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August 2009
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Safe Harbor
“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995:
This presentation includes “forward looking statements.” All statements other than statements of
historical facts included in this presentation regarding the prospects of our industry and our
prospects, plans, financial position and business strategy, may constitute forward looking
statements. These statements are based on the beliefs and assumptions of our management and
on the information currently available to our management at the time of such statements. Forward
looking statements generally can be identified by the words “believes,” “expects,” “anticipates,”
“intends,” “plans,” “estimates” or similar expressions that indicate future events and trends. Although
we believe that the expectations reflected in these forward-looking statements are reasonable,
these expectations may not prove to be correct. Important factors that could cause actual results to
differ materially from our expectations are disclosed in our filings with the United States Securities
and Exchange Commission (“SEC”). All subsequent written and oral forward-looking statements
attributable to us or persons acting on our behalf are expressly qualified in their entirety by the
cautionary statements included our SEC filings. Factors, risks and uncertainties that could cause
actual outcomes and results to be materially different from those projected include, but are not
limited to, our ability to obtain financing, obtain and maintain regulatory approvals, generate
sufficient cash flows, develop our universal chipset architecture, achieve market acceptance for our
services, develop our network and generate technological innovations.
historical facts included in this presentation regarding the prospects of our industry and our
prospects, plans, financial position and business strategy, may constitute forward looking
statements. These statements are based on the beliefs and assumptions of our management and
on the information currently available to our management at the time of such statements. Forward
looking statements generally can be identified by the words “believes,” “expects,” “anticipates,”
“intends,” “plans,” “estimates” or similar expressions that indicate future events and trends. Although
we believe that the expectations reflected in these forward-looking statements are reasonable,
these expectations may not prove to be correct. Important factors that could cause actual results to
differ materially from our expectations are disclosed in our filings with the United States Securities
and Exchange Commission (“SEC”). All subsequent written and oral forward-looking statements
attributable to us or persons acting on our behalf are expressly qualified in their entirety by the
cautionary statements included our SEC filings. Factors, risks and uncertainties that could cause
actual outcomes and results to be materially different from those projected include, but are not
limited to, our ability to obtain financing, obtain and maintain regulatory approvals, generate
sufficient cash flows, develop our universal chipset architecture, achieve market acceptance for our
services, develop our network and generate technological innovations.
The forward-looking statements in this presentation are made only as of the date of this
presentation.
presentation.
We undertake no obligation to update or revise the forward-looking statements, whether as a result
of new information, future events or otherwise.
of new information, future events or otherwise.
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TerreStar Networks
• Owned by U.S. publicly-traded TerreStar Corporation
– (NASDAQ: TSTR)
• Funded into 2010
– Viable, stable and innovating
• Unique spectrum position
– 20 MHz of spectrum in 2.0 GHz range (ATC eligible)
– 8 MHz of nationwide 1.4 spectrum
• Most advanced, powerful commercial communications satellite
– Launched July 1, 2009
– First call over satellite using smartphones with no external antennas completed July 19, 2009
• Channel partners in place
• Government CRADA extended through Oct 2010
• Holistic Technology Ecosystem
– Integrated satellite/ ground-based design
– Flexible device form factors
• Handsets similar to today’s cellular devices
• Mobile data modems
• Chipsets for OEM integration
• Typical mobile devices can be enabled
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TerreStar Corporate Structure
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Integrated Network Architecture
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Significant Development Progress
TerreStar Networks Strategy
Spectrum Perfected, License Secured
ü Successful Satellite Launch
ü Call Completed Over Satellite with Integrated Satellite-Terrestrial Devices
ü All FCC and IC Milestones Achieved
Minimize Risk
ü Experienced Management
ü Market-Defining Technology
ü Tier 1 Partners and Suppliers
Prudent Capital Plan
ü Targeted and Prioritized Technology Spend
ü Aggressive Operating Expense Reduction
ü Restructured Agreements with Partners and Suppliers
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Assets and Capabilities
• Most powerful two-way commercial communications satellite
ever launched -- in IOT and performing well
ever launched -- in IOT and performing well
• Beam coverage: United States, Canada, Puerto Rico, Hawaii
and Alaska
and Alaska
• Capable of generating approximately 500 simultaneous spot
beams
beams
• TerreStar-2 underway
• 2 Satellite Gateways licensed, ground segments completed --
in testing
in testing
• ATC global IP license portfolio
• Significant 2 GHz Ecosystem
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Industry-Leading Partners and Suppliers
OSS/BSS
Network
Critical Partner Ecosystem is in Place and Executing to Plan7
Satellite
Devices
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Key Dates in 2009
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Integrated Satellite Terrestrial Smartphone
Reference Design for TerreStar by EB
• Customizable
– Components usable by any ODM
• User Interface
– Windows Mobile Professional 6.5
– Touch Screen
– QWERTY Keyboard
• Terrestrial
– Dual-band WCDMA (850 and 1900)
– Quad-band GSM/EGPRS (850,900,1800,1900)
– Wi-Fi
– Bluetooth
• Satellite
– 2.x GHz GMR-3G
– No External Antenna
• Form Factor - Conventional Size & Weight
– 4.2” x 2.5” x 0.8”
– 5.2 ounces (with battery)
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Next Generation Chipsets
GSM/HSPA/LTE/GMR-3G
• Infineon Chipset
– Software Defined Radio
• Programmable protocols
• Support for all major
frequency bands
frequency bands
– High volume / Low cost
chips
chips
– Lower power
consumption
consumption
• Hughes Network Systems
Satellite Base Stations
Satellite Base Stations
– Native support for GMR3-
G Satellite Protocol
G Satellite Protocol
CDMA/HRPD(EVDO)HSPA+/LTE/sHR
PD
PD
• Qualcomm Chipset
– sHRPD Satellite Protocol in
future chips
future chips
• Significant downstream
channels
channels
– High volume / Low cost chips
– Universal - 3GPP, 3GPP2,
CDMA
CDMA
• Alcatel-Lucent Satellite Base
Stations
Stations
– Leverage Commercial Base
Stations
Stations
• Higher Volumes
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TerreStar vs. the Competition
GEO, single satellite covering US and Canada
Next gen system with configurable spot beams
Voice, data up to 400 kbps
Broadcast mobile video capable
PDA size GSM/satellite handsets at prices slightly higher
than standard cellular PDAs (~$700 initially, ~$500 with
volume)
volume)
LEO, 66 satellites, global
including polar
including polar
Legacy system
Large $1500 handset
2.4k voice, 2.4k data
$1-2/min
LEO, 40 satellites, global
Legacy system
Large expensive handsets
Voice, Data up to 9.6 kbps
Failing satellite system
GEO, single satellite covering
US and Canada
US and Canada
Next gen system with
configurable spot beams
Mobile video to vehicle platform
(MIM - Mobile Interactive Media) for
video and two-way messaging
GEO, two satellite covering
US and Canada
Current legacy system: GEO two satellites
covering N, central and part of S. America
Large expensive terminals $4000+
Planned next gen system similar to TerreStar’s
Global coverage
Legacy system
Very large, expensive
terminals & devices
Voice, data up to 492
kbps
kbps
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Financials
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Consolidated Condensed Balance Sheet 6/30/09
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Unaudited - $ in millions |
Cash and cash equivalents | $ | 111 | Accounts payable and accrued expense | $ | 20 | |||
Other current assets | 10 | Dividents payable on Series A & B | 5 | |||||
Total current assets | 121 | Total current liabilities | 25 | |||||
Fixed assets, net | 818 | Notes and accrued interest, net of discount | 839 | |||||
Intangible assets, net | 350 | Other long term liabilities | 18 | |||||
Other long term assets | 14 | 882 | ||||||
Total assets | $ | 1,303 | ||||||
Series A convertible preferred stock | 90 | |||||||
Series B convertible preferred stock | 319 | |||||||
All other equity and APIC | 1,206 | |||||||
Accumulated deficit | (1,194 | ) | ||||||
$ | 1,303 |
Projected Capital Expenditures | July 2009 - June 2010 |
Capital Expenditure Contractual Commitments (1) | $ | 77 | ||
(1) Includes TerreStar-1 orbital incentive payments and handset/chipset costs, TerreStar-2 construction funded by Credit Agreement |
Capital Expenditure Contractual Commitments (1) | $ | 77 | ||
(1) Includes TerreStar-1 orbital incentive payments and handset/chipset costs, TerreStar-2 construction funded by Credit Agreement |
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Senior Secured PIK Notes:
Face Amount $550M
Maturity: 2/14/2014
PIK Interest: 16.5% on 2/15 & 8/15
Senior Exchangeable Notes:
Face Amount: $150M
Maturity: 6/15/2014
Interest & Conversion: PIK thru 3/2011 at
6.5% interest
Convertible into
TSTR shares at
$5.57/share
TSTR shares at
$5.57/share
TerreStar-2 Credit Agreement:
Face Amount: $100M -
outstanding $39.5M
Maturity: 2/5/2013
Interest: PIK thru 2/2012 at
14% interest
14% interest
Preferred Stock:
Series A: $90M
Series B: $318.5M
Due 4/15/2010
Convertible into TSTR shares at $33.33/share.
Dividends Cash Paid or PIK’d on 4/15 & 10/15
Dividends Cash Paid or PIK’d on 4/15 & 10/15
Series E:
1.9M shares convertible into TSTR shares at a
rate of 25:1. 1.2M issued on 6/10/2008
rate of 25:1. 1.2M issued on 6/10/2008
TerreStar Current Capitalization and Market Value
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As of June 30, 2009 | ||||||||||
Book Value | Current Market Price (1) | Market Value | ||||||||
Current Share Price as of 6/30/09 | $ | 1.53 | $ | 1.53 | ||||||
Common Shares Outstanding | 139.2 | 139.2 | ||||||||
Options, Warrants and Convertible Instruments | 60.3 | 60.3 | ||||||||
Fully Diluted Shares Outstanding | 199.5 | 199.5 | ||||||||
Equity Value | $ | 305.2 | $ | 305.2 | ||||||
Plus: | ||||||||||
TerreStar Networks 16.5% Notes due February 15, 2014 | 774.6 | 50.0% | 387.3 | |||||||
TerreStar Networks 6.5% Exchangeable PIK Notes due June 15, 2014 | 165.8 | 165.8 | ||||||||
TerreStar-2 14% Purchase Money Credit Agreement due February 5, 2013 | 39.5 | 39.5 | ||||||||
Total Debt | 979.9 | 592.6 | ||||||||
Plus: | ||||||||||
Series A Preferred Stock | 90.0 | 90.0 | ||||||||
Series B Preferred Stock | 318.5 | 318.5 | ||||||||
Series C Preferred Stock | 0.0 | 0.0 | ||||||||
Series D Preferred Stock | 0.0 | 0.0 | ||||||||
Series E Junior Preferred Stock | 0.0 | 0.0 | ||||||||
Total Preferred | 408.5 | 408.5 | ||||||||
Less: Cash and Cash Equivalents | 110.8 | 110.8 | ||||||||
Total Enterprise Value | $ | 1582.80 | $ | 1195.50 | ||||||
Source: Company filings | ||||||||||
(1) Per Broadpoint Capital |
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Questions?
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Thank You!
TerreStar Contact:
Vincent Loiacono
Chief Accounting Officer
vincent.loiacono@terrestar.com
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