Isce 2005
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ISCe 2005. John Stone, Jr. Director. May 31, 2005. Runup to takeouts – or, how we got here. FSS has always had high EBITDA margins and revenue visibility to support debt. Telecom boom produced significant infrastructure overcapacity in FSS too.

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ISCe 2005

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Isce 2005

ISCe 2005

John Stone, Jr.

Director

May 31, 2005


Runup to takeouts or how we got here

Runup to takeouts – or, how we got here

  • FSS has always had high EBITDA margins and revenue visibility to support debt.

  • Telecom boom produced significant infrastructure overcapacity in FSS too.

  • Fed intervention in the credit markets produced low rates and economic recovery that collapsed credit spreads, making debt capital cheap.

  • Low cost of debt and reduced need for CapEx begged for recapitalization.

  • Bush tax policies made

    dividends more attractive.


Fss where we are today

FSS – Where we are today

  • PanAmSat – Model for success or crash test dummy?

    • Move to internally rationalize capacity supercharges cash flow

    • Restructuring leaves company highly levered

      • Increases equity returns

      • Floating rate debt => interest rate risk

      • Reduced liquidity => reduced flexibility

    • First out of the gate - up 9% since IPO

    • 7.8% dividend yield makes stock trade like a bond (sensitive to rates)


Fss where we are today1

FSS – Where we are today

  • SES Global – the road less taken…

    • Substantial cash reserves and liquidity

    • Aggressive fleet expansion continues

    • Stated appetite for acquisitions

    • Projecting double digit growth in 2005 and 2006

    • Dividend yield of 3.1% - for now

    • Less financial risk, but more operational risk – plenty of rope


What lies ahead

What lies ahead?

  • Return of financial discipline

    • Tight capex budgets drive demand for “small” satellites

    • Capacity rationalization gradually eases transponder glut and drives increasing lease rates – growing EBITDA margins for all

  • Interest rate fluctuations affect the industry more than ever before

  • New Skies: eat or be eaten

  • Inmarsat: a different kind

    of bird


Paradigm shifts or did someone get the license on that truck

Paradigm shifts – or did someone get the license on that truck?

  • IPTV- based services

  • High Definition TV

  • Broadband to homes, aircraft, cars?

  • Ancillary Terrestrial Components

  • WiMax

  • Insurance – Do It Yourself

  • Satellites – one bird, many slots

  • SpaceX


Near earth llc

Near Earth LLC

  • What we are: A boutique investment bank focused on satellite communications and related industries, member NASD

  • What we do:financings and advisory services to large and small companies

  • How we are different: Our industry focus allows us to be more more creative than larger Wall Street firms. Our small size allows us to be more flexible.

  • www.nearearthllc.com


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