![slide1](https://capedge.com/proxy/8-K/0001214659-09-002229/ex99_11.jpg)
Jefferies 7th Annual Communications Conference
September 17, 2009
![slide2](https://capedge.com/proxy/8-K/0001214659-09-002229/ex99_12.jpg)
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.
1
![slide3](https://capedge.com/proxy/8-K/0001214659-09-002229/ex99_13.jpg)
Overview of 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
2
![slide4](https://capedge.com/proxy/8-K/0001214659-09-002229/ex99_14.jpg)
TerreStar Corporate Structure
TerreStar Corporation
(NASDAQ: TSTR)
MVH Holdings, Inc.
Motient Ventures
Holdings, Inc.
Holdings, Inc.
TerreStar Networks
Inc.
TerreStar Networks
Holdings, Canada, Inc.
(Canada Inc.)
TerreStar Global,
Ltd.
Ltd.
(a Bermuda Company)
TerreStar Europe, Ltd.
(a UK Company)
TerreStar National
Services, Inc.
(Government Sub)
TerreStar
License, Inc.
(License Sub)
4506901
Canada Inc
Canada Inc
TerreStar Networks
Canada, Inc.
(Canada Inc.)
Holds 8MHz of 1.4GHz terrestrial spectrum
Holdings structured to comply with Canadian foreign ownership rules
Legal entity indirectly holding 20MHz of 2.0 GHz Spectrum
3
![slide5](https://capedge.com/proxy/8-K/0001214659-09-002229/ex99_15.jpg)
Integrated Network Architecture
4
![slide6](https://capedge.com/proxy/8-K/0001214659-09-002229/ex99_16.jpg)
Significant Development Progress
TerreStar Networks Strategy
• Spectrum Perfected, License Secured
– Successful Satellite Launch
– Call Completed Over Satellite with Integrated Satellite-Terrestrial Devices
– All FCC and IC Milestones Achieved
• Minimize Risk
– Experienced Management
– Market-Defining Technology
– Tier 1 Partners and Suppliers
• Prudent Capital Plan
– Targeted and Prioritized Technology Spend
– Aggressive Operating Expense Reduction
– Restructured Agreements with Partners and Suppliers
5
![slide7](https://capedge.com/proxy/8-K/0001214659-09-002229/ex99_17.jpg)
Significant Assets and Capabilities
Assets | Capabilities |
• Most powerful two-way commercial communications satellite ever launched -- in IOT and performing well • TerreStar-2 underway • 2 Satellite Gateways licensed, ground segments completed - -- in testing • ATC global IP license portfolio | • Beam coverage: United States, Canada, Puerto Rico, Hawaii, Alaska and US Virgin Islands • Capable of generating approximately 500 simultaneous spot beams |
Significant 2 GHz Ecosystem |
6
![slide8](https://capedge.com/proxy/8-K/0001214659-09-002229/ex99_18.jpg)
Industry-Leading Partners and Suppliers
Critical Partner Ecosystem is in Place and Executing to Plan
7
![slide9](https://capedge.com/proxy/8-K/0001214659-09-002229/ex99_19.jpg)
Key Dates in 2009
Complete Satellite simulated
calls with ground network
calls with ground network
Final Satellite review for
shipment to launch base
shipment to launch base
Commence Core Network/IT
Development Program
Development Program
TerreStar-1 Launch
TerreStar Network
Operational
Operational
EB Commercial Terminals
ready
ready
Final hardware and software
certification to perfect
spectrum
certification to perfect
spectrum
PTCRB (industry)
certification
certification
Core Services available
Voice Service
Email
Mobile Web
8
![slide10](https://capedge.com/proxy/8-K/0001214659-09-002229/ex99_110.jpg)
Integrated Satellite Terrestrial Smartphone
Reference Design for TerreStar by EB
• Components usable by any ODM
• Windows Mobile Professional 6.5
• Touch Screen
• QWERTY Keyboard
• Dual-band WCDMA (850 and 1900)
• Quad-band GSM/EGPRS (850,900,1800,1900)
• Wi-Fi
• Bluetooth
• 2.x GHz GMR-3G
• No external antenna
• Conventional Size & Weight
– 4.2” x 2.5” x 0.8”
– 5.2 ounces (with battery)
9
![slide11](https://capedge.com/proxy/8-K/0001214659-09-002229/ex99_111.jpg)
Next Generation Chipsets
Infineon | Qualcomm |
• Software Defined Radio – Programmable protocols – Support for all major frequency bands • High volume / Low cost chips • Lower power consumption | • Qualcomm Chipset – sHRPD Satellite Protocol in future chips • Significant downstream channels • High volume / Low cost chips • Universal - 3GPP, 3GPP2, CDMA |
Hughes Network Systems | Alcatel-Lucent |
• Native support for GMR3-G Satellite Protocol | • Leverage Commercial Base Stations – Higher Volumes |
GSM/HSPA/LTE/GMR-3G
CDMA/HRPD(EVDO)HSPA+/LTE/sHRP
D
D
Chipset
Satellite Base
Stations
Stations
10
![slide12](https://capedge.com/proxy/8-K/0001214659-09-002229/ex99_112.jpg)
Competitive Overview
• Next generation system with configurable spot beams | • Voice, data up to 400 kbps • Broadcast mobile video capable | • PDA size GSM/satellite handsets, priced slightly higher than standard cellular PDAs (~$700 initially, ~$500 with volume) | • NA | |
• Next generation system with configurable spot beams | • Mobile video to vehicle platform (MIM - Mobile Interactive Media) for video and two-way messaging | • NA | • NA | |
• Legacy system • GEO two satellites covering N, central and part of S. America | • NA | • Large expensive terminals $4000+ | • Planned next generation system similar to TerreStar’s | |
• Legacy system | • 2.4k voice, 2.4k data | • Large expensive handsets ($1500 handset) | • $1-2/min | |
• Legacy system | • Voice, data up to 9.6 kbps | • Large expensive handsets | • Failing satellite system | |
• Legacy system | • Voice, data up to 492 kbps | • Very large, expensive terminals & devices | • NA |
11
![slide13](https://capedge.com/proxy/8-K/0001214659-09-002229/ex99_113.jpg)
Roam-In Business Model
• Definition: Roam-In Service
– Effectively allows customers of GSM carriers to “roam-in” to satellite coverage
– Requires GSM customers to purchase a satellite enabled handset
• Roam-In Business Model
– GSM carriers will pay a monthly recurring charge per subscriber and usage
– Introduced as an additional service feature from GSM operators, and would
appear on the customer’s bill from the carrier
appear on the customer’s bill from the carrier
– Satellite usage charges will appear as roaming charges on the customers bill
12
![slide14](https://capedge.com/proxy/8-K/0001214659-09-002229/ex99_114.jpg)
• Risk averse business and
consumers willing to pay a
premium for safety and peace of
mind
consumers willing to pay a
premium for safety and peace of
mind
• For use primarily in emergency
situations
situations
• Adventurous travelers to parks and
nature areas, leisure boaters,
ATV/4x4/snowmobilers, mountain
bikers…
nature areas, leisure boaters,
ATV/4x4/snowmobilers, mountain
bikers…
• For use in emergencies and
occasional communications
occasional communications
• Need for communication and vertical
applications for business continuity
and in remote areas
applications for business continuity
and in remote areas
• All enterprise markets, including
finance & insurance, transportation &
logistics, extractive industries, oil &
gas, agriculture, forestry, etc.
finance & insurance, transportation &
logistics, extractive industries, oil &
gas, agriculture, forestry, etc.
• Consumers and small business users
living/working in areas where
terrestrial coverage is poor
living/working in areas where
terrestrial coverage is poor
• For use for basic communication
Safety Conscious
Outdoor Adventurers
Industry/Enterprise
Rural Population
• First Responders, Public Safety
Personnel & Essential Mission Critical
Personnel
Personnel & Essential Mission Critical
Personnel
• Continuous coverage when terrestrial
networks are unavailable
networks are unavailable
Government & Public Safety
A number of wireless market segments would benefit from the addition of TerreStar
service capabilities
service capabilities
Addressable Wireless Market Segments
13
![slide15](https://capedge.com/proxy/8-K/0001214659-09-002229/ex99_115.jpg)
• At a $20 monthly premium, almost 20% of cellular
subscribers indicated an interest in purchasing integrated
cellular/satellite services
subscribers indicated an interest in purchasing integrated
cellular/satellite services
• This equates to a potential total addressable market size of
over 50M (270M US cellular market x 19.5% = 53M)
over 50M (270M US cellular market x 19.5% = 53M)
• 10% of business cellular subscribers indicated they would
definitely purchase at a $20 premium
definitely purchase at a $20 premium
• Bottom-up approach to defining addressable market results
in 38M market size
in 38M market size
• Achieving 38M market size depends on bringing equipment
costs down to no more than $50 premium over standard
cellular devices
costs down to no more than $50 premium over standard
cellular devices
• Earliest adopters will be government/public safety, industry
verticals, and outdoor adventurers
verticals, and outdoor adventurers
Source: Sources: US Bureau of labor statistics , National Fire Protection Association,
Department of Justice website, Office of Management and Budget, FEMA website,
National Survey on Recreation and the Environment, USDA Forest Service, National
Marine Manufacturers Association, US Census Bureau, TerreStar market feedback
and analysis
Department of Justice website, Office of Management and Budget, FEMA website,
National Survey on Recreation and the Environment, USDA Forest Service, National
Marine Manufacturers Association, US Census Bureau, TerreStar market feedback
and analysis
US Market of ~50M for integrated terrestrial/satellite
service
service
Breakdown of US Integrated Satellite/Cellular Market
Breakdown of US Market Segments
14
![slide16](https://capedge.com/proxy/8-K/0001214659-09-002229/ex99_116.jpg)
Financials
15
![slide17](https://capedge.com/proxy/8-K/0001214659-09-002229/ex99_117.jpg)
Consolidated Condensed Balance Sheet 6/30/09
Unaudited ($ in millions)
Cash and Cash Equivalents | $ | 111.0 | Accounts Payable and Accrued Expense | $ | 20.0 | ||
Other Current Assets | 10.0 | Dividend Payable on Series A & B | 5.0 | ||||
Total Current Assets | $ | 121.0 | Total Current Liabilities | $ | 25.0 | ||
Fixed Assets, Net | $ | 818.0 | Notes and Accrued Interest, Net of Discount | $ | 839.0 | ||
Intangible Assets, Net | 350.0 | Other Long Term Liabilities | 18.0 | ||||
Other Long Term Assets | 14.0 | Total Long Term Liabilities | $ | 857.0 | |||
Total Long Term Assets | $ | 1,182.0 | |||||
Series A Convertible Preferred Stock | 90.0 | ||||||
Series B Convertible Preferred Stock | 319.0 | ||||||
All Other Equity and APIC | 1,206.0 | ||||||
Accumulated Deficit | (1,194.0 | ) | |||||
Total Shareholder's Equity | $ | 421.0 | |||||
Total Assets | $ | 1,303.0 | Total Liabilities and Shareholder's Equity | $ | 1,303.0 |
Projected Capital Expenditures ($ in millions) July 2009 - June 2010
Capital Expenditure Contractual Commitments (1) $77.0
( 1) Includes TerreStar-1 orbital incentive payments and handset/chipset costs. TerreStar-2 construction funded by Credit
Agreement.
Agreement.
16
![slide18](https://capedge.com/proxy/8-K/0001214659-09-002229/ex99_118.jpg)
TerreStar Current Capitalization and Market Value
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 | 30.8 | 30.8 | ||||||||
Fully Diluted Shares Outstanding | 170.0 | 170.0 | ||||||||
Equity Value | $ | 260.1 | $ | 260.1 | ||||||
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 | $ | 1537.70 | $ | 1150.40 | ||||||
Source: Company filings | ||||||||||
(1) Per Broadpoint Capital |
Senior Secured PIK Notes:
Face Amount $550M
Maturity: 2/14/2014
PIK Interest: PIK thru 2/2011 at
16.5% on 2/15 & 8/15
16.5% on 2/15 & 8/15
Senior Exchangeable Notes:
Face Amount: $150M
Maturity: 6/15/2014
Interest & Conversion: PIK thru 2/2011 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
17
![slide19](https://capedge.com/proxy/8-K/0001214659-09-002229/ex99_119.jpg)
Questions?
18