Inmarsat — Investor Day (September 2007)
81 slides from Inmarsat's investor day presentation, Sep 25, 2007
Slide 1: Inmarsat plc Investor Day Presentation
Inmarsat plc (LSE: ISAT) Investor Day Presentation 25th September 2007 99 City Road London EC1Y 1AX
Slide 2: Forward-looking statements
Forward-looking statements Certain statements in this presentation may constitute “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks, uncertainties and other factors that may cause our actual re
Slide 3: Inmarsat management and speakers
Inmarsat management and speakers Andrew Sukawaty Michael Butler Rick Medlock Rupert Pearce CEO and Chairman COO and President CFO Group General Counsel Simon Ailes Perry Melton James Collett Gene Jilg Director, VP, Sales and Marketing Director, CTO Corporate Finance Commercial Solutions
Slide 4: Inmarsat Investor Day – Agenda
Inmarsat Investor Day – Agenda • 9.00 Welcome Andy Sukawaty, Chairman & CEO • 9.10 Maritime review James Collett, Director, Commercial Solutions • 9.30 BGAN review Perry Melton, VP, Sales & Marketing • 10.00 SPS handheld review Rupert Pearce, Group General Counsel • 10.35 Aero review James Collett –
Slide 5: Maritime business update
Maritime business update 25 September 2007 James Collett, Director – Commercial Solutions
Slide 6: Fleet – the maritime business growth engine
Fleet – the maritime business growth engine Maritime Revenues - $ Millions Other maritime services Fleet 300 250 21 42 65 Fleet H1 07 200 revenue growth 58% yoy 150 30 47 230 226 220 100 50 111 111 0 2004 2005 2006 H1 2006 H1 2007 Growing Fleet ARPT Fleet Commissioned Terminals - Year End Fleet 77 F
Slide 7: Inmarsat Fleet demand drivers
Inmarsat Fleet demand drivers • Strong new-build and solid retro-fit markets in merchant shipping • Growth in demand for bridge data and crew communications Average Usage Per Terminals (mins/month) Fleet • GMDSS status and 410 product & service 390 370 performance make Fleet 350 330 the de facto dee
Slide 8: FleetBroadband
tan FleetBroadband Broadband IP data - up to 432kbps (contended service) ... plus voice ... plus fax with guaranteed data rates on-demand with 64kbps ISDN that will be available globally » inmarsat
Slide 9: FleetBroadband – Positioning
FleetBroadband – Positioning What are our FB goals? Where will we target? 1. Customer retention Year Year • Raise the barrier further to 2008 and 2009 and end-users moving to VSAT onwards onwards • Win back voice traffic • Move existing end-users into Large Small the ‘broadband’ era, Market Merchant
Slide 10: FleetBroadband – Who will we target?
FleetBroadband – Who will we target? % of Total Revenues by Monthly Spend >$2500/ship/month <$250/ship/month 11% FB proposition 6% initially $250 - $500 $2,000 - $2,500 /ship/month /ship/month targeted at these 12% 8% users $1,500 - $2,000 • Desire predictable costs /ship/month • ARPU expansion 13%
Slide 11: FleetBroadband Commercial Service Introduction
FleetBroadband Commercial Service Introduction • Targeted for November 2007 • With seven Distribution Partners from our core maritime distribution network • And two launch hardware providers with at least two further to follow • Wide-ranging plan for field evaluations throughout 2008
Slide 12: BGAN Update
BGAN Update 25 September 2007 Perry Melton – Vice President, Sales & Marketing
Slide 13: BGAN revenue and subscribers
BGAN 2006/2007 quarterly progression BGAN revenue and subscribers $9.00 14,000 $8.00 12,000 $7.00 10,000 $6.00 Subscribers $US Mill $5.00 8,000 $4.00 6,000 $3.00 4,000 $2.00 $1.00 2,000 $0.00 0 Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007 Q2 2007 Revenues Subscribers
Slide 14: BGAN geographic usage analysis
BGAN geographic usage analysis Russia, Eastern Europe & Former CIS Central Asia (Including 5% India) Central & South America 2% & Carib 6% Europe Middle East & North 7% Africa 47% East Asia / Asia Pac (Incl China) 8% US and Canada 8% Sub-Saharan Africa 17%
Slide 15: BGAN usage – by service type
BGAN usage – by service type Standard IP 61% Streaming • Plus monthly subscription and 33% activation charges, run rate ISDN $0.6m for June 2007 4% Voice 2% Note: Data relates H1 2007
Slide 16: Positive impact of new BGAN distributors
Positive impact of new BGAN distributors ‘LESO’ distributors: Beijing MCN; KDDI; MVS; SingTel; Stratos Global; Vizada $900,000 11% $800,000 $700,000 $600,000 New distributors share of $500,000 quarterly BGAN revenue $400,000 3% $300,000 $200,000 3% 3% $100,000 2% 0% $0 Q1 2006 Q2 2006 Q3 2006 Q4 200
Slide 17: Limited migration to date
Limited migration to date 70,000 60,000 50,000 MB's per day 40,000 30,000 20,000 10,000 0 Jan-06 Feb-06 Mar-06 Apr-06 May -06 Jun-06 Jul-06 Aug-06 Sep-06 O c t-06 Nov -06 Dec -06 Jan-07 Feb-07 Mar-07 Apr-07 May -07 Jun-07 Date GAN RBGAN BGAN Note: GAN ISDN and BGAN streaming converted to MB's
Slide 18: BGAN outlook
BGAN outlook End user markets Products • Leveraging know-how into new, • New vehicular products building unpenetrated markets on early entry terminal success – e.g. Stratos in Japan • Intensive campaign to ramp-up new distributors • Dedicated US-based team to serve and develop US government business
Slide 19: Government Land Services
Government Land Services • Blue Force Tracking – 30,000 terminals deployed (combatants) • 180,000 terminals projected – Land mobile, maritime, and aeronautical (fixed and rotary wing) • Movement Tracking System – Tracking logistics vehicles – Same technology as BFT • Communications on the Move (COTM
Slide 20: Government Civil Services
Government Civil Services State and Local Disaster Response Emergency Non-Emergency Response Services • Transition existing users from GAN to BGAN • Leverage early adopters into state and local government – State – City Police/Fire Departments • Encourage early adopters to use BGAN outside actual em
Slide 21: Government Services Expansion
Government Services Expansion • UK Ministry of Defence (MoD) Special Forces (SF) • Netherlands Ministry of Defence (MoD) • Irish Defence Forces • South African Defence Forces • NATO Rapid Reaction Force • Various other defence BGAN requirements – Coalition forces (NATO, AUSCANZUKUS, etc.)
Slide 22: Satellite Phone Services
Satellite Phone Services Rupert Pearce Group General Counsel
Slide 23: The SPS and handheld opportunity
The SPS and handheld opportunity • Accelerated entry into handheld market through ACeS collaboration – Regional launch from Asia 2006-08 – Rapid global roll-out around modernised network from 2009 • Access to new MSS users through low-cost land and maritime products – Global MSS voice users (governm
Slide 24: Overall Market Picture
Overall Market Picture • What is the market to which we should benchmark? + Handheld satellite phones + USO, fixed low-end phones + Broader low-end voice by satellite (includes low-end maritime) – Low Speed Data services (‘tainting’ Globalstar/Iridium numbers) • We are focused on the handheld and lo
Slide 25: Globalstar
Globalstar • Launched 1999, relaunched 2004 • LEO, 47 satellites, EOL 2008 • Multi-regional MSS operator • H1 07: Revenues $49M, normalised EBITDA $6.5M • Traffic: 85% NA (exposed to competition in NA) • Estimated 200,000 subscribers at Q2 2007 • Phone: SO; Size: 340g, 160x55x35mm; RRP $1,000 • Issu
Slide 26: Thuraya
Thuraya • Launched 2000 • GEO, 1 satellite (soon to be 2), EOL 2018 • EMEA operator (extending to Asia Dec 07) • 06: Revenues $160M, EBITDA est $40M • Traffic: high dependency on Middle East • c250,000 subscribers at end 2006 • Phone: DM; Size: 180g, 141x48x18mm; RRP $700 • R-BGAN look-alike, Thuray
Slide 27: Iridium
Iridium • Launched 1998, relaunched 2001 • LEO, 66 satellites, EOL 2013 • The only truly global MSS network • Q2 07: Revenues $66.7m; EBITDA $20.2M • Traffic: 12% NA; 30% EMEA/Asia; 44% Maritime • Growing low-end aeronautical voice business • Estimated 200,000 subscribers at Q2 2007 • Phone: SO, Siz
Slide 28: Inmarsat pre SPS
Inmarsat pre SPS • GEO, 10 satellites, EOL 2020 • Global, except the polar regions • Mini-M/LAMM are our low-end voice products Inmarsat mini-M land and maritime • 06: Revenues $83m (all airtime) • Traffic: 75/25% maritime/land. 12% LAMM • H2 2007: c50,000 active terminals • Phone: SO, 2.2kg, 270x15
Slide 29: Conclusions
Conclusions • Mini-M is not competitive with handheld • Some 50%+ of the market is unstable – Globalstar & Iridium’s future is uncertain – High value customers are looking for a new home – Many can only be served by Inmarsat • Strong competitive threat from Thuraya incumbency – Good time to push bac
Slide 30: Go to market strategy
Go to market strategy Highly Competitive Dual Mode (MSS & GSM) Weight: 210g, Size: 130 x 50 x 32 mm RRP: $500
Slide 31: What? Market Propositions
What? Market Propositions IsatPhone LandPhone FleetPhone Coastal & Regional vessels Fishing & Merchant NGOs, Media, Govt Leisure users, Military, Multiple units/vessel Industrial/MNCs, private Social, Welfare and High ARPU individuals Business users BGAN bundle Migrate from LAMM Frequent Replenishme
Slide 32: Value Proposition
Value Proposition Inmarsat Iridium Globalstar Thuraya Coverage Coverage Regional to Global Global Multi-regional Multi-regional Countries in footprint 83 to Global Global 120 100 Retail Pricing Standard handset price (US$) $500 $1,300 $1,000 $700 Monthly Subscription (US$) $20 $30 $40 $20 Typical pe
Slide 33: Where? Service launch coverage 2007-08
Where? Service launch coverage 2007-08 • Positioned as F1 within 20 degree elevation • Covers key land areas & maritime trade routes • Provides full China land & coastal coverage • Opportunity to develop Indian market • Uses 140+ beams • Overlay with ACeS Garuda-1 • Plan to extend to global coverage
Slide 34: How? Distribution
How? Distribution • Airtime Distribution at Service Launch – ACeS currently sole distributor over Garuda satellite – 8 DPs at Service Launch over I4 F1 • Significant presence in Asian region • Strong ME coverage (Fono) • New Africa focus (Evosat/Satcom) • Hardware Distribution – Axiom Telecom – Sole
Slide 35: What’s Next? 2008 and beyond
What’s Next? 2008 and beyond • Pre-pay Platform (November 2007) – Real-time control, rating and charging – CRM facility for Inmarsat channel – Multi-language retail IVR for top-up – Expect pre-pay to be majority of revenues going forward • Global SPS by end of 2008 – Modern, global network infrastru
Slide 36: Aeronautical business update
Aeronautical business update 25 September 2007 James Collett – Director, Commercial Solutions
Slide 37: Aircraft connectivity technology - networks
Aircraft connectivity technology - networks Global LEO L-band Over Land GEO L-Band VHF/UHF/HF Datalink and Voice GEO Ku-band - AirCell - Inmarsat - Verizon Airfone - Iridium - New Entrants? On the Ground Gatelink WiFi GPRS UMTS
Slide 38: Aircraft connectivity technology - avionics
Aircraft connectivity technology - avionics Total Weight Equals??? <10kg Smaller, Lighter and Cheaper Technology
Slide 39: Inmarsat aeronautical business today
Inmarsat aeronautical business today Aeronautical Revenues $m Classic Aero Swift 64 35 30 25 17.2 20 10.3 15 5.5 14.3 10 7.7 11.4 12.4 13.4 5 6.7 6.5 0 2004 2005 2006 H1 2006 H1 2007 Aeronautical Terminals Classic Aero Swift 64 9000 8000 1530 7000 1241 782 984 6000 447 5000 4000 6434 6236 6777 3000
Slide 40: Market drivers in key aeronautical sectors today
Market drivers in key aeronautical sectors today Business Aviation Government Air Transport • Connectivity on high-end • Maturity in US Government • Optimism for GSM on aircraft corporate jets no longer a L-band market – synergies with data applns differentiator - accepted norm • Interoperability dr
Slide 41: The Inmarsat aeronautical business model
The Inmarsat aeronautical business model Airtime Providers Aeronautical Service Providers Avionic and Antenna Manufacturers Airframe Manufacturers
Slide 42: SwiftBroadband overview
SwiftBroadband overview • ‘BGAN in the air’ service – broadband IP data + simultaneous voice • Commercial Service Introduction targeted October 2007 • 3 Distribution Partners signed to date (OnAir, Stratos & MVS) • Broad commitment from avionics manufacturers • More aggressive price point anticipate
Slide 43: SwiftBroadband target markets
SwiftBroadband target markets • Early adoption from Business Aviation due to ability to adopt IP technology • Some early adoption from Military customers - governed by pace to migrate from circuit switched technology • Airlines today fitting Swift64 for operational applications (with intent of upgra
Slide 44: Connectivity trends
Connectivity trends ‘Bandwidth Hungry’ domain ‘Thin Enterprise’ domain GPRS Gbps UMTS Mbps GSM Kbps IP bps ISDN Divergent trends exist on the ground – ‘Thin Enterprise’ best suited for the cabin
Slide 45: Market space for SwiftBroadband in Air Transport
Market space for SwiftBroadband in Air Transport • SwiftBroadand is a global IP service, well matched to thin enterprise domain. Not a $30/passenger/flight public internet connection • Leverages existing Inmarsat installations – antenna, etc • Single antenna solution for Aero safety services and Swi
Slide 46: AeroMobile
AeroMobile™ Delivering Cellular Services in Flight: The Reality David Coiley Director, Marketing and Strategic Relationships
Slide 47: The global cellular market place
The global cellular market place 9 3 billion cellular subscribers worldwide 9 Over 2.5 billion GSM subscribers 9 1000 new connections a minute 9 784 GSM networks in 209 countries Demand for in-flight communications 9 80%+ passengers carry a mobile phone 9 Research and behaviour shows that passengers
Slide 48: AeroMobile Limited
AeroMobile Limited 9 Global GSM operator - focused on aviation sector 9 Worlds 1st - enabling mobile device usage in-flight 9 Emirates is launch customer – fleetwide commitment 9 Company established in 2006 9 Headquarters’ in dedicated new facility in the UK Telenor ARINC 9 Established in 1855 9 Est
Slide 49: The Qantas Evaluation
The Qantas Evaluation 9 Boeing 767 aircraft installed with Panasonic-supplied AeroMobile system 9 Inmarsat ‘Classic’ and Swift64 satcom for both SMS and GPRS data services. 9 Familiar interface and access to own address book. 9 Cost of usage appears on mobile bill, as on the ground. 9 End user prici
Slide 50: AeroMobile: system installation
AeroMobile: system installation
Slide 51: Unique to AeroMobile
AeroMobile and Inmarsat • Leverages existing investment in satcom i.e. 2000+ aircraft today • Future-proofed for Swift services – no hardware changes needed Bearer Voice Calls Short Supplementary PrePaid GPRS 802.11x Messaging Services Cards (BlackBerry, (Wi-Fi Service (caller ID, call MMS, push ena
Slide 52: Managing The Passenger Experience
Managing The Passenger Experience 9 Promotion and Education • Revised Cabin Crew Procedures • PA announcements • Seatback educational cards • In-flight video • Promotion of social etiquette • Cabin crew training • Questionnaires and market research • The challenges of marketing a one aircraft evalua
Slide 53: Technical Challenges, Commercial Challenges
Technical Challenges 9 Installation and certification 9 Installation projects for 7 aircraft types 9 Certification applications near completion 9 “Guilty until proven innocent” 9 Testing, testing and more testing 9 What if, what if, what if …. Commercial Challenges 9 Operating an airborne service 9
Slide 54: Over 1200 flight hours, 450 flights, 14,000 text messages
Over 1200 flight hours, 450 flights, 14,000 text messages & 65MBytes of Blackberry data
Slide 55: AeroMobile – we have the answers
AeroMobile – we have the answers 9 Market interest surging: 9 Commitments from Emirates, Qantas and four unannounced customers 9 Mature dialogue with 15 other aircraft operators 9 In service now: 9 Mature, proven; passenger interest overwhelmingly positive 9 Plan to activate Emirates before end of 2
Slide 56: Thank you
Thank you -B . i } i ( AeroMobile. - a AIRBORNE MOBILE CONNECTIVITY
Slide 57: OnAir Inmarsat Analyst Briefing
OnAir Inmarsat Analyst Briefing 25 September 2007
Slide 58: Agenda
Agenda • About OnAir • Mobile OnAir • Confirmed programmes • Key milestones achieved 2 © OnAir 2007
Slide 59: OnAir
OnAir A company established in 2005 owned by SITA (65%), Airbus (30%) and the former Tenzing shareholders (5%) OnAir has developed aircraft communications services for passengers including GSM, SMS, GPRS (Blackberry) & wi-fi internet access in flight OnAir has committed investment of more than US$10
Slide 60: OnAir Management
OnAir Management Chief Executive Officer Benoît Debains Chief Financial Officer Chief Operating Officer Sean Lund David Russell 4 © OnAir 2007
Slide 61: Mobile OnAir
Mobile OnAir • For single aisle, A320 family and B737 aircraft • Long range aircraft programmes also planned • Passengers use their own mobile phones or other PDA during flights • SMS, email & voice • GPRS - Supports BlackBerry™-type devices • Invoiced by passenger’s own mobile account at internatio
Slide 62: Passenger benefits
Passenger benefits Last minute calls Stay contactable Email during flight Be prepared when land Advice of any delays Normal bill at international roaming rates 6 © OnAir 2007
Slide 63: Airline benefits
Airline benefits • New revenue stream • Opportunity to generate additional income from inflight communication services • Advanced passenger services • Benefit from a clear service differentiator and competitive advantage • New opportunities for improved customer relationship management • Controlled
Slide 64: Market demand
Market demand OnAir has conducted extensive market research which shows that: Passengers travelling on business • Up to 40% carry a BlackBerry-type device • 69% would like to turn their device on • 93% of those would like to send & receive emails Voice calls • 55 % would like to turn their phone on
Slide 65: End-to-end service architecture
End-to-end service architecture Ground station OnAir point of presence OnAir GSM ground @ infrastructure OnAir business systems Repository 9 © OnAir 2007
Slide 66: Confirmed programmes
Confirmed programmes Fleet deployments: A320 line & retrofit (fleet wide) B737 retrofit (fleet wide) A320 family line & retrofit + B737 retrofit (fleet wide) A330/A340/A350/A380 (fleet wide) linefit Trials leading to fleet deployment: A318 linefit A320 retrofit A319 retrofit 10 © OnAir 2007
Slide 67: Key milestones achieved
Key milestones achieved • Telecom regulatory • CEPT framework providing framework for in-flight mobile telephony across Europe • Blueprint for other regions • Aviation regulatory • EASA approval of installations on A318 and B737-800 aircraft • Commercial success • Confirmed airline programmes coveri
Slide 68: OnAir analyst briefing invitation
resenters: Benoit Debains CEO of OnAir Sean Lund CFO of OnAir The introduction of inflight communications, allowing passengers to use their mobile phones and BlackBerry-type devices while flying, is imminent. The presentation will introduce OnAir, an Airbus and SITA company that will be the service
Slide 69: F-3 Launch, Alphasat Update
F-3 Launch, Alphasat Update Gene Jilg Chief Technology Officer 25 September 2007
Slide 70: Refresher: Inmarsat Assets
Refresher: Inmarsat Assets Now • Inmarsat-4 F1 and F2 in orbit. Sound performance over 52+ satellite-months. Stationkeeping lifetime through 2023 • Burum and Fucino Satellite Access Stations (SASs) fully operational • Five Inmarsat-3s. Stationkeeping lifetimes 2016-2019 • Three Inmarsat-2s. Stationk
Slide 71: F3 Launch
F3 Launch • Contract signed 3 August with International Launch Services for March-April 2008 launch period using Proton vehicle • Price decreases if contractor causes delays, does not decrease if Inmarsat is the cause • Performance to 4 Sept 07: 54 for 56 Proton since 2000, 14 for 15 Proton M/Breeze
Slide 72: Proton Launch failure 5 Sept 07
Proton Launch failure 5 Sept 07 • JCSAT-11 launch failure on Proton M Breeze M destroyed launch vehicle & satellite, total loss ~ US$190m insured • Second-stage malfunction • Second-stage has never caused a failure in previous 41 flights with ILS • Previous second-stage Proton failure 8 years ago, i
Slide 73: Proton Launch - Conclusion
Proton Launch - Conclusion The proposed plan to use Proton to launch F3, originally targeting a March- April 2008 date, is still the best option to have emerged from eleven months of intensive launch service search efforts. The price premium relative to a launch in July 2009 is justified by the posi
Slide 74: Alphasat - Compelling rationale
Alphasat - Compelling rationale • Significant European Space Agency subsidy for new next generation satellite – ~€200m of ESA subsidy, a further $24m LDA support • Stand alone business case – Service footprint in area of greatest MSS revenue opportunity – Enhanced BGAN services (data rate advancemen
Slide 75: Alphasat – How much?
Alphasat – How much? • Impact on Inmarsat forecast capital expenditures – $200m – construction estimate – $150m - launch costs • Target initial launch date early 2013 • Capex payment profile – Construction 2008 to 2012 – Launch costs 2012/13 • Opex impact not material after launch
Slide 76: Alphasat Status
Alphasat Status • Contract progressing full funding in place • Tri-partite contract construct challenging; we are committed to assuring Inmarsat’s interests are preserved • ESA to fund head start programme on critical-path processor technology – a show of good faith and confidence On track for contr
Slide 77: Closing remarks and Q&A
Andy Sukawaty Chairman and CEO Closing remarks and Q&A
Slide 78: Checklist since IPO
Checklist since IPO Complete Ahead 9 Disposal of subsidiaries • SwiftBroadband launch Q4 2007 9 Launch of second I-4 (F2) • FleetBroadband launch Q4 2007 9 Start of BGAN services on F1 • Alphasat contract Q4 2007 9 Third I-4 completed • CIP/Stratos closing Q4 2007 9 Commercial services on F2 • Launc
Slide 79: Core strategy and evolving growth options
Core strategy and evolving growth options L-band ATC in US S-Band CGC in Europe Low-data rate services nd Galileo European GPS yo be d Global security and Embedded in govt. an event revenues /military programmes 07 20 Aero passenger Handheld voice connectivity Ba Broadband Global Area Network (BGAN)
Slide 80: Summary
Summary • IPO objectives implemented and successful – Step change and strong revenue growth across sectors – Continuing momentum in Maritime, BGAN, and Aero – Reiterate 6-8% revenue growth target (2005-2010) – Cash flow and dividend growth • Significant opportunities ahead, medium and long term – Ag
Slide 81: Investor Day Q&A
Investor Day 25th September 2007 Q&A Contact: Simon Ailes, Inmarsat plc simon_ailes@inmarsat.com +44 20 7728 1518 www.inmarsat.com/investor_relations/