1st Quarter 2009 Earnings
May 4, 2009
This presentation may contain “Forward-Looking Statements”. All
statements other than statements of historical facts made in this
presentation regarding the prospects of our industry and our
prospects, plans, financial position and business strategy may
constitute forward-looking statements. We can give no assurance
that these expectations will prove to be correct. Factors and risks
that could cause actual results to differ materially from our
expectations are described in the most recent SkyTerra Forms 10-Q
and 10-K, on file with the SEC.
Outline of Presentation
Alex Good – Chairman & CEO
Chipset Technology Update
Satellite Construction
Customer Sales Activity
Regulatory Initiatives and Filings
Market and Industry Perspectives
Scott Macleod – Chief Financial Officer
1Q09 Financial Results
April 1, 2009 Funding
Ownership and Capital Structure
Next-Generation Satellite System Costs
Chipset Technology Update (1)
1.
We are making steady progress on our goal of integrating satellite
capability into a range of mass-market, terrestrial-capable handsets
2.
Qualcomm’s first handset-capable LTE chipset, the MSM8960 will include our satellite air interface instead of the MSM8660
The industry is adopting the LTE protocol
The MSM8660 will not support LTE, while the MSM8960 will support LTE
The MSM8960 includes legacy CDMA and GSM-based 3G and 2G protocols
The MDM9600 will support LTE and a broad range of 3G and 2G protocols
3.
Alcatel-Lucent has been selected to develop the Satellite Base Station
Subsystem compatible with the planned Qualcomm chipsets
Chipset Development Program (2)
1.
We have added a second technology path with Infineon
2.
The Infineon/Hughes Network Systems platform:
Combines GSM-based technologies with HNS’ GMR1-3G satellite air interface
The chipset platform (the XMM SDR210) is based on Infineon’s Software
Defined Radio architecture
HNS will develop and deliver GMR1-3G Satellite Base Station Subsystem
3.
Key advantages of the two-vendor approach:
Technology flexibility
Strengthens strategic position in delivering next-generation solutions to the
broadest range of partners and market segments
Sharing costs with other ATC providers increases cost-effectiveness
Satellite Construction Program
1.
The surface for the 22-meter reflector has been fully assembled and
successfully completed several stow and deploy sequences
2.
The payload module testing has been completed and the payload module has been mated with the spacecraft bus
3.
The development and testing of the GBBF systems is continuing
4.
The launch window for SkyTerra 1 is expected to be open from March
2010 through May 2010
Customer Sales Activity
1.
As we have done with the SMARTTM talkgroup program, we continue to develop reference customers and models of operation that will be a
framework for our next-generation system
2.
Shelby County, Tennessee
In late April, we closed a significant MSAT-G2 sales order to Shelby County,
Tennessee
The buy was facilitated through Federal funding, specifically, the Urban Area
Security Initiative grant program
This model of pairing fixed installations with mobile kits is very attractive to
local governments
3.
We are focused on finalizing plans to transition current customers to our next-generation system and expect to announce shortly several
transition initiatives
4.
As we have already done with a number of private network customers,
we recently extended our existing satellite data communications services contract with Wireless Matrix
Regulatory Initiatives and Filings
1.
On March 4, 2009, Harbinger and SkyTerra asked the FCC to separate the request
for authority to transfer control of SkyTerra from the request for approval of the
possible business combination between SkyTerra and Inmarsat
2.
SkyTerra filed on April 29, 2009, an amendment to its earlier filing with the FCC
to implement ATC Reconsideration and Cooperation Agreement
3.
We continue the formal satellite coordination process with the relevant ITU-
sanctioned operators and governments
Market and Industry Perspectives
1.
Smartphone penetration is driving growth in data services revenue
2.
The significant increase in data devices and usage requires significantly more
network capacity
3.
The CTIA and third-party analysts note that mobile Internet services require
significantly more spectrum
4.
There is limited new mobile spectrum that could be cleared in the medium term,
and existing spectrum positions lack uniform availability of 10 MHz carriers
Wireless Data Usage Is Growing Exponentially
Source: Cisco IP Traffic Forecast, August 2008.
North America Europe & Japan Rest of World
Global wireless data is forecast to increase at 157% CAGR
between 2006 and 2012
2006 – 2012 CAGR
North America: 140%
2006 – 2012 CAGR
Europe & Japan: 130%
2006 – 2012 CAGR
Rest of World: 187%
Large Bandwidth Will Be Needed to Support Next-
Generation Business Models
Mobile Access
Fixed-Mobile
Bundled Offerings
Web 2.0
Rysavy - Mobile Broadband Spectrum Demand, Dec. 2008
Fixed
Access
Fixed Mobile
Convergence
Embedded
Device Model
Industry Take-Aways
1.
We believe the backdrop of limited supply and rapidly increasing demand for
mobile bandwidth bodes well for our ATC spectrum opportunity
2.
Smartphone penetration and an emerging class of newly connected devices are
driving unprecedented growth in the use of mobile bandwidth
3.
Carriers, device manufacturers and consumers are increasingly dependent upon
data services for revenue or utility
4.
There is limited mobile spectrum available in the near term from traditional
sources
SkyTerra Consolidated Income Statement
SkyTerra Consolidated Balance Sheet
SkyTerra Capital Structure (1)
April 1, 2009 Funding
1.
Closed on the second of four funding tranches from Harbinger:
January 4, 2009: $150 million
April 1, 2009: $175 million
July 1, 2009: $ 75 million
January 4, 2010: $100 million
Total $500 million
2.
SKYT issued 21.25 million penny warrants for SKYT common stock as per the closing of the April funding tranche
SkyTerra Ownership
Next-Generation Satellite System Costs ($ in mm’s)
