ASX Spotlight - Small to Mid Caps Conference · Company overview 3 NewSat (ASX:NWT) is...
Transcript of ASX Spotlight - Small to Mid Caps Conference · Company overview 3 NewSat (ASX:NWT) is...
ASX Spotlight - Small to Mid Caps Conference March 2013
Company overview
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NewSat (ASX:NWT) is Australia’s leading independent satellite
service provider specialising in global satellite communications
― Operates as a reseller of third-party satellite capacity using
owned Teleports in Adelaide and Perth, Australia
― Provides remote and temporary sites with fast, secure and
reliable Internet, voice, data and video communications
Established and profitable current business:
― Market capitalisation of A$250M
― 22% average revenue growth over the last two years
― EBITDA of A$3.9m, FY12
Jabiru project to transform business from a “reseller” of satellite
capacity to an “owner” of satellites
― Expected to create a step-change in earnings and
significantly increase EBITDA margins once Jabiru is
operational
NewSat also holds an attractive portfolio of satellite slots, which
will form the basis for additional future satellite launches NewSat Orbital Slot
MEASAT Orbital Slot
Development timetable
NewSat’s satellite slot portfolio
Stage 1 Stage 2 Stage 3
2002
Solutions
provider
2005
Teleport
operator
2011–2015
Satellite
operator
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Experienced Management Team
Michael Hewins
Chief Operating Officer
>30 years of executive
management experience in
global space industry
Satellite Experience:
AON / International Space
Brokers (Chief Commercial
Officer), Arianespace
Adrian Ballintine
Founder and CEO
>30 years of global technology
experience
Satellite Experience:
2011 Teleport Executive of the
Year and Director of the World
Teleport Association
David Ball
Chief Technology Officer
20 years of experience in
satellite and communication
sectors
Satellite Experience:
Intelsat (Managing Director Asia
Pacific), PanAmSat
William
Abbott
Corporate
Counsel
>30 years corporate law
experience including capital
raising, commercial
financing, corporate
governance, compliance and
enforcement
Mike
Kenneally
VP – Satellite
Strategy
>30 years global ICT and
satellite experience with
Telecom NZ, Optus, Telstra,
Lockheed Martin
Len
McGoldrick
VP – Engineering
& Operations
25 years experience in
satellite operations with
SES New Skies, British
Telecom
Andrew
Matlock VP – Sales
>25 years experience in the
telco and technology sectors,
including at Calcomp Inc.
(division of Lockheed Martin)
Adam
Shapiro
Chief Financial
Officer /
Company
Secretary
>10 years financial sector
experience at
PriceWaterhouseCoopers and
Ernst & Young in assurance
and advisory
Merv
Kuek VP – Marketing
>10 years marketing and
communications experience,
including Telstra and Crazy
John’s (subsidiary of
Vodafone Australia)
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Existing Industry Knowledge and Networks from Teleport Business Provides Springboard
Currently purchase capacity from 7
satellite operators on 10 satellites (1)
Understand service requirements,
transition contracts to owned capacity
Customer Insight / Solutions Oriented
Supply Side Insight
Existing relationships and service
accreditations
Military Accredited & Internationally Recognised
Note:
1. Includes agreement with MEASAT for hosted payload on Jabiru-2
Ka-Band Supplementary to C- and Ku-Band Markets
Widely used
Broad footprint
Least rain fade
Reliable low bandwidth
Interference from terrestrial
systems
Larger earth station antenna
required
New spectrum unavailable
C-Band (4-8GHz)
Higher power transmission
More focused beams
Some rain fade / signal attenuation
issues
Spectrum saturated
Ku-Band (12-18GHz)
Offers high capacity bandwidth at
already occupied satellite positions
Greatest user flexibility
Smaller end-user antenna
Higher frequency
New spectrum available
Some rain fade / signal attenuation
issues at the surface
Ka-Band (26-40GHz)
Uses Uses Uses
Full-time TV distribution
Contribution feeds
Backhaul and VSAT
Direct-to-home (DTH) television
Satellite news gathering
Fixed and broadcast services
Backhaul and VSAT
Enterprise communication networks
Military applications
Aeronautical & mobility applications
Fixed and broadcast services
Backhaul and VSAT
Enterprise communication networks
Military applications
High throughput satellite (HTS)
applications
Aeronautical & mobility applications
Ka-band capacity can operate adjacent to C- and Ku-band frequencies with no interference
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Jabiru-1 is a Highly Flexible Satellite with Proven Technology
Jabiru-1 Overview
8.3GHz capacity: one of the largest commercial
communication satellites
― 7.6GHz Ka-band
― 648MHz Ku-band
Ka-band is proven technology
― Ka-band satellites have been operating for
>10 years. Number of Ka-band satellites has
steadily increased in the last 5 years
Highly flexible payload: spot, regional and
steerable beams
Currently under construction by Lockheed Martin
Launch date scheduled for mid 2015
Ka-Band Capacity Overview
Ku-band
Ka-band:
spot beams
Ka-band:
regional beams
Ka-band:
steerable beams
(MHz)
Capacity Breakdown
24 Spot Beams
Concentrates power in a specific location
Allow same frequency transmissions in other
locations
Potential to switch 5 spot beams into high
demand regions to provide additional capacity
3 Regional Beams
Coverage tailored to serve coastlines or
specific areas without including unwanted
regions
Wider coverage than traditional Ka-band spot
beams
2 Steerable Beams
Ability to position coverage in areas of high
demand anywhere on the visible earth
65%
19%
8% 8%
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Experienced Partners to Execute the Project
Source Lockheed Martin, Arianespace, Export-Import Bank of the United States Note:
1. ECA funding subject to customary conditions precedent, including NewSat contributing ~US$105MM in equity. Refer to “Funding Risk” in Appendix of
this presentation for further information
2. Weighted average interest rate based on Ex-Im Bank benchmark Commercial Interest Reference Rate (CIRR) of 1.81%, effective from 15 February
2012. Final interest rate will be determined with reference to the prevailing CIRR five business days prior to the Financial Close Date for ECA funding
Export Credit Agency (ECA) Debt Financing Providers
(see Appendix for summary term sheet)
~US$400MM facility size for Jabiru-1
― Approved by Ex-Im Bank Board, now subject to equity raise(1)
― COFACE promesse granted
Weighted average fixed interest rate of ~3.0% (2)
8.5 year amortisation period from commencement of operations
Finance partners
Construction contract signed; preliminary design review (PDR) completed
Jabiru-1 construction commenced and is on schedule
Using proven A2100 series spacecraft platform
Currently 39 A2100 series spacecraft in orbit
Design life 15 years
Over 100 GEO (geosynchronous earth orbit) commercial communications satellites
launched
Launch Service Agreement signed
Accounts for over half of all worldwide commercial launches
Using proven Ariane 5 rocket technology
53 consecutive successful launches
300 primary satellites launched from French Guiana operations
Construction and
launch partners
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Exposure to High Growth Markets
Source Euromonitor International 2012, Informa, ITU
Satellite offers effective, low-cost carriage in NewSat's target markets, which have minimal fixed
network infrastructure, and low 3G mobile and internet penetration
Note:
Values shown are for 2011 (except internet penetration for 2010)
1. Includes Armenia, Azerbaijan, Cyprus, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Oman, Saudi Arabia, Syria, United Arab Emirates and Yemen
2. Includes Burundi, Central African Republic, Chad, Democratic Republic of Congo, Djibouti, Egypt, Eritrea, Kenya, Libya, Rwanda, Somalia, Sudan,
Tanzania and Uganda
3. Includes Afghanistan, Kyrgyzstan, Pakistan, Tajikistan, Turkmenistan and Uzbekistan
4. CIA World Factbook, as at 4 February 2013
Worldwide
Total Population: 7.0 billion (4)
Internet Penetration
30%
3G Mobile Penetration
16%
Middle East (1)
Total Population: 227 million (4)
Internet Penetration
24%
3G Mobile Penetration
11%
North-East Africa (2)
Total Population: 376 million (4)
Internet Penetration
14%
3G Mobile Penetration
4%
South-West Asia (3)
Total Population: 267 million (4)
Internet Penetration
15%
3G Mobile Penetration
0.3%
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High Bandwidth Data Applications Expected to Drive Growth
Enterprise Data
Networking
Government and
Military Operations
3G / 4G Mobile
Backhaul
Reliance on time-sensitive data/connectivity
Growth in remote oil, gas and mining operations
Current customers of teleport business – we understand their service
requirement
Provides connectivity across multiple sites / operating locations
Backup for enterprise networks
Accredited to provide services to certain Governments / military
Increased utilisation of data-rich technologies (e.g. UAV’s)
Increasing Government reliance on private sector
Ongoing conflicts in Middle East / North Africa region
Small % of operating costs / defence budgets
Connectivity across multiple sites (e.g. mobile, airborne, maritime)
Critical to data service delivery
Expected growth in mobile data volume / smartphones in emerging
economies. Customers seek large bandwidth volumes
Limited existing network infrastructure capable of satisfying demands
Reliable connection into fixed/fibre networks. Cost effective
Ubiquitous rural and remote access
Rationale / Opportunity Existing customers / End Users
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Customers & Pipeline
Customer Description Existing Customer(s) Potential Size (US$MM) Status
1 U.S. satellite operator, looking for Ka-band expansion 88 Negotiations well progressed
2 Southeast Asian satellite operator 74 Contract under review, negotiations well progressed
3 Pakistani telco, trunking / backhaul service 72 Reviewing proposal
4 Systems integrator providing Government welfare communications 11 Current Jabiru customer, considering extension
5 Australian based, non-Government communications provider 10 Contract under review, negotiations well progressed
6 Systems integrator providing general Government services 8 Reviewing proposal
7 Division of large satellite operator, Maritime / Government applications 7 Reviewing proposal
8 Systems integrator focused on UAV services 5 Reviewing opportunity
9 - 27 Additional J-1 pipeline customers (including 1 existing teleport customer) 179 Various
Subtotal Jabiru-1 454
J-2 & J-3 Additional pipeline customers for J-2 and J-3 175 Various
Grand Total 629
Weighted Toward Telco and Govt.
Telco
Government
Enterprise
(Total Contracts + Sales Pipeline = US$1,247MM)
Estimated Sales Pipeline Across Jabiru-1, 2 & 3 – US$629MM
Binding Pre-Launch Contracts – US$618MM
(US$MM)
197
105
13440
67 32 1330
618
0
175
350
525
700
Middle East
Telco.
GCC
Company
U.S.
Comm’s Co.
Ku-band Ka-band Ka-band Ka-band Ka-band Ka-band Ka-band
~18% of Jabiru-1 life
of satellite capacity
currently pre-sold
Pre
-La
un
ch
Co
ntr
acts
S
ale
s P
ipe
lin
e
To
tal C
on
tra
cts
+ P
ipe
lin
e
Direct-to-Home
(DTH) 16%
26%
36%
22%
South Asian
Reseller
Ka-band
+
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Established FSS Economic Model Providing Significant Potential Returns
Key Economics of Jabiru-1 Industry Fill Rate (1) and EBITDA Margin (2)
Capacity Pricing Over Middle East (3)
(%) Capacity: Jabiru-1 capacity 8.3GHz
Expected Year-1 Fill Rate: >60%
― Industry average 74% (’06 – ’10A)
― Pre-sales at a ~30% discount to market
― Long-term take-or-pay contracts
― No pre-sales of high value steerable beams (~8% of capacity) – reserved to sell on the spot market – expected higher pricing
Revenue: Jabiru-1 total annual capacity (US$MM p.a.)
Operating Costs: Fixed, marginal costs expected to be in-line with standard FSS operating model. Variable costs include insurance (including in-orbit insurance) and sales commissions
Depreciation: Straight-line over 15 years (deferred until launch)
Teleport & Jabiru-2: Ability to transfer existing supply arrangements to “owned” capacity on Jabiru-2 will expand margins
1.00
1.25
1.50
1.75
2.00
2.25
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Ka-band C-band Ku-band
(US$MM / TPE)
Source Company filings, Euroconsult
Source NewSat analysis, NSR
65%
70%
75%
80%
2006 2007 2008 2009 2010
% Fill Rate % EBITDA MarginCapacity Utilisation (%)
80% 70% 60%
1.2 220 193 165
1.3 239 209 179
1.4 257 225 193 We
igh
ted
Ave
rag
e
Pri
ce
p.a
.
(US
$M
M / T
PE
)
Note:
1. Estimated fill rate of transponders in orbit (all lifecycle stages / ages, and excluding HTS capacities)
2. Aggregate EBITDA margin for Intelsat, PanAmSat, SES, Eutelsat and Telesat
3. 2008 to 2011 capacity pricing based on NewSat capacity purchasing and additional research across 14 satellites covering the Middle East region. 2012
to 2018 capacity pricing based on NSR GASSD 2009 research covering the Middle East region
Historical Forecast
Sources and Uses
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Sources of Funds (US$MM) (1)
Uses of Funds (US$MM) (1)
Ex-Im Bank Direct Loan 291 Spacecraft & Launch Vehicle 384
COFACE Guaranteed Facility 108 Insurance 36
Mezzanine(2) 30 Opex / Non-Satellite Capex 50
Standby Facility 25 Interest During Construction 19
Proposed New Equity Issue(3) 108 ECA Exposure Fees 39
Equity Spent to Date 49 Other(4) 44
DSRA 14
Contingency 25
Total Sources 611 Total Uses 611
Note:
1. Approximate values shown; ECA funding subject to customary conditions precedent, including NewSat contributing ~US$105MM in equity. Refer to
“Funding Risk” in Appendix of this presentation for further information
2. Minimum mezzanine financing amount of US$30 million, potential to increase to US$40 million, in which case equity component may be reduced
3. Assumes minimum equity raising of US$105 million. Actual range of US$105 – 115 million
4. “Other” composed of: refinancing of existing debt ($6.3m), equity placement fees ($8.3m), mezzanine placement fees ($1.8m), ECA co-ordination and
advisory fees ($4.0m), standby facility fees ($2.0m), ECA due diligence costs ($3.0m), COFACE facility agreement fees ($2.2m) and orbital slots and
project startup costs ($13.4m)
Development timeline
Milestone Date Fulfilled
Acquired seven orbital slots January 2011 P
Lockheed Martin construction agreement signed December 2011 P
Arianespace launch agreement signed December 2011 P
Secured substantial off-take agreement February 2012 P
Obtained financing from Ex-Im and COFACE June 2012 P
Achieved improved financing terms January 2013 P
Equity component of financing package February 2013 P
Construction completion Mid 2015
Satellite launch Mid 2015
Positive cash flow FY2016
Launch Jabiru-3 and Jabiru-4 From 2017
Acquired seven orbital slots
Lockheed Martin construction agreement signed
Arianespace launch agreement signed
Secured substantial off-take agreement
Obtained approval from Ex-Im and COFACE
Achieved improved financing terms
Equity component of financing package
Planned construction completion
Planned satellite launch
Planned positive cash flow
Planned launch Jabiru-3 and Jabiru-4
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NewSat Investment Highlights
Exposure to High Growth Markets
Early Mover in Ka-Band Supports Value Enhancing Applications Focus
Leveraging Existing Teleport Business Expertise to Execute on Established FSS1 Economic Model
Balance Sheet Anchored by Attractive Export Credit Financing from High Quality Lenders
Highly Experienced Management Team
~18% of Life of Satellite Capacity Sold, with a Promising Pipeline of Blue-Chip Customers
1. Fixed Satellite Services
Melbourne, Australia Gold Coast, Australia Bangkok, Thailand Perth, Australia Washington DC, USA Dubai, UAE Adelaide, Australia Texas, USA Karachi, Pakistan Sydney, Australia Singapore, Singapore Johannesburg, South Africa
Thank you