THE STATE OF PLAY AND PROSPECTS FOR THE MARITIME SATCOM MARKET

DIGITAL SHIP MARSEILLE THE MARITIME CIO FORUM MED 4 APRIL 2017

Presented by: Geoffroy Stern EUROCONSULT 30+ YEARS OF EXPERTISE

• Leading global consulting firm specialized in satellite communications • Privately-owned, fully independent firm • Close to 600 customers in over 50 countries • Missions conducted in all world regions on a yearly basis

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Digital Ship: The Maritime CIO Forum Med, 4 April 2017 OVERVIEW OF THE MARITIME MARKET

123,000 72,300 6,800 13,300 Offshore rigs Addressable Passenger Merchant and support vessels >24 ships ships vessels meters $1,700 322,000 16,050 MSS terminals VSAT terminals million Revenue for maritime 8.4 satcom service providers 70+ $953 million Gbps VSAT service Revenue for MSS and FSS Total maritime providers satellite operators VSAT demand

Digital Ship: The Maritime CIO Forum Med, 4 April 2017 THE MARITIME ADRESSABLE MARKET

GLOBAL BANDWIDTH ADRESSABLE MARKET–2015 CHARACTERISTICS ARPU/MONTH MOBILITY REQUIREMENTS (Kbps) MERCHANT SHIPS • Limited bandwidth $1,000- $5,000 72,300 requirements but global vs. daily operational coverage requires cost of a merchant ship: vessels Low High $5,000 - $10,000 • Price sensitive 2015 2025

OFFSHORE Very high quality of service 13,300 and very high bandwidth >$10,000 units Low High requirements

PASSENGERS Very high bandwidth 6,800* requirements in focused >$10,000 vessels Low High areas * ~330 cruise ships>1,000 GT

LEISURE 7,600 Very high seasonality $4,000 - $30,000 vessels Low High

FISHING Extremely price 23,000 $700 - $2,000 sensitive vessels Low High

Digital Ship: The Maritime CIO Forum Med, 4 April 2017 4 THE MSS AND VSAT COMPETITION

MSS TERMINAL GROWTH 2010 - 2015 VSAT TERMINAL GROWTH 2010 - 2015

No. of terminals No. of terminals MSS operators still control over 95% of the maritime satellite installation base

VSAT competition has significantly slowed down the MSS business

First maritime VSAT terminals in C-band due to larger • Ubiquitous • Few kbps-500kbps coverage and higher MSS • 100% Availability • Cost Effective only resilience • Light equipment for low data users Users are now rapidly shifting toward Ku- and Ka-band • Few kbps to 10+ • Availability Mbps • Limited by VSAT • Variety of enabled frequency band • Heavy equipment Applications Digital Ship: The Maritime CIO Forum Med, 4 April 2017 MSS: THE LEGACY OF MARITIME SERVICES

TYPE OF MSS TERMINALS VS. VERTICAL MARKETS

Among the 322,000 MSS terminals:

60,000 (19%)

Broadband 48,000 (15%) Narrowband terminals

213,700 (66%) M2M and Safety communications

Market Trend SMALL BOATS MARKET POTENTIAL Migration Small boats = Mostly in: ~123,000 NB to BB • Small fishing vessels • Asia addressable vessels > 24 m • Small leisure vessels • Europe & U.S. Small Boats • Small working vessels • Asia New MSS ~350,000 Limited ARPU Needs for satcom but no addressable vessels market but high equipment and services > 12 m & < 24 m volume available until recently

Digital Ship: The Maritime CIO Forum Med, 4 April 2017 VSAT: A MAJOR GROWTH DRIVER

VSAT ENABLED APPLICATIONS

E-health Passenger & crew  The installation of E-learning entertainment broadband VSAT systems has become inevitable, especially Voyage Electronic file sharing for high-end vessels optimization VSAT equipped ship

Predictive Virtual network  Mainly C-band and Ku-band maintenance until now Onboard live television & Real-time video streaming monitoring FUTURE VSAT GROWTH DRIVERS PASSENGER SHIP VSAT  The new-generation Ka-band BANDWIDTH CAPABILITIES systems recently entered DRIVERS LEVEL OF IMPORTANCE kbps service (O3b, GX) Increasing volume of HTS capacity at lower costs with Low coverage over maritime regions High  Upcoming launched of HTS Flat panel antennas Low High satellites with capacity over New generation of modems oceans will drive future enabling higher speeds Low High Operational applications such as VSAT growth predictive maintenance, route Low High planning, etc. Video content streaming and live television Low High Digital Ship: The Maritime CIO Forum Med, 4 April 2017 Source: Telenor Maritime LARGE NUMBER OF MARITIME KU- AND KA-BAND HTS CAPACITY WILL COME ONLINE

31.5 Gbps Total 0.5 Gbps 127 Gbps 2011 2015 2019 Pacific Indian Med. GoM +30 Gbps +90 Gbps South A. North A. Gbps

’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19 ’20 … O3b* KA-SAT GX O3b* GX GX Hylas -3*, -4* O3b* GX Leosat Telstar 19V O3b* Thor 7 IS 29e Chinasat 16 IS 38e Leosat Viasat 3 Ka-band maritime coverage Horizons 3e Telstar 12 V IS 33e Viasat 2 IS 39e Viasat 3 OneWeb IS 37e <10% E 172B OneWeb Telstar 18 V, 10%–50% IS 35e SES 17 >50% IS 32e 19V Ku-band maritime coverage SES-12, -14, -15 <10% 10%–50% * Steerable beams can be moved over land or maritime regions >50%

 Total available HTS satellite capacity over oceans will grow from about 52 Gbps in 2016 to 127 Gbps in 2019. By then, Ka-band systems will stand for 61% of HTS satellite capacity over oceans  New constellations (Viasat 3, OneWeb, Leosat) after 2020 might have a strong impact on the maritime market

Digital Ship: The Maritime CIO Forum Med, 4 April 2017 MARITIME VSAT SERVICE PROVIDERS’ MARKET SHARE, 2015

Market shares in terms of 1 revenues are different Others KVH 22% 22%

iSeaglobal 2% 16,050 2 Trends toward maritime Radio Holland 3% terminals in Inmarsat and aero consolidation Globecomm 3% 2015 Maritime Up for sale? 16% GEE/EMC 4% Aero & Marlink Most of other VSAT service Maritime 3 12% providers have less than 100 NSSLGlobal 5% ships SpeedCast 5% Merger Harris CapRock 5%

Digital Ship: The Maritime CIO Forum Med, 4 April 2017 4 TYPES OF APPLICATIONS TO DRIVE SATCOM USAGE IN THE FUTURE Demand Maritime communications have changed dramatically from basic voice and low-data applications used in • Content is the key safety applications to fully integrated • Must have element for solution for crew differentiation for SPs. IP applications providing Internet and passenger Bandwidth • Lead to incremental access, audio and video streaming. communications consuming revenue from existing applications customers

Supply

Content and applications into the service portfolio could help satellite operators and service providers make a difference in competition, generate • Increasing number of sensors onboard ancillary revenues, and drive more vessels • Store content on the cloud usage of connectivity. • Supporting a large variety of operational • Reducing IT investment applications, including maintenance, • Improving efficiency remote diagnostic, performance optimizations, etc. Digital Ship: The Maritime CIO Forum Med, 4 April 2017 10-YEAR Market forecasts

MSS VS. VSAT TERMINALS FORECASTS WHSL CAPACITY REVENUE FORECASTS SP REVENUE FORECASTS No. of terminals $ in millions 600,000 $ in millions 1,800 500,000 1,600 1,400 400,000 1,200 300,000 1,000 800 200,000 600 100,000 400 200 0 2010 2015 2020 2025 0 2010 2015 2020 2025 FORECASTS BY VERTICAL MARKET VSAT CAPACITY DEMAND TERMINALS FORECASTS WHSL CAPACITY REVENUE FORECASTS Gbps No. of terminals $ in millions

600,000 1,800 1,600 500,000 1,400 400,000 1,200 1,000 300,000 800 200,000 600 400 100,000 200 0 0 2010 2015 2020 2025 2010 2015 2020 2025 Digital Ship: The Maritime CIO Forum Med, 4 April 2017 THANK YOU

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