide 5: Satellite business lifecycle
Satellite business lifecycle Multiple steps to generate business through a satellite system: 1. Obtain spectrum rights for an orbital position, 2. Raise financing to build and launch the system, 3. Design and order the satellite, 4. Procure the launch service and have the satellite delivered into or
Slide 6: Economic model of a satellite operator
Economic model of a satellite operator PRODUCTION CAPABILITY OF THE ASSET(S) • Lifetime of the satellite • Capacity supply available REVENUES/COMMERCIAL PERFORMANCE Leasing of satellite capacity or airtime (usually >80% of revenues): • Volume of capacity leased, potentially expressed in: • Transmiss
Slide 7: Economic model of a satellite operator (continued)
Economic model of a satellite operator (continued) CAPITAL EXPENDITURE AS PRIMARY COST ITEM Capex range and efficiency • Space infrastructure capex primarily includes $US million m$/produced GHz • Satellite manufacturing, • Launch and • Launch insurance • Trend towards higher ground segment costs fo
Slide 8: Snapshot of Orbits and Frequencies
HIGH LEVEL VIEW OF THE BUSINESS MODEL OF SATELLITE OPERATORS SNAPSHOT OF ORBITS AND FREQUENCIES FROM SATELLITE TO THE GROUND DYNAMICS OF SATCOM SERVICES AND VALUE CHAIN – FOCUS ON MOBILITY SEGMENTS SOME UPCOMING TECHNOLOGIES INMARSAT CAPITAL MARKETS 2016
Slide 9: Overview of satellite orbits and properties
Overview of satellite orbits and properties GEO MEO Static In LEO motion In motion In motion (90 2-12h / min) by orbit 1.5h / orbit orbit 36 000 km 100-2,000 km 2,000-20,000 km NOTES: • Lower latency is a plus, but mostly for certain real time applications • It is otherwise one criteria among others
Slide 10: Myths and realities of risks to in-orbit infrastructure
Myths and realities of risks to in-orbit infrastructure GEO SATELLITES LEO SATELLITES Satellites launched / in orbit in the last ~330 SATELLITES ~1,000 SATELLITES 10 years Observed risks of total failure due to: Launch failures ~5% ~9% <1% - Thanks to redundancy of Depends on satellite type. Also ri
Slide 11: Why a very low risk of collision for GEO satellites?
Why a very low risk of collision for GEO satellites? • Any two GEO satellites are spaced at an average of ~75 km (45 miles) from one another • On Earth, these two GEO satellites (slightly smaller than red buses) would be separated by more than the diameter of Great London INMARSAT CAPITAL MARKETS 20
Slide 12: Overview of frequency bands for satellite communications
Overview of frequency bands for satellite communications SPECTRUM ANTENNA DOWNLINK AVAILABLE BY SENSITIVITY TYPE AND FREQUENCIES GEO ORBITAL TO RAIN FADE DIAMETER POSITION (mobility focus) Q/V-bands ~40-50 GHz >5GHz Pointed Pointed Ka-band ~20 GHz 3,500 MHz 0.6-1.2m ~12 GHz 500 MHz Pointed Ku-band 0
Slide 13: Spectrum rights – overview of the acquisition process
Spectrum rights – overview of the acquisition process In geostationary orbit: • Rights for different frequency bands are attached to orbital positions, • Access rights to a position first need to be granted by a national administration (NAD). • The operator will : 1. Make an application to the NAD (
Slide 14: Rationale for the move towards higher frequencies in FSS
Rationale for the move towards higher frequencies in FSS Larger spectrum can enable higher data rates Smaller and cheaper Smaller beams enable receiving antennas higher power and facilitates in particular for mobility frequency reuse segments Saturation of spectrum in certain bands and highly demand
Slide 15: Challenges come with new/higher frequencies in FSS
Challenges come with new/higher frequencies in FSS Higher sensitivity to rain fade can enable higher data rates Potentially more complex/costly satellites Often boosted by new especially in case of multi- usage, due to the inertia mission satellites or with of legacy satcom complex HTS design segmen
Slide 16: From Satellite to the Ground
OVERVIEW OF THE BUSINESS MODEL OF SATELLITE OPERATORS SNAPSHOT OF ORBITS AND FREQUENCIES FROM SATELLITE TO THE GROUND DYNAMICS OF SATCOM SERVICES AND VALUE CHAIN – FOCUS ON MOBILITY SEGMENTS SOME UPCOMING TECHNOLOGIES INMARSAT CAPITAL MARKETS 2016
Slide 17: Coverage, and notions of Regular and HTS payloads
Coverage, and notions of “Regular” and “HTS” payloads OVERVIEW OF REGULAR FSS REGULAR AND HTS CONCEPTS HTS SATELLITES SYSTEMS C-band, Ku-band, Ka-band Frequency Ku-band, Ka-band Throughput ~5-300+ Gbps, with frequency reuse ~1–10 Gbps capability in multiple spot beams ~$200–300m (including launch) T
Slide 18: Selected advantages & challenges of Regular and HTS systems
Selected advantages & challenges of Regular and HTS systems REGULAR SYSTEMS HTS SYSTEMS ADVANTAGES WITH LARGE COVERAGE ADVANTAGES • Preferred solution for point-to- • Higher bandwidth resulting in lower multipoint communication cost per bit • Increases chances of having • Should become preferred opt
Slide 19: Terminology and topology for satellite networks
Terminology and topology for satellite networks Typical “star” network Typical “mesh” network (All communications need to pass through a (Possibility of direct communications between central anchor station) user terminals) Mobile user 2 Mobile user 2 Mobile user 1 Mobile user 1 Central Anchor statio
Slide 20: Supply of raw vs. managed satellite capacity
Supply of raw vs. managed satellite capacity Raw satellite capacity, i.e. MHz Frequency band, Modulation, Spectrum efficiency Transmission power, (Mbps/MHz) Dependent on Antenna size, Mobility, Weather conditions etc. For FSS services, “Managed” satellite capacity typical range is in Mbps 1-2.5 Mbps
Slide 21: Focus on user terminals in the mobility satcom market
Focus on user terminals in the mobility satcom market MSS terminal Data rate Weight Cost (L-Band) M2M <10 kbps 0.1-1.9 kg $100-2,000 Handheld 2-60 kbps 0.2-0.3 kg $300-1,300 $1,300-7,000 Broadband 128-800 kpbs 10-30 kg $50-200k (Aero) VSATs Data rate Antenna size* Cost (C, Ku & Ka-band) (maritime) L
Slide 22: Satcom services: Much more than a communication link
Satcom services: Much more than a communication link IT/network/solution design Equipment integration, installation and maintenance. Increasing trend towards leasing equipment to end users. Connectivity management, with a service level agreement (SLA) and potentially different types of users and lin
Slide 23: Dynamics of Satcom Services and Value Chain
OVERVIEW OF THE BUSINESS MODEL OF SATELLITE OPERATORS SNAPSHOT OF ORBITS AND FREQUENCIES FROM SATELLITE TO THE GROUND DYNAMICS OF SATCOM SERVICES AND VALUE CHAIN – FOCUS ON MOBILITY SEGMENTS SOME UPCOMING TECHNOLOGIES INMARSAT CAPITAL MARKETS 2016
Slide 24: Satcom services value chain: Operation & service layers
Satcom services value chain: Operation & service layers “MSS” based services “FSS” based services Trend with Legacy Operators HTS systems Operation of satellite system / “raw” Service capacity leasing companies Operation of large ground segment (teleports/gateways) Connectivity service design / plat
Slide 25: Historical and future growth of mobile satcom
Historical and future growth of mobile satcom Terminals by type* No. of terminals VSAT > MSS is the historical mobile solution MSS BB&NB MSS HH > First large scale VSAT installations: Maritime market: 2005 MSS M2M Aero market: 2011 > MSS/VSAT migration for large users, VSAT taking a larger share of
Slide 26: Historical and future growth of mobile satcom (continued)
Historical and future growth of mobile satcom (continued) Terminals by vertical* No. of terminals > Land market: Aero > Dominated by M2M terminals Maritime > Huge M2M addressable market, strong growth potential Land > Maritime market: > Merchant shipping is the largest vertical Revenues evolution* >
Slide 27: Share of the mobility segments in MSS and FSS revenues
Share of the mobility segments in MSS and FSS revenues Mobility = on-the-move and transportable communication units 2006 - 2015 >95% <5% “MSS” based solutions “FSS” based solutions 2016 - 2025 >95% ~10-15% NOTE: % of relative total revenues of MSS and FSS. MSS and FSS services correspond to two sepa
Slide 28: Some Upcoming Technologies
OVERVIEW OF THE BUSINESS MODEL OF SATELLITE OPERATORS SNAPSHOT OF ORBITS AND FREQUENCIES FROM SATELLITE TO THE GROUND DYNAMICS OF SATCOM SERVICES AND VALUE CHAIN – FOCUS ON MOBILITY SEGMENTS SOME UPCOMING TECHNOLOGIES INMARSAT CAPITAL MARKETS 2016
Slide 29: Innovations for satellite assets: platforms and access to space
Selection of ongoing & future innovations for satellite assets Satellite platforms and access to space CURRENT/POTENTIAL WHAT IS IT? TYPE OF IMPACT ADOPTION* • Lower satellite mass Electric vs. Propulsion using Increasing use: • Lower launch cost chemical electric power from • ~30% of GEO comsats pr
Slide 30: Innovations for satellite assets: communication payloads and links
Selection of ongoing & future innovations for satellite assets Communication payloads and links CURRENT/POTENTIAL WHAT IS IT? TYPE OF IMPACT ADOPTION* • Flexibility (mesh Onboard • Relatively small Onboard routing of networks) digital • Should progressively uplink channels Reduced onboard processing
Slide 31: Sources
SOURCES Euroconsult research reports • High Throughput Satellites: Vertical Market Analysis & Forecasts • Mobile Satellite Communications Market Survey • Prospects for In-Flight Entertainment and Connectivity • Maritime Telecom Solutions by Satellite: Global Market Analysis & Forecasts • Satellite C
Slide 32: Contacts
CONTACTS Pacome Revillon, CEO revillon@euroconsult-ec.com Paris Office 86 Boulevard de Sebastopol 75003 Paris, France T: +33 1 49 23 75 30 www.euroconsult-ec.com INMARSAT CAPITAL MARKETS 2016