Inmarsat — Investor Day (October 2015)
79 slides from Inmarsat's investor day presentation, Oct 8, 2015
Slide 1: Capital Markets Day 2015
INMARSAT > Capital Markets Day 2015 Capital Markets Day 2015 8 October 2015
Slide 2: Disclaimer
Disclaimer These presentations and discussions contains “forward-looking statements” within the meaning of the US Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks, uncertainties and other factors that may cause our actual results, performance or achiev
Slide 3: Chairman's overview
Capital Markets Day 2015 > Chairman 01 Chairman’s overview Andrew Sukawaty
Slide 4: Confident that we will continue to deliver
Confident that we will continue to deliver Building on our strong track record ˃ 35 years market leadership in Mobile Satellite Services ˃ 3 generations of L-band satellites flown successfully ˃ Ka-band Global Xpress constellation now launched ˃ New aviation technologies and partnerships developed ˃
Slide 5: Delivering returns for shareholders
Delivering returns for shareholders Returned to FTSE 100 in June 2015 700 Indexed Total Shareholder Return Inmarsat 600 500 400 FTSE 250 300 200 FTSE 100 100 – Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Source: Datastream, 1 October 2015 Inmarsat FTSE 100 FTSE 250
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 ˃ Balance interests of customers, employees & investors ˃ Continue commitment to safety as Public Service duty
Slide 7: Delivering transformational growth
Capital Markets Day 2015 > CEO 02 Delivering transformational growth Rupert Pearce, CEO
Slide 8: Strong underlying growth opportunities in all our markets
Strong underlying growth opportunities in all our markets We serve unique communities having a Demand is increasing in all our markets, critical need for our range of services with solid growth drivers Exploding Increasing Rise of data traffic penetration of From safety services to smart shipping so
Slide 9: Credible and achievable strategic roadmap
Credible and achievable strategic roadmap Continued L-band growth Growth & diversity via GX and S-band ˃ Grow value of our core markets ˃ New super-broadband MSS services text ˃ Innovate to expand beyond our core markets ˃ Diversification into new user/terminal markets ˃ Extend our geographic footpr
Slide 10: Global Xpress will drive revenue growth
Global Xpress will drive revenue growth Commercial service introduction globally by end 2015 Global Xpress Global Xpress programme will soon be Commitments already in place will drive fast ‘open for business’ globally take-up of service › F1 & F2 already in commercial service › ‘Inmarsat Solutions’
Slide 11: Opportunity to refocus and grow L-band
Opportunity to refocus and grow L-band GX growth will release L-band for new fit-for-purpose services › Small, light, cheap, medium-speed device services > Next generation BGAN › Next-generation safety services > Maritime, Aviation › Resilient services with omni-directional antennas > M2M › New prod
Slide 12: European Aviation Network - innovative, hybrid solution
European Aviation Network - innovative, hybrid solution Unlocks aircraft passenger connectivity in Europe Core infrastructure elements all under contract and on Regulatory risk substantially retired track for delivery by December 2016 › Europasat satellite supply › Strong EU policy support › CGC net
Slide 13: 'Inmarsat Gateway' solution platform
‘Inmarsat Gateway’ solution platform Enables new markets and revenue streams to be opened up Places Inmarsat at the centre of an innovation ecosystem Catalyst to Brings new Value added services platform foster value creation innovation opportunities across our to existing channel partners Network ag
Slide 14: Growing the Maritime business
Capital Markets Day 2015 > Maritime 03 Growing the Maritime business Ronald Spithout, President
Slide 15: Three market strategies
Three market strategies Value (L-band and GX) Volume (L-band) Applications (CAP and GX) > FleetBroadband > Fleet One > Gateway > XpressLink, Fleet Xpress > FleetPhone > Fleet Media / content
Slide 16: Addressable market
Addressable market Market segmentation High Bandwidth Rigs and Cruise platforms vessels 1,800 320 Large fishing 46,000 Offshore Supply Super Vessels Yachts 10,900 6,600 Ferries Regional 6,180 Merchant shipping Global 67,000 Mobility Mobility Leisure 233,000 Small fishing 324,000 Low Bandwidth
Slide 17: Addressable market
Addressable market Portfolio relevance High Bandwidth Rigs and Cruise platforms vessels > Combination of Fleet One FX/GX Large fishing and FleetPhone extends position in the fishing and Fleet Xpress leisure markets and drives c.2,500 (XL migration) Offshore Supply Super future L-band growth Yachts V
Slide 18: Migrating XpressLink to Fleet Xpress
Migrating XpressLink to Fleet Xpress 2,500 3yr $55 m $35 m $100 m Vessels currently Capex supporting using XpressLink Migration to Ku-band capacity Revenue p.a. Fleet Xpress migration savings All numbers Inmarsat estimates
Slide 19: New growth with Fleet One
New growth with Fleet One All numbers Inmarsat estimates >300k Key growth >200k Recruiting new Material Fishing vessels opportunity Leisure vessels channel market addressable market in Asia addressable market partners opportunity (12-24m) (12-24m)
Slide 20: The landscape of shipping is changing
The landscape of shipping is changing Driving demand for bandwidth 2010 2013 2016 2020 Traditional shipping Digital shipping Smart shipping Autonomous vessel
Slide 21: A new maritime eco-system
A new maritime eco-system Enabled by Certified Applications Partners Image: Courtesy of Rolls Royce
Slide 22: Driving innovation in maritime communications
Driving Driving Shaping Shaping the innovation the innovation future of the future of the in maritime communications connected connectedship ship in maritime communications Building Building Defining maritime communities maritime communities Defining Connectivity at Sea Connectivity at Sea
Slide 23: U.S. Government and Global Xpress for governments
Capital Markets Day 2015 > U.S. Govt. 04 U.S. Government and Global Xpress for governments Peter Hadinger, President
Slide 24: Global concerns drive U.S. Government demand
Global concerns drive U.S. Government demand Complex event-driven global reality On-demand mobility Worldwide readiness for the unexpected High reliability, high throughput Inmarsat well-matched Global. Mobile. Trusted. Source: Global Conflict Tracker, Council on Foreign Relations 6 Oct 2015
Slide 25: Sequestration
Sequestration Market complexity Budget Instability continues Multi-dimensional differentiation Service Requirements acquisition Mobile comms Searching for drive demand new model
Slide 26: Market environment
Market environment USG Commercial Satcom Expenditures $M Near-term instability, long-term alignment ˃ Continued spending reductions ˃ Continued troop/major program cuts but: Source: Defense Information Systems Agency, September 2015 ˃ Fewer ‘boots’ drives Airborne ISR* Inmarsat is among the ‘Top-3’
Slide 27: U.S. Government business
U.S. Government business At a glance A market leader ˃ USG is Inmarsat’s largest single customer ˃ Inmarsat is USG largest MSS supplier ˃ Among ‘top-3’ in $1bn USG COMSATCOM market Trusted Partner ˃ “Substantial National Security Space Commercial Satellite Operator” U.S. Strategic Command, March 201
Slide 28: Steady long-term vision – to be #1
Steady long-term vision – to be #1 Outlined in 2014, strong progress in 2015 Wholesale/retail goals Embedded in USG Strategic new product met and exceeded programs development tests Customer diversity Increasingly base-lined Superfast L-band User intimacy MILSAT Augmentation Protected Ka
Slide 29: GX worldwide: MILSATCOM augmentation strategy
GX worldwide: MILSATCOM augmentation strategy “WGS Compatible is killer feature for U.S. forces” (NSR GMSC 12th Edition, Sept. 2015) GX delivering military- Ka to users across Indian Ocean Region Dozens of military-Ka terminals type-approved Global ‘SATCOM as a service’ provides easily used and robu
Slide 30: Global Xpress for Government – Year one
Global Xpress for Government – “Year one” Augmenting government resources with agile capabilities Highly successful user 100s of Mbps currently High user interest in key evaluations in Indian in service in military Ka growth markets (aero Ocean and Atlantic and commercial Ka transport, AISR, maritim
Slide 31: GX for governments - going forward
GX for governments - going forward Growing both market size and market share At the beginning of GX adoption curve in governments ˃ New uses – enabled by features unique to Inmarsat ˃ Terminals 25% of the size and weight of Ku-band ˃ Only system with consistent global coverage and performance ˃ Ku “
Slide 32: Trusted, Interoperable, Available, Dedicated
Trusted Inter- Available Dedicated operable Serving critical govt. Seamless Assured, global Investing to meet security applications MILSATCOM SATCOM as a govt. requirements augmentation Service
Slide 33: Global Government & L-band for governments worldwide
Capital Markets Day 2015 > Global Govt. 05 Global Government & L-band for governments worldwide Andy Start, President
Slide 34: Market dynamics
Market dynamics Short-term fluctuations based on operational scenarios and impact of land troop deployment Non-US ISAF Troops Deployed Peak vs Today 45,000 Revenue Volatility 40,000 100% 35,000 80% 30,000 60% Variance from Average 25,000 40% 20% 20,000 0% 15,000 -20% 10,000 -40% 5,000 -60% 0 Jan Mar
Slide 35: L-Band growth opportunities
L-Band growth opportunities Counteract down-pressure by diversifying in new products and new markets Government New specific New Government L-band countries verticals products Common to U.S. Government Global Government only and Global Government
Slide 36: Assured Access
Assured Access Guaranteed priority links for critical missions
Slide 37: L-TAC
L-TAC Tactical Satellite for secure government radios
Slide 38: LAISR & LACE
LAISR & LACE Superfast 10Mbps broadband at L-band for specialist government users
Slide 39: Government specific solutions
Government specific solutions Working with partners to deliver enhanced operational capability to government customers
Slide 40: Adjacent government verticals
Adjacent government verticals Accessing under-served markets Inter-Governmental Election Delivery & Organisations State-Owned Utilities Monitoring Border Security Emergency Services Coast Guard
Slide 41: New countries
New countries 28 countries $ 600m Filtered pipeline 20% revenue Core Primary Focus Opportunistic
Slide 42: Global Government summary
Global Government Summary ˃ Military characterised by Op-Tempo fluctuations ˃ Down pressure from troop withdrawals & migration to new, better-value services ˃ Over last 3.5 years more than countered by: ˃ New L-band products ˃ New countries ˃ New verticals ˃ GX provides further opportunities to grow
Slide 43: Growing the Enterprise business
Capital Markets Day 2015 > Enterprise 06 Growing the Enterprise business Greg Ewert, President
Slide 44: Inmarsat Enterprise
Inmarsat Enterprise Digital oilfield uses sensor data to optimize drilling, Helping business to move data like never before reducing exploration costs SCADA Connectivity enables NGOs growing digital economies in Digital power grids emerging markets Resources environmental awareness Digital explorati
Slide 45: Global Network Enabling
Foundation of strength – why they want to be partners and part of our eco-structure Global Enabling Core technology GX Network Technology (now) Core Technology Financial Diverse Strength & Eco-System Inmarsat Market Stability
Slide 46: Leveraging our assets
Leveraging our assets Core technology Core technology GX (now) Core Technology Inmarsat Market
Slide 47: Leveraging a great service portfolio and distribution network
Leveraging a great service portfolio and distribution Global distribution network AST Global MSS market forecast to grow from $1.32bn in 2014 Global MSS CAGR of 4.2% Airbus to $1.74bn in 2018* from 2014 to 2018* Growing markets Innovative services BSNL Resources GX Globecomm Aid/NGO IDP/M2M MCN Medi
Slide 48: Expanding distribution into new markets and verticals with key distributors
Expanding distribution into new markets and verticals with key distributors Leverage L-band with migration to GX Leverage core technology platform (BRM/Chipset) into new distribution partners Orbcomm OEM Heavy Equipment • OG-ISAT (IDP) Modem = dual-mode CISCO Distribution leverage • BGAN & CISCO 918
Slide 49: Some of the new partners or partners of partners
Some of the new partners or partners of partners OEM and embedded technology
Slide 50: Supporting key communications needs of the digital oil field
Supporting key communications needs of the digital oil field RigNet is key route to energy market: Long-term partnership for L-band and GX Increase Inmarsat share of Digital Oilfield services market forecast to reach $38.49 billion by 2024* ‘Upstream Oil & Gas industry spends $800 billion per year o
Slide 51: Supporting key communications needs in the evolving world of the connected cars
Supporting key communications needs in the evolving world of the connected cars Growing opportunity for satellite in connected car market forecast to reach $46 billion by 2020*: Shift from basic telematics to over-the-air software upgrades saves manufacturers money 80% of vehicle recalls are softwar
Slide 52: Become the preferred communications partner to LPWAN
Become the preferred communications partner to the developing new field of LWAN (low power, wide area networks) Growing market enabled by the Internet of Everywhere: 30 billion connected objects by 2020* Link fixed base stations and access points to IoT MARKET transport aggregated data from sensor n
Slide 53: What does the future hold for us?
What does the future hold for us? ˃ Leveraging Inmarsat’s extreme global reach and unique content to monetize ˃ Unlocking our share of Big Data in telecoms worth $300 billion by 2020* Land, Aero, Inmarsat Maritime Mine data Monetise deployed devices *‘Big data in telecoms: How to capture value from
Slide 54: Why they partner with us and how we'll continue to grow
Why they partner with us and how we’ll continue to grow Unparalleled asset base to exploit Great evolving Great network Great core technology eco-structure INNOVATE INVEST GROW
Slide 55: Growing the Aviation business
Capital Markets day 2015 > Aviation 07 Growing the Aviation business Leo Mondale, President
Slide 56: Meeting the communications needs of the aviation industry
Meeting the communications needs of the aviation industry Safety services > cockpit comms > aircraft information > passenger connectivity Safety and Ops Services Cabin Connectivity Other Services ˃ ~7,500 Classic SIMs ˃ ~6,700 SwiftBroadband SIMs ˃ Leasing ˃ ARPU ~ $330/month ˃ ARPU ~ $1,000/month ˃
Slide 57: Global, integrated, fit-for-purpose proposition
Global, integrated, fit-for-purpose proposition Scalable, bundled solutions: global/regional, flight deck/cabin/aircraft, speed/QoS SB Global Safety Ka-band Worldwide safety and operations to the cockpit S-band Global Xpress L-band Seamless, superfast broadband delivered across the globe by a single
Slide 58: Safety & Operations
Safety & Operations Connected aircraft revolution ˃ An A350 generates 4GB of data per flying hour ˃ An A380 generates 4GB of data per flight = Up to 30TB of data per aircraft per month ˃ A B787 generates up to 500GB of data per flight (significantly more than ˃ 5,000 sensors = “Internet of Everythin
Slide 59: Safety & Operations: aircraft communication gap
Safety & Operations: aircraft communication gap Bottlenecks in cockpit communications Safety grey area Cockpit Connectivity Cabin Connectivity SB Global Safety is positioned to fill the gap > High speed, secure, certified, dedicated IP ‘pipe’ to the cockpit > 33% cost reduction, new functionality
Slide 60: Business & General Aviation market
Business & General Aviation market Recent trends highlight continuing growth potential Business aviation – SB aircraft growth Data growth per aircraft per year 4,000 5,000 3,000 4,000 SIMs 2,000 Mb 3,000 1,000 - 2,000 2009 2010 2011 2012 2013 2014* 2012 2013 2014* * Through Q3/2014
Slide 61: Business Aviation fleet growth accelerating
Business Aviation fleet growth accelerating Industry deliveries by region: 2014-2023 & 2024-2033 ˃ 168,000 General Aviation aircraft* * Source 2013 GAMA Outlook ˃ 30,400 helicopters** ** Source 2013 EASA Outlook
Slide 62: Commercial air transport opportunity
Commercial air transport opportunity Airline passenger connectivity market expanding 7.3bn 204 Mb 300 % 10 k IATA forecast of Average data use per Growth in connected Connected aircraft passenger numbers by user per long-haul flight aircraft expected over within 10 years 2034 (doubled) next 10 years
Slide 63: Commercial air transport opportunity
Commercial air transport opportunity Industry trends that will drive growth Airline passenger connectivity market expanding ˃ Number of flights increasing - especially short/medium haul ˃ Airline passenger adoption of mobile data services moving toward 100% ˃ In-flight connectivity take- up set to i
Slide 64: Clear consumer call for connectivity
Clear consumer call for connectivity It’s all about personal electronic devices Source Inmarsat Source Inmarsat ˃ Passengers – especially on short and medium-haul flights – want to be able to go on line and do their own thing
Slide 65: Business model is changing
Business model is changing ˃ Airline diversity ˃ passenger profiles; ˃ routes/flight duration; ˃ appetite for risk relating to connectivity; ˃ product and pricing models; ˃ Rapid evolution of airline sophistication ˃ Mbyte/session retail model likely not sustainable – users conditioned to Gbytes/mon
Slide 66: Business models - key principles
Business models - key principles Wide variety of business models ranging from Traditional Wholesale to Full Retail TRADITIONAL WHOLESALE FULL RETAIL Inmarsat ˃ Wholesale $/Mb ˃ Share of end user revenue revenue ˃ Limited Menu of Add On Services ˃ Installation & Maintenance Revenue Service ˃ Limited
Slide 67: Inmarsat eco-system approach
Inmarsat eco-system approach Flexible model to can meet airline requirements Global Xpress/SB Global European Aviation Network Commercial Air Transport W-IFEC Partners Inmarsat accountability
Slide 68: European Aviation Network
European Aviation Network Infrastructure overlay for high density regional market European Aviation Network Coverage is indicative Airline Routes Global Xpress coverage
Slide 69: European Aviation Network
European Aviation Network Partnership roles ˃ S-band satellite & ˃ Ground based 4G LTE regulatory authorisations network ˃ Supply and manage ˃ Supply and manage satellite service component ground network of offering component of offering ˃ Marketing and sales to ˃ Internet Service Provider European
Slide 70: Inmarsat differentiators
Inmarsat differentiators Committed to meeting expectations of passengers based on their experience on the ground “It’s our core business”: > Engineered mobile internet communications specifically for the aviation environment Quality of Service: > Availability and consistency at levels to enable devi
Slide 71: Financial Review
Capital Markets day 2015 > Finance Financial Review Tony Bates, CFO 08
Slide 72: Trading outlook update
Trading outlook update Current guidance – a reminder ˃ 2015 revenue including LightSquared of $1,250-$1,300m ˃ GX revenue target ˃ Global CSI now expected at the end of 2015 ˃ $500m pa of annual Ka-band revenue 5 years after Global CSI ˃ Includes XL migration (close to $100m of current Ku-band reven
Slide 73: Future financial guidance
Future financial guidance Expansion and revision ˃ New medium-term revenue guidance ˃ First to be published with 2015 preliminary results ˃ Revenue range for third year ahead (i.e. initially for 2018) ˃ Updated at least annually ˃ Potential impact on current guidance ˃ F4 opportunity and impact stil
Slide 74: Available funding
Available funding $m 1,921 (Net Debt) 2000 317 1750 ˃ c. $900m liquidity at 30 June 2015 1500 ˃ Credit Facility $500m 1250 993 ˃ Undrawn Ex-Im Facilities $189m ˃ Cash $198m 1000 ˃ Leverage 2.9x at 30 June 750 ˃ Normally maintain below 3.5x 500 659 ˃ Maturities run from 2017 to 2022 250 ˃ Convertible
Slide 75: LightSquared
LightSquared Ongoing uncertainty but material upside opportunity for Inmarsat ˃ LightSquared implementing court approved plan to exit Chapter 11 ˃ Expected to close before end of 2015 ˃ Significant issues will remain e.g. FCC licence, business plan/funding, GPS ˃ Quarterly payments due under current
Slide 76: Summary
Capital Markets Day 2015 > CEO Rupert Pearce, CEO Summary 09
Slide 77: Strongly positioned - confident we will deliver growth
Strongly positioned - confident we will deliver growth Multi-platform Financial strength L, Ka, S-band infrastructure Innovative FTSE 100 status New generation networks, Strong balance sheet ‘Inmarsat Gateway’ platform Track record Global 36 years and 5 fleet generations Seamless global coverage and
Slide 78: Q&A
INMARSAT > Capital Markets Day 2015 Q&A
Slide 79: Capital Markets Day 2015
INMARSAT > Capital Markets Day 2015 Capital Markets Day 2015 8 October 2015