Inmarsat — Investor Day (October 2016)
79 slides from Inmarsat's investor day presentation, Oct 7, 2016
Slide 1: Capital Markets Day 2016
INMARSAT > Capital Markets Day 2016 Capital Markets Day 2016 7 October 2016
Slide 2: Disclaimer
Disclaimer This presentation contains forward-looking statements. The words "believe", "expect", "anticipate", "intend", "plan", "estimate", "expect", "project", "will", "may" and similar expressions as well as statements other than statements of historical facts including, without limitation, those
Slide 3: Agenda
Agenda 2016 Capital Markets Day Presentations: Chairman’s overview 10:05 Andrew Sukawaty Context of the capital markets day 10:15 Rupert Pearce Demand, supply, technological evolution and how we compete + Q&A 10.30 Michele Franci Break 11.30 Aviation + Q&A 11.45 Leo Mondale Maritime + Q&A 12.30 Rona
Slide 4: Chairman's overview
Capital Markets Day 2016 > Chairman 01 Chairman’s overview Andrew Sukawaty
Slide 5: Confident that we will continue to deliver
Confident that we will continue to deliver A resilient core business with growth opportunities, even in tough market conditions ˃ 37 years market leadership in Mobile Satellite Services ˃ 3 generations of L-band satellites flown successfully ˃ Ka-band Global Xpress constellation launched and being c
Slide 6: Board objectives
Board objectives Based on independence, experience & governance ˃ Manage Board transition ˃ Retain expertise while adding new members ˃ Maintain independence & diverse business backgrounds ˃ Mrs Pip McCrostie joined the Board on 1 September 2016 ˃ Balance interests of customers, employees & investor
Slide 7: Context of the Capital Markets Day
Capital Markets Day 2016 > CEO 02 Context of the Capital Markets Day Rupert Pearce, CEO
Slide 8: Best in class networks, solutions & distribution
Best in class networks, solutions & distribution › Connected cars Wild › Events – Govt. operational tempo Cards › China, India, Russia, Turkey Spectrum › Ligado Networks Core L-band services L-band provides a solid Inmarsat-3, 4 & 6 business foundation, steady › Inmarsat Gateway platform cash flows
Slide 9: Demand, supply, technological evolution and how we compete
Capital Markets Day 2016 > CTO 03 Demand, supply, technological evolution and how we compete Michele Franci, CTO
Slide 10: Overall market dynamics
Capital Markets Day 2016 > CTO Overall market dynamics
Slide 11: Satcom market experiencing growth but also structural change
Satcom market experiencing growth but also structural change Demand growth is uneven…traditional fixed under pressure…mobility market opportunities Satcom Operator > Traditional Fixed Satellite Maritime VSAT to grow Number of Maritime Wholesale Revenue in 2015* Service (FSS) sectors (TV, at a CAGR o
Slide 12: Capacity rising in response to demand growth
Capacity rising in response to demand growth Significant amounts of capacity being launched… with uneven distribution ˃ HTS capacity to grow from <700 Gbps in 2015 to ~3,000 Gbps 2020, while ˃ Most satellite operators devote the vast majority of their available HTS demand by 2020 not expected to exc
Slide 13: Evolution of supply
Evolution of supply Ka-band supply availability remains large. Ku-band is expected to expand in 2016-18 but to remain an order of magnitude lower. In North America Ku-band supply could be limited, supporting price Short term regional supply by frequency band1 Focus on North America for Ku-band 2,4 G
Slide 14: So what is actually this HTS leading to all that change?
So what is actually this HTS leading to all that change? Nothing magic…essentially a multi-spotbeam architecture, high power, and frequency re-use Widebeam HTS > Typically 1-3 Gbps > Today up to 150 Gbps, tomorrow >500 Gbps? > Mainly C-band & Ku-band > Mainly Ka-band & Ku-band > Capacity shared with
Slide 15: The number of HTS satellites increases rapidly
The number of HTS satellites increases rapidly …but not so many of them are actually relevant to Inmarsat and mobility markets Eutelsat 172B NBN-1A SES-12 ˃ Dates still uncertain Viasat-1 Telstar 12 Vantage and subject to delays SES-14 NBN-1B SES-17 ˃ Not all satellites funded Echostar Jupiter 1 Ech
Slide 16: Inmarsat's competitive landscape is changing
In short: Inmarsat's competitive landscape is changing Competitors are trying to move in Inmarsat's direction....we must have done the right things right !? L-band competitors launching next generation systems ˃ Improvements to Inmarsat L-band too Traditional fixed satellite (FSS) operators show inc
Slide 17: Inmarsat's differentiation
Capital Markets Day 2016 > CTO Inmarsat's differentiation Building on a unique set of assets to drive competitive advantage
Slide 18: Inmarsat's strategy in light of satcom sector evolutions
Inmarsat's strategy in light of satcom sector evolutions Deploying mobile, global, scalable capacity providing unique services and value to our customers Continued focus on capacity optimised for mobility markets that clearly differentiates from FSS HTS Unique holistic mobility satcom approach inclu
Slide 19: Competition
Competition We have invested earlier in lower $/bit Aviation infra than direct competition, with control over the location of capacity to follow real, not theoretical demand High level 5-year roadmap comparison ˃ HTS supply competition limited to 2-3 per region Time Market Aviation infrastructure Mo
Slide 20: Competitive positioning of GX
Competitive positioning of GX Real capacity for real markets vs theoretical capacity for theoretical markets Ku-band HTS Viasat-1&2 GX (Intelsat EPIC, SES Viasat-3 LEO BB 12/14/15, Eutelsat 172B) (plus Ka-Sat) Regional Eventually global Coverage Global Regional patchwork (N. America part of N. (star
Slide 21: Global Xpress (GX)
Global Xpress (GX) Setting a new standard for global mobile satellite broadband connectivity $1.6 billion GX investment Key Inmarsat differentiators 89 Ka-band spot beams per GX GX designed and optimised from the ground up for mobility broadband and WGS interoperability satellite GX currently th
Slide 22: And our Ka-band franchise is growing
And our Ka-band franchise is growing The first three GX satellites are only the beginning of a long journey Targeted capacity - More throughput – Lower Cost per bit Terminal Backward & Forward Compatibility Existing Global Coverage complemented by regional overlays I5-F1,F2,F3 I5-F4 Third-party Ka-b
Slide 23: Scaling up Global Xpress
Scaling up Global Xpress A wide range of flexible and efficient options – sample simulation… ˃ Seamless (sub-second) beam handover (make before break) ˃ Sub-minute satellite switchover (vs 5-10 min for FSS and HTS) ˃ Equal performance across the globe ˃ Unique type approval process to ensure that mi
Slide 24: How Ku-band HTS compares to Inmarsat
How Ku-band HTS compares to Inmarsat Ku-band HTS will compete with GX but mainly serves to protect fixed data business of FSS operators HTS Ku-band satellites will win market shares in mobility ˃ Only two Ku-band HTS satellites which target mobility currently in orbit; markets over the coming years
Slide 25: How LEOs and MEOs compare to Inmarsat
How LEOs and MEOs compare to Inmarsat LEO broadband systems still seen as a long way off and facing a multitude of challenges ˃ LEOs/MEOs optimised for fixed point-to-point and/or consumer grade applications rather than mobility PROs ˃ Lower latency ˃ Systems still facing multiple challenges includi
Slide 26: ...and what about Viasat?
…and what about Viasat? At heart a regional Ka-band consumer grade home broadband provider No in-land coverage is an issue for coast-to coast flights ˃ Main satellite service business is understood to be consumer grade direct-to- Viasat-1 home broadband (>90% of service revenues) – lower QoS ˃ Mobil
Slide 27: European Aviation Network (EAN)
European Aviation Network (EAN) Unique capability setting new performance standards for aviation broadband connectivity in Europe Key Inmarsat differentiators 300+ Europasat Hybrid satellite/terrestrial system across Europe, designed and optimised towers S-band satellite from the ground up for mob
Slide 28: European Aviation Network (EAN)
European Aviation Network (EAN) An integrated part of Inmarsat’s offering to aviation markets
Slide 29: EAN Network Deployment
EAN Network Deployment LTE Network Roll Out, Testing and Introduction ˃ Radio Network Planning Underway and tower Laboratory Integration At Nokia Stuttgart Test site selection pending Network April 16 May 16 Jun16 Jul 16 Aug16 Sep 16 Oct 16 Nov 16 Dec 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 ˃ ACGC End-to-E
Slide 30: L-band
L-band Unique capabilities will maintain leadership for Inmarsat in high volume mobility >650k active Key Inmarsat differentiators >$800 million terminals* on network MSS revenue Highest always on data rates available (>700kbps) - incremental improvements over the coming years (>1Mbps) in 2015 S
Slide 31: L-band competition
L-band competition Inmarsat the clear market leader in L-band services 2015 Revenue $1,274M $411M $140M $90.5M $178M 2015 EBITDA $726M $234M n.a. $5M $19M Multi-regional Regional (EMEA, Coverage Global Global (incl. Poles) (Americas, EMEA, Global ASIA) ASIA) Maritime, Aviation, HH, M2M, Govt., HH, G
Slide 32: How Iridium NEXT compares to Inmarsat
How Iridium NEXT compares to Inmarsat Inmarsat confident of continuing to outperform its main L-band competitor despite improved capabilities ˃ Availability not expected before 2018/19 ˃ Mass, power and no of spacecraft equivalent between original and NEXT ˃ Beam size/number, and frequency available
Slide 33: Inmarsat's next generation L-band
Inmarsat's next generation L-band I-6 will once again bring unprecedented capabilities and set the global standard for MSS ˃ Maintaining global coverage ˃ Dramatic increase in processing capability: ˃ more channels ˃ narrower channels ˃ broadband channels ˃ Multicast capability ˃ Guard bands reduced
Slide 34: Inmarsat's solution platform
Inmarsat's solution platform Differentiation via solutions enablement with the power to create new business Portals Gateway Developer Edge Computing Device (NSD) API Layer Content Service Catalogue Service delivery platform Delivery Analytics VNF Orchestration Network orchestration Least Cost CAP AP
Slide 35: Inmarsat's solution platform
Inmarsat's solution platform Enablement of a powerful and increasing partner ecosystem Service access ˃ Self-serve ˃ Corporate EU account Customer sites ˃ Prepaid EU account Service access ˃ Physical Hardware ˃ Self-serve ˃ Subscription Package ˃ Corporate EU account ˃ Supplementary Package ˃ Prepai
Slide 36: Conclusion - Why Inmarsat is positioned to win
Conclusion - Why Inmarsat is positioned to win Unique mix of factors that will sustainably enhance value creation in the future Unique mobile, global, scalable capacity enhanced through continued innovation Broad area coverage for true global mobile (available where people go) End to end offer
Slide 37: Q&A
Capital Markets Day 2016 > Q&A Q&A Demand, supply, technological evolution and how we compete Capital Markets Day 2016
Slide 38: Aviation
Capital Markets Day 2016 > Aviation 04 Aviation Leo Mondale, President, Aviation
Slide 39: Inmarsat Aviation introduction
Introduction Portfolio of connectivity services for the cabin and the cockpit. Strong market position in Airline Cockpit and Business Aviation. Rapidly building backlog in Commercial Aviation Indirect ˃ ~ 7k SIMs; ARPU ~ $0.4k/month1 (Classic Aero) Safety and Cockpit Operations ˃ Strong position, an
Slide 40: Safety and operations services
Safety and operations services Cockpit satcom is a small part of a much wider $10b+ avionics, air traffic and operations market. Unlocking the hyped ‘Connected Aircraft’ market and achieving significant industry savings requires upgrade of secure satcom Satcom & avionics $ billion, 2014 ˃ Cockpit sa
Slide 41: Safety and Operations Services
Safety and Operations Services New Inmarsat L-band SB-S product to unlock safe, reliable satcom solutions for the Connected aircraft – introduction 2017 ˃ SwiftBroadBand-Safety (SB-S) is the next Global Aero generation cockpit satcom, backbone to Distress Safety real time cockpit apps System (GADSS)
Slide 42: Business and General Aviation
Business and General Aviation Robust BGA market expanding rapidly in North America, Latin America and Greater China driven by strong deliveries. Connected business jets growing by up to 14% CAGR by 2025 Business and General Aviation market Business and General Aviation market ˃ Overall volume of bus
Slide 43: Business and General Aviation
Business and General Aviation The BGA segment continues to show strong performance with steady SBB aircraft growth. Adoption of Jet Connex (GX for BGA) is already well advanced with OEM and retrofit commitments Launch of Jet Connex (JX) Key indicators ˃ JX brings superior Ka-band HTS coverage and ca
Slide 44: Commercial Aviation – Cabin connectivity
Commercial Aviation – Cabin connectivity We are entering a 5-year phase of rapid market scale up from today’s early stages, with still over 70% to capture. Retrofit dominates until linefit takes over IFC revenues 1 Connected aircraft 2 2020 and 2025 Aircraft adoption $15-18b cumulative Linefit (airl
Slide 45: Expansion segments
Expansion segments Over the next 5 years most of the expansion will come from Narrowbody fleets, in particular in Europe and Asia Pacific where Inmarsat is well positioned Connected aircraft Net installs 2015-21 Core Inmarsat Aircraft (k) Aircraft (k) Accelerators Illustrative 13.9 3.0 5.8 single ai
Slide 46: Competitive landscape
Competitive landscape Visibility on short term market outlook is pretty strong given 2 year deal cycles. Demand (backlog) has shifted towards ‘RoW’ where Inmarsat is one of 3 larger players competing Installed aircraft and backlog North America Rest of World 2Q16 global shares 1,2 2Q16 market shares
Slide 47: Business models (cabin connectivity service provision)
Business models (cabin connectivity service provision) There are two main models - strategy depends on airline requirements and channel partner value adds. Indirect provides Inmarsat with higher cash conversion but limits scale potential Deal type Sell to Capabilities Benefits Metrics per aircraft (
Slide 48: What do airlines want?
What do airlines want? They want what their passengers want: Dependable in-flight broadband. ASAP. 1. Wifi before any other service 2. Wifi now or they will switch 3. Don’t want IFE Q: If you had a choice of only one of Q: Would switch to an airline that offers Q: Do you think wifi will replace IFE
Slide 49: Airlines realise QoS is what really matters
Airlines have now realised that after the initial rush to equip their most competitive routes, QoS is what really matters Q: Would you use a wifi if you know it will be low quality? 80% 60% 60% of passengers say: 60% 40% "I prefer not to 40% use Wifi if I know it's not high 20% quality" 0% Yes No So
Slide 50: Airline decision making criteria
Airline decision making criteria Historical deals have focused on getting IFC immediately, for fear of passengers switching airlines. On-going/future deals focus on the capacity roadmap and QoS Airlines happy line 2015 Airlines happy line 2016-18 Relative weight of purchase criteria Relative weight
Slide 51: QoS to the seat
QoS to the seat QoS per seat requires the alignment of the full capacity chain. Competition has different approaches to achieving QoS. Airlines are less confused about marketing claims … Profile 1: large but shared satellite capacity Profile 2: Limited satellite capacity, large antenna capacity CLAI
Slide 52: GX QoS over transatlantic
GX QoS over transatlantic … Detailed satellite link budget modelling shows GX provides a consistent, seamless connectivity experience, which patchwork HTS / widebeam networks cannot replicate Signal strength (%) 1h 3h 4h 5h 7h Aircraft changes 10h widebeam: 5 min disconnections to switch satellite 1
Slide 53: GX: we're ready. Test flights summer 2016
GX: we’re ready. Test flights summer 2016 GX launch customer airline: - Inmarsat formally selected by major airlines - Engaged in final contract negotiation - Airlines expected to make announcements in coming weeks/months
Slide 54: Welcome to exponential Traffic
Welcome to exponential Strong market drivers lead to exponential traffic growth in the next 5-10 years. Serving airlines at appropriate QoS requires controlled growth and low $/bit than industry has today Total aircraft Share of aircraft connected Traffic profile Illustrative + 20% 25k x2 55% 21k 25
Slide 55: Roadmap: $ per bit and controlled augmentation
Roadmap: $ per bit and controlled augmentation Our roadmap for Aviation includes both satellite and terrestrial infrastructure Having already invested in global coverage, our roadmap can now focus on $ per bit and controlled augmentation Inmarsat roadmap Cost profile – Average $ per bit Incremental
Slide 56: Inmarsat Aviation Terminal Evolution
Inmarsat Aviation Terminal Evolution The GX terminal was designed to deliver I-5 generation system performance. Immediate tech upgrades will focus on critical aero requirements (performance, reliability). A new generation of high performance Ka-band technology will mature from 2019 onwards. Evolutio
Slide 57: EAN allows superior economics
EAN allows superior economics The EAN offers a lower cost option for airlines. Network design and generous spectrum allows scalability through targeted addition of sites and sectors per site in high traffic areas Low aircraft TCO EAN key on-board Contiguous multi- Flexible capacity expansion compare
Slide 58: Conclusion
Conclusion ˃ Strong offering in SOS and BGA with SB-S and JX product launches ˃ Commercial GX now operational and gaining market momentum ˃ Sustainable differentiators in largest expansion markets ˃ Innovative technology and cost optimisation roadmap ˃ Led by targeted investment in infrastructure, s
Slide 59: Q&A: Aviation
Capital Markets Day 2016 > Q&A Q&A Aviation Capital Markets Day 2016
Slide 60: Maritime
Capital Markets Day 2016 > Maritime 05 Maritime Ronald Spithout, President, Maritime
Slide 61: Addressable market
Addressable market High bandwidth Rigs andFX/GX platforms 1,800 Cruise vessels 320 Super yachts 6,600 Offshore supply vessels 10,900 Fleet Xpress Large fishing Ferries 46,000 6,180 Tankers 15,000 Regional Bulk Carriers 11,000 Global mobility Container shipping 4,900 mobility FleetBroadband General C
Slide 62: Oversupply in commercial maritime puts operational costs under pressure
Oversupply in commercial maritime puts operational costs under pressure Depressed market converts communications from cost centre to efficiency driver ˃ Continued fleet growth ˃ Stressed market conditions ˃ Rates depressed in all major sectors Source: Clarkson’s Research Environmental & technology c
Slide 63: VSAT growth in commercial maritime outstrips L-band
VSAT growth in commercial maritime outstrips L-band Inmarsat is well positioned to address the higher growth VSAT market in commercial maritime Wholesale airtime revenue forecast by technology Inmarsat key differentiators versus competition ˃ The Internet of Things (IoT), cloud based services and th
Slide 64: Inmarsat most vertically-integrated maritime market player
Inmarsat most vertically-integrated maritime market player Resilience by vertical integration Inmarsat key differentiating attributes ˃ Fleet Media, based on content agreement with NT Digital/Swank ˃ Cyber security as a service (with Trustwave/SingTel) VAS / Content ˃ Safety and GMDSS compliancy ˃ I
Slide 65: Inmarsat maritime market strategy summary
Inmarsat maritime market strategy summary Strategy designed to grow ARPU with Fleet Xpress whilst generating volumes on L-band Commercial Maritime Business Applications Sub-24 metre Market (L-band and Fleet Xpress) (CAP and Fleet Xpress) (L-band) Value Enhancement Growing L-band
Slide 66: Fleet Xpress – a new standard in maritime communications
Fleet Xpress – a new standard in maritime communications Application triggered bandwidth removes barriers to entry for business applications > A hybrid managed service of > Five powerful sets of benefits above make Fleet Xpress unique GX and FB, with an intelligent in the market on-board Network Ser
Slide 67: Uniquely positioned for business applications
Uniquely positioned for business applications Inmarsat Gateway opens up the market for maritime business applications on board The Certified Application Partner (CAP) programme: a structured programme to facilitate the development, optimisation, delivery & monetisation of business applications as pa
Slide 68: The Inmarsat Maritime ecosystem vision
The Inmarsat Maritime ecosystem vision Expanding our business model for long term future growth Inmarsat $ Market Service enablement enablement Sustainable Value Growth Customer Fleet Xpress enablement CAP Partner Accredited Partner
Slide 69: Successful market education in a conservative industry
Successful market education in a conservative industry Fleet Xpress very well received by the maritime community
Slide 70: What our partners say…
What our partners say… Ready and excited to take Fleet Xpress to market Tore Morten Olsen, President, Marlink Maritime
Slide 71: What our end-users say
What our end-users say Confirming the Fleet Xpress value proposition Michael Papaioannou, CEO Helikon Shipping
Slide 72: Conclusion
Conclusion ˃ Inmarsat is the market leading, most vertically-integrated maritime market player with seamless global coverage ˃ L-band capability well established in commercial shipping, with opportunities for expansion ˃ Search for increased fleet efficiency in a challenging market driving adoption
Slide 73: Defining Connectivity at Sea
Defining Connectivity at Sea
Slide 74: Q&A: Maritime
Capital Markets Day 2016 > Q&A Q&A Maritime Capital Markets Day 2016
Slide 75: Summary
Capital Markets Day 2016 > Summary Rupert Pearce, CEO Summary 06
Slide 76: Mobile satellite communications poised for growth…
Mobile satellite communications poised for growth… Core business for 37 years Maritime Enterprise Aviation Government 47% 13% 10% 22% ˃ Merchant shipping ˃ Energy and Resources ˃ Commercial Airlines ˃ Military (US DoD, etc.) ˃ Fishing ˃ Agriculture and Heavy Equipment ˃ Business Aviation ˃ Air Force
Slide 77: Conclusion - Why Inmarsat is positioned to win
Conclusion - Why Inmarsat is positioned to win Unique mix factors of that will sustainably enhance value creation in the future Targeting attractive and fast growing markets Best-in class infrastructure networks in place Unique differentiators and core capabilities against all major competitor
Slide 78: Q&A
Capital Markets Day 2016 > Q&A Capital Markets Day 2016 Q&A
Slide 79: Capital Markets Day 2016
INMARSAT > Capital Markets Day 2016 Capital Markets Day 2016 7 October 2016