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Spectrum & the ESAP Process

Spectrum & the ESAP Process

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Spectrum & the ESAP Process

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  1. Spectrum & the ESAP Process ATIF - April 16, 2009 Samer HalawiVice President, Strategic Corporate Development Inmarsat plc (LSE: ISAT)

  2. Content • Who we are • Not enough spectrum! • ATC and ESAP/CGC • Monetization of the ESAP process

  3. Our markets • Dependable global voice & data mobile communications where local networks are unreliable or don’t exist • MSS market leader in maritime, land, and aero markets • 2008 revenues up 13.4% to $635 million, EBITDA up 12.5% to $432 million (68% EBITDA margin) • Fully funded with satellite fleet operational into the 2020s Usage data as at June 2008

  4. Not enough spectrum! • Exploding demand for broadband wireless services, both 2-way and broadcast • Congested network capacity • Broadband explosion (smart phones with PC like experience, social networking such as Facebook and Youtube, next generation gaming, mobile broadband applications, bundling and pricing strategies, etc.) • Planned technologies hungrier than ever for spectrum • Limited spectrum availability and lack of harmonization • Due to spectrum and business model uncertainty, incumbent operators slow to invest in new infrastructure

  5. Spectrum availability in Europe • Bands • 470-862 MHz – Digital dividend TV spectrum • 880-915/925-960 MHz; and 1710-1785/1805-1880 MHz – GSM bands • 1900-1980/2010-2025/2110-2170 MHz – 3G bands • 1980-2010/2170-2200 MHz – MSS bands • 2500-2690 MHz – 3G expansion bands • Comments • Top 70 MHz targeted for mobile, but no common agreed timetable or strategy • Only GSM and UMTS currently allowed in bands, with very complex sharing between legacy and new technologies • Already allocated, with little chance to re-purpose l • Available, harmonized and auction-free l • Best available new band, but no harmonization and auctions expected

  6. ATC licensing in North America • Efficient use of L-band spectrum (reserved for satellite) • Extends terrestrial scope and economics to satellite world • Allows for deployment of national hybrid networks • Fulfillment of USO obligations • Gating requirements • Requires spectrum coordination amongst different holders • Spectrum coordination agreement between Inmarsat and MSV

  7. ESAP process & CGC licensing in Europe • Similar to ATC concept • 2 free awards of 30 MHz of spectrum each, through ESAP process • MSS pan-European license and local CGC model • S-band spectrum at 2 GHz is clean and of premium quality • Hybrid network, technology agnostic • Gating requirements less strict that ATC, with main condition being launch of S-band satellite (€300 million over a period of 3 years)  translates into a cost of less than $0.02 / PMP • Several monetization strategies

  8. Monetization of the ESAP process Spectrum play, as preferred business model, or… S-band MSS & CGC - Broadcast audio/video services - Mobile telephony/broadband S-band MSS - 10Mbps downlink speeds to laptop - 500kbps downlink speeds to handheld MSS Evolution- BGAN ‘on steroids’- GSPS evolution B2G- First responders- Security/military- Integrated comms Mobile broadcast- Mobile TV-In-vehicle audio and telematics (SDARS) CGC- 3G/4G 2-way comms- Terrestrial network- Spectrum play Primarily internal Primarily external Evolutionary approach founded on Inmarsat’s existing services Revolutionary approach founded on third party collaborations

  9. Conclusion • Unique opportunity to acquire 30 MHz of clean premium S-band spectrum across all 27 member states of the EC • Entry cost consist of around €300 million payable over 3 years • Flexibility to apply several business models, spectrum play model could deliver very health IRR and cash on cash multiple • Safety net business model delivers a business worth over $800 million, with a range of options in between • Several strategic rationales for potential partners to join Inmarsat on this venture Inmarsat confidential

  10. Thank you