Attached files
| file | filename |
|---|---|
| 8-K - TERRESTAR CORP | c129948k.htm |
December 2009
1
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.
2
TerreStar
Delivers in 2009
• Introduced the
world's first quad-band GSM and tri-band WCDMA/HSPA
smartphone with integrated all-IP satellite-terrestrial voice and data capabilities
- TerreStar Genus™.
smartphone with integrated all-IP satellite-terrestrial voice and data capabilities
- TerreStar Genus™.
• Signed agreements
with Qualcomm and Infineon to add S Band satellite
capability to next generation mobile chipsets enabling integrated satellite
functionality in mass-market devices costing about the same as cellular-only
devices.
capability to next generation mobile chipsets enabling integrated satellite
functionality in mass-market devices costing about the same as cellular-only
devices.
• Launched the
world’s largest, most powerful commercial communications
satellite - TerreStar-1 and successfully deployed its 18 meter reflector, the
largest commercial satellite antenna ever unfurled.
satellite - TerreStar-1 and successfully deployed its 18 meter reflector, the
largest commercial satellite antenna ever unfurled.
• Brought on-line
redundant gateway earth stations in the United States and
Canada.
Canada.
• Completed the
first end-to-end phone call over TerreStar-1 between two
TerreStar GENUS™ smartphones and satisfied last regulatory milestones.
TerreStar GENUS™ smartphones and satisfied last regulatory milestones.
• Announced the
successful completion of in-orbit testing of TerreStar-1.
• Activated an
all-IP, 4G core network.
• Executed a
distribution agreement with AT&T whereby AT&T will offer the
TerreStar GENUS solution to its government and commercial customers.
TerreStar GENUS solution to its government and commercial customers.
• Signed multi-year,
multi-million dollar revenue lease of 1.4GHz spectrum asset.
• Received FCC and
industry certification for the TerreStar GENUS™
smartphone.
3
Holdings
structured to comply with Canadian foreign ownership rules
Legal
entity holding of 8 MHz of 1.4GHz spectrum
Legal
entity holding of 20 MHz of 2.0 GHz spectrum
TerreStar
Corporation
(NASDAQ:
TSTR)
MVH
HOLDINGS INC.
(100%
owned)
MOTIENT
HOLDINGS INC.
(100%
owned)
TerreStar
National
Services,
Inc.
(Government
Sub)
(100%
owned)
MOTIENT
VENTURES HOLDING INC.
(100%
owned)
TERRESTAR
NETWORKS
INC.
(88.4%
owned)
MOTIENT
COMMUNICATIONS
INC.
(100%
owned)
MOTIENT LICENSE
INC.
(100%
owned)
MOTIENT SERVICES
INC.
(100%
owned)
TerreStar
License
Inc.
(License
Sub)
(100%
owned)
TERRESTAR
GLOBAL
LTD
(a Bermuda
Company)
(86.5%
owned)
TerreStar
Europe
Limited
(a
UK Company)
(100%
owned)
TerreStar
Networks
Holdings
(Canada)
Inc.
(33-1/3%
owned)
TerreStar
Networks
(Canada)
Inc.
(80%
owned)
20%
4506901
Canada Inc
(100%
owned)
TERRESTAR
HOLDINGS INC.
(100%
owned)
TERRESTAR
1.4 HOLDINGS LLC
(100%
owned)
TerreStar
Corporate Structure
4
Integrated
Network Architecture
5
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
6
Significant
Assets and Capabilities
|
Assets
|
Capabilities
|
|
• Most powerful
two-way commercial communications
satellite ever launched • 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
|
7
Industry-Leading
Partners and Suppliers
Critical
Partner Ecosystem is in Place and Executing to Plan
8
Key
Dates
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
FCC
& PTCRB
(industry)
certification
Scale
Commercial Service
Launch with AT&T
Launch with AT&T
2009
2010
Satellite
Demonstration
at
IACP conference
Limited
Service Launch
9
TerreStar
GENUSTM
Smartphone
|
|
|
|
|
|
|
|
|
|
• 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)
FCC
& PTCRB (industry)
certification -- December 2009
certification -- December 2009
10
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
11
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 |
• 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
|
• Large,
expensive terminals
& devices |
• NA
|
12
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 plus usage charges
– Introduced as an
additional service feature from GSM operators, and would appear on
the customers’ bill from the carrier
the customers’ bill from the carrier
– Satellite usage
charges will appear as roaming charges on the customers’
bill
13
The
Roam-In Value Proposition
|
Channel
Partners
|
GSM
Customers
|
|
• Fills network
gaps for carriers
• Enhances
customer retention
• Utilizes
existing form factor devices
• Creates new
market opportunities
• Creates a key
competitive differentiator
|
• Provides
complete coverage nationwide
• Single device
for everyday and disaster
communications • More robust
voice and date applications (than
existing MSS) |
Roam-In
Value Proposition For:
• 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
13
• 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
14
15
• 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
16
Significant
Progress on Roam-In
TerreStar
has made significant progress towards launching the Roam-In
business
Execution
of Roam-In Plan
|
Roam-In
Revenues Expected To Begin in 2010
|
|
Perfected
Spectrum
&
Secured License
|
Technological
Ecosystem
|
Roaming-Agreements
|
Third
Party Distribution
Agreements |
|
• Successfully
launched satellite into
orbit on July, 1 2009 • First
successful call over satellite
using TerreStar smart phones completed on July 19, 2009 • All FCC and IC
milestones achieved
|
• Integrated
satellite / ground-based
design • Handsets
achieved FCC and
industry certification in December 2009 • Third-party
handset certification
process underway • R&D
agreements in place with
Infineon and Qualcomm for chip development • Nokia base
stations available, with
next gen LTE versions expected to be available in 2011 |
• AT&T
roaming agreement
executed • In discussions
with other
carriers |
• AT&T
distribution agreement
executed • Significant
progress in
negotiating distribution agreements with third-parties • Creates a
distribution channel
for TerreStar handsets and satellite services • Currently
integrating logistics,
provisioning, billing and customer care operations with initial MNO. |
17
1.4
GHz Spectrum
• 8
year lease term with ROFR purchase option at $250M or value of
competing offer
competing offer
– Lease payments $1M
per month for first eight months; $2M per month
thereafter
thereafter
– Lease commenced
October 2009
18
ATC
Opportunities
• Several
Integrated Satellite / ATC opportunity classes identified
– 4G upgrade for
existing carriers
– 4G capacity
expansion for existing carriers
– Market / geographic
expansion
– Industry vertical
applications (Smart Grid, transportation, government…)
• Project
activity underway in all classes
• Commercial
availability of 2.0 GHz LTE equipment expected in 2011
• MNOs experiencing
rapidly increasing demand for data services on
3G networks and face increasing spectrum limitations
3G networks and face increasing spectrum limitations
• 4G
demands even more spectrum for implementation
• FCC
ATC authorization application pending
• TS-2
(ground spare) 85% complete and on schedule to permit
commencement of commercial ATC operations in late 2010
commencement of commercial ATC operations in late 2010
19
Financials
Consolidated
Condensed Balance Sheet 9/30/09
| Unaudited ($ in millions) | |||||||
|
Cash
and Cash Equivalents
|
$ | 72.3 |
Accounts
Payable and Accrued Expense
|
$ |
22.0
|
|
|
|
Other
Current Assets
|
$ | 8.6 |
Dividend
Payable on Series A & B and
Other Current Liabilities
|
31.6
|
|
||
|
Total
Current Assets
|
$ | 81.0 |
Total Current
Liabilities
|
$ |
53.5
|
|
|
|
Fixed
Assets, Net
|
$ | 900.6 |
Notes
and Accrued Interest, Net of Discount
|
$ |
904.6
|
|
|
|
Intangible
Assets, Net
|
$ | 345.8 |
Other
Long Term Liabilities
|
24.8
|
|
||
|
Other
Long Term Assets
|
$ | 13.3 |
Total Long Term
Liabilities
|
$ |
929.4
|
|
|
|
Total
Long Term Assets
|
$ | 1,259.8 | |||||
|
Series
A Convertible Preferred Stock
|
$ |
90.0
|
|
||||
|
Series
B Convertible Preferred Stock
|
$ |
318.5
|
|
||||
|
All
Other Equity and APIC
|
$ |
1,203.0
|
|||||
|
Accumulated
Deficit
|
$ | (1,253.7 | ) | ||||
|
Total
Shareholder's Equity
|
$ |
357.8
|
|||||
| Total Assets | $ | 1,340.8 | Total Liabilities and Shareholder's Equity | $ | 1,340.8 | ||
20
21
TerreStar
Capitalization and Market Value
as of September 30, 2009
as of September 30, 2009
|
Book Value
|
||||
|
Current Share Price as of
9/30/2009
|
$ | 2.29 | ||
|
Common Shares
Outstanding
|
139.7 | |||
|
Options,
Warrants and Convertible Instruments
|
30.0 | |||
|
Fully Diluted
Shares Outstanding
|
169.7 | |||
|
Equity
Value
|
$ | 388.6 | ||
|
Plus:
|
||||
|
TerreStar
Networks 16.5% Senior PIK Notes due February 15,
2014
|
$ | 810.4 | ||
|
TerreStar
Networks 6.5% Exchangeable PIK Notes due June 15, 2014
|
$ | 167.0 | ||
|
TerreStar-2
14.0% Purchase Money Credit Agreement due February 5, 2013
|
$ | 65.3 | ||
|
Total
Debt
|
$ | 1,042.7 | ||
|
Plus:
|
||||
|
Series A
Cumulative Convertible Preferred Stock
|
$ | 90.0 | ||
|
Series B
Cumulative Convertible Preferred Stock
|
$ | 318.5 | ||
|
Series C
Preferred Stock
|
$ | 0.0 | ||
|
Series D
Preferred Stock
|
$ | 0.0 | ||
|
Series E
Junior Participating Preferred Stock
|
$ | 0.0 | ||
|
Total
Preferred
|
$ | 408.5 | ||
|
Less:
|
||||
| Cash and Cash Equivalents | $ | (72.3 | ) | |
|
Total
Enterprise Value
|
$ | 1,767.5 | ||
Senior
Secured PIK Notes:
Original
Issue Amount $550
million
Maturity: 2/14/2014
PIK
Interest: 16.5%
on 2/15 & 8/15
Senior
Exchangeable PIK Notes:
Original
Issue Amount: $150
million
Maturity: 6/15/2014
Interest: PIK
thru 3/2011 at 6.5%
Conversion: TSTR
shares at $5.57/share
TerreStar-2
Credit Agreement:
Commitment: $100
million
Outstanding: $65.3
million
Maturity: 2/5/2013
Interest: PIK
thru 2/2012 at 14%
Series
A&B Preferred Stock:
Series A
Amount: $90.0
million
Series B
Amount: $318.5
million
Series
A&B Maturity: 4/15/2010
Conversion: TSTR
shares at $33.33/share
Dividends: 5.5%
cash or 6.5% common
Paid on
4/15 & 10/15
Series
E Junior Preferred Stock:
1.9
million shares authorized and 1.2 million issued on
6/10/2008, convertible into TSTR shares at a rate of 25:1
6/10/2008, convertible into TSTR shares at a rate of 25:1