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M FOUNDATION October 12, 2017 04:01 AM GMT

Space Investment Implications of the Final Frontier Rising demand for bandwidth and falling launch costs make space a highly relevant domain of disruption. National security and high levels of private funding (SpaceX) accelerate the conversation.

Morgan Stanley does and seeks to do business with companies covered in Morgan Stanley Research. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of Morgan Stanley Research. Investors should consider Morgan Stanley Research as only a single factor in making their investment decision. For analyst certification and other important disclosures, refer to the Disclosure Section, located at the end of this report. + = Analysts employed by non-U.S. affiliates are not registered with FINRA, may not be associated persons of the member and may not be subject to NASD/NYSE restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account. M FOUNDATION Contributors

MORGAN STANLEY & CO. LLC MORGAN STANLEY & CO. LLC MORGAN STANLEY & CO. LLC Adam Jonas, CFA Armintas Sinkevicius, CFA, CPA Simon Flannery Equity Analyst Research Associate Equity Analyst

MORGAN STANLEY & CO. LLC MORGAN STANLEY & CO. INTERNATIONAL PLC MORGAN STANLEY & CO. INTERNATIONAL PLC Benjamin Swinburne, CFA Patrick Wellington Terence Tsui Equity Analyst Equity Analyst Equity Analyst +

MORGAN STANLEY & CO. LLC MORGAN STANLEY & CO. LLC MORGAN STANLEY & CO. LLC Rajeev Lalwani, CFA James E Faucette Brian Nowak, CFA Equity Analyst Equity Analyst Equity Analyst

MORGAN STANLEY & CO. LLC MORGAN STANLEY & CO. LLC MORGAN STANLEY & CO. LLC Ravi Shanker Kai Pan Eva T Zlotnicka Equity Analyst Equity Analyst Equity Strategist

MORGAN STANLEY & CO. LLC MORGAN STANLEY & CO. LLC MORGAN STANLEY & CO. LLC Nigel Coe, CFA Brian Essex, CFA Craig Hettenbach Equity Analyst Equity Analyst Equity Analyst

MORGAN STANLEY & CO. LLC MORGAN STANLEY MUFG SECURITIES CO., LTD. MORGAN STANLEY & CO. LLC Katy L. Huberty, CFA Tetsuro Tsusaka, CFA Keith Weiss, CFA Equity Analyst Equity Analyst Equity Analyst

MORGAN STANLEY & CO. LLC MORGAN STANLEY & CO. LLC MORGAN STANLEY & CO. LLC Carmen Hundley Alex Straton Jonathan Lanterman, CFA Research Associate Research Associate Research Associate

MORGAN STANLEY & CO. LLC MORGAN STANLEY & CO. LLC MORGAN STANLEY & CO. LLC Shaked Atia Lisa Nekrasova Ethan C Ellison Research Associate Research Associate Research Associate M FOUNDATION Contents

5 Investment Implications

8 Why Space?

10 Global Space Economy

12 The Demand for Bandwidth

20 The Key Players

24 SpaceX

26 National Security and Civil Space

30 Deep

33 Appendix

39 Models

MORGAN STANLEY RESEARCH 3 M FOUNDATION

Space Investment Implications of the Final Frontier Rising demand for bandwidth and falling launch costs make space a highly relevant domain of disruption. National security concerns and high levels of private funding (such as SpaceX) accelerate the conversation.

Why are we writing about space? Public investors may find it diffi- speed travel, … even mining asteroids. In this report, we discuss the cult to invest in space exploration, due to limited options and cata- potential for the BFR from SpaceX to disrupt the freight transporta- lysts, fragmented coverage, and / or significant risk and uncertainty. tion industry. The private side is a different story, with the likes of Elon Musk and Jeff Bezos allocating significant capital to the effort. We see a range Space is the "ultimate high ground" for national security. With of industries that are ripe for disruption, with improvements in tech- the United States military's expenditures exceeding $600 bn/ year, nology lowering the cost of access and creating affordable real and global military expenditures ~$1.7 Tr, compared to NASA's estate in space. The elevator changed real estate. Fracking changed budget of ~$20 bn, there appears to be substantial room to increase energy. Will the reusable rocket and change space? the investment in space. While we expect the topic of space to increase in importance, our view is balanced by a recognition of real- We estimate that the ~$350b Global will grow world budgetary constraints, and other priorities. into a $1.1+ Tr Global Space Economy by 2040. However, there is significant execution risk, and we, accordingly, estimate a wide range Ultimately, we believe public investors will start to pay more of potential outcomes, from ~$600 bn (-60 bps v. Global GDP) to attention to space when or if SpaceX decides to IPO. For this ~$1.75 Tr (+400 bps v. Global GDP). Working with our & report, we built a hypothetical DCF range for SpaceX, valuing the defense, , , and telecom analysts, we estimate a company somewhere between ~$5 bn and $120 bn+, with a Base $400 bn+ incremental revenue opportunity from providing internet Case of ~$50 bn. We note that the company has recently denied that access to under- or unserved parts of the world, and a ~$725 bn rev- it was preparing for an IPO (Reuters), and we have no knowledge of enue opportunity for internet companies focused on social media, any specific transactions. However, with upcoming projects that search/online advertising, and, in particular, e-commerce, if global require significant amounts of capital, it seems reasonable to con- internet penetration reaches 100%. Ultimately, this will depend on sider whether the company could look to access capital in the public the success of the new low Earth (LEO) from players markets. We believe that SpaceX is using the launch business to like OneWeb and SpaceX. gather data on the launch process, and the satellite internet business to generate cash, and, ultimately, we believe that SpaceX is quite In the short to medium term, most of the value of the industry serious about accelerating the calendar of manned missions to Mars. is linked to internet bandwidth. Satellite broadband is responsible While public investors cannot directly invest in SpaceX, we rec- for ~50% of the Global Space Economy, and ~70% of our Bull Case. ommend that they consider the "Space 20" list of stocks we iden- The demand for data is growing at an exponential rate, while the cost tify here as a way to increase their exposure to this domain of of access to space (and, by extension, data) is falling by orders of mag- technology and innovation, which is both more significant and nitude. However, over the long term, the discussion expands to topics faster developing than you may think. such as national security, research, deep space exploration, high

Morgan Stanley does and seeks to do business with companies covered in Morgan Stanley Research. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of Morgan Stanley Research. Investors should consider Morgan Stanley Research as only a single factor in making their investment decision. For analyst certification and other important disclosures, refer to the Disclosure Section, located at the end of this report. += Analysts employed by non-U.S. affiliates are not registered with FINRA, may not be associated persons of the member and may not be subject to NASD/NYSE restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account. M FOUNDATION Investment Implications

Why are we writing about space? The frequency and magnitude of investment projects is accelerating, championed by influential leaders such as Elon Musk and Jeff Bezos. Add the mounting number of developments and commentary from governments on the subject, and we believe investors cannot be too early in at least understanding this rapidly evolving topic.

Exhibit 1: Exhibit 2: Why Space Is an Important Emerging Investment Theme… Now We See the Global Space Economy Going from ~$350b Today to $1.1t+ by 2040, with Bull Case of ~$1.75t by 2040 Global Space Economy ($t) $2.0t $1.75 $1.5t

$1.10 $1.0t

$0.62 $0.5t $0.35

$0.0t 2015 2016 2017e 2018e 2019e 2020e 2021e 2022e 2023e 2024e 2025e 2026e 2027e 2028e 2029e 2030e 2031e 2032e 2033e 2034e 2035e 2036e 2037e 2038e 2039e 2040e Bull Case Global Space Economy Bear Case

Source: Satellite Industry Association, Morgan Stanley Research, Thomson Reuters.

Source: Shutterstock, Morgan Stanley Research The sector breadth is quite large, led by Internet, Aerospace & Defense, IT Hardware, Telecom Services, and Media. Smaller contrib- Global Space Economy utors are represented by Communications Systems and Insurance.

The Satellite Industry Association (SIA) "2017 State of the Satel- Exhibit 3: lite Industry" report estimates the size of the Global Space Breaking Down the $1.1t+ Global Space Economy by Industry Industry to be ~$350b, or ~50 bps of Global GDP. We worked with 10 Morgan Stanley analysts across multiple sectors on a proprietary bottom-up forecast of the Global Space Economy through 2040 by end market. Our Base Case of ~$1.1t implies a ~5.0% CAGR, or slightly in excess of Global GDP growth.

Source: Shutterstock, Satellite Industry Association, Morgan Stanley Research. Aerospace & Defense includes Government + Satellite Manufacturing. IT Hardware includes Consumer Navigation. Telecom Services includes Consumer Broadband + Fixed Satellite Services + Mobile Satellite Services, excluding Government. Media includes Consumer TV + Consumer Radio. Other includes Research + Satellite Launch. Communications Systems includes Ground Equipment.

MORGAN STANLEY RESEARCH 5 M FOUNDATION The Morgan Stanley "Space 20" communication satellites (ViaSat) to sensitive US Government entities seeking classified capabilities (X-37). The company pro- vides launch through the United Launch Alliance joint venture As part of our collaboration across Morgan Stanley, we have con- with Lockheed Martin. structed a diversified list of stocks that, in our collective view, l Facebook (FB): Facebook's revenue growth is driven by growth in are best exposed to the growth of the Global Space Economy. The users (now at 1.3b daily active users), engagement (now at ~55 list is populated irrespective of specific 12-month recommendations minutes / user / day), and sophisticated data analytics / targeting and, so, includes some Underweight-rated names, in addition to to serve high quality content and ads to its users. As such, the ~2b Equal-weight and Overweight-rated names. The Morgan Stanley current global internet users not on Facebook and 3b+ people not "Space 20" is meant to provide investors a way into this emerging online are potential material drivers of long term growth. theme. l GoDaddy (GDDY): GoDaddy is focused on providing technology to enable web presence for small to medium sized businesses and Exhibit 4: is the largest scaled vendor in markets with low barriers to entry The Morgan Stanley "Space 20" and high barriers to scale. The company estimates that over 50% of SMBs in the U.S. do not have a web presence with this number increasing to 70% globally. In addition to its scale, GoDaddy’s competitive advantages include better breadth, functionality, and reliability relative to its peer group. While performance in the U.S. remains stable, international expansion into underserved geo- graphies remains a substantial opportunity for incremental growth and profitability. l Honeywell (HON): Honeywell is a leader in avionics, thermal con- trol, environmental control and life support systems for the Human Space market, and has been part of every NASA manned space mission. The company also has a stronger expertise in developing and manufacturing satellite hardware for both mili- tary and commercial applications, and provides guidance, propul- sion, steering and utility control systems for launch vehicles. Honeywell also acquired a satellite communication component manufacturer, Com Dev (~$160M Revenue) in 2015, which man- Source: Company Data, Morgan Stanley Research. agement believes is well positioned to benefit from rising demand for higher bandwidth and growth in the market. l Alphabet (GOOGL): Google has seven platforms with 1b+ users. l Inmarsat (ISAT): Inmarsat is a traditional mobile satellite services We see rising internet penetration, bringing the next 3b+ people operator specializing in connectivity services for those in remote online and improving global internet connectivity, leading to areas. There are opportunities and risks from the latest space stronger adoption and monetization of Google's products, developments. On the one hand, we see a higher risk of new including the Android ecosystem, paid search and YouTube. entrants, which is evident with Viasat becoming a serious compet- l Analog Devices (ADI): Analog Devies has modest exposure, with itor in in-flight connectivity. On the other hand, the demand for RF and microwave products in satellites (including LEO satellites) connectivity ought to be advantageous to Inmarsat's core mari- representing low to mid single digit % of company sales. time business, where the barriers to entry are higher (for example, l (AMZN): Amazon is the global e-commerce leader with development of drone ships for long haul maritime routes). operations in developed and developing countries. At a high level, l Lockheed Martin (LMT): Lockheed Martin participates across all increased global internet connectivity is likely to lead to rising segments of the value chain, including satellites (AEHF), launch e-commerce adoption, which will move more consumer dollars (United Launch Alliance), and ground systems. The company pri- into Amazon's ecosystem. marily caters to the US government with exposure to NASA and l Boeing (BA): Boeing participates most heavily in the satellite and the DoD amongst others. In recent years, the company has made launch components of the space value chain. The company caters several investments focused on space, including a $300M refresh to a host of end-customers, from commercial companies seeking of its family of satellites concluded in 2017

6 M FOUNDATION l (NOC): Northrop Grumman participates in Timing, Catalysts & Milestones the development and manufacturing of both satellite (the sensor system for SBIRS), as well as full up satellites (for 2017 example, JWST). With the recently announced acquisition of Orbital ATK, the company stands to add launch to its capability l SpaceX: Rocket Launch in November 2017 set, as well as extend its satellite business to smaller platforms. l Federal Communications Commission: Approval for Boeing + l Qualcomm (QCOM): Qualcomm is best positioned to make com- SpaceX LEO Satellites? munication work across difficult spectrum challenges. l SES (SES): SES is the world's second largest fixed satellite ser- 2018 vices operator, with operations around the world. The company has 12 (MEO) satellites in service, plans to l OneWeb: LEO Satellites in March 2018 launch 8 satellites in 2018 / 2019, and 7 super power satellites l Virgin Orbit: LauncherOne in 2018 from 2021. l SpaceX: IPO Before LEO Satellites in 2019? l Shopify (SHOP): Shopify offers a platform that enables mer- chants to build and use online storefronts with little to no tech- 2019 nology expertise required. The platform’s scalability, ease of use, and low cost has enabled the company to maintain the fastest l : Commercial Flight Within 18 Months (of October growth rate among our global Software coverage universe. Low 2017) cost of failure offered by Shopify’s platform has been a catalyst l NASA: Orion Exploration Mission (EM-1) in 4Q19 for small entrepreneurs to pursue opportunities they otherwise l OneWeb: Low Latency Broadband Access never would have with economics that have also attracted large l SpaceX: LEO Satellites (Through 2024) enterprises, further expanding its addressable markets. While l ViaSat: 2019 / 2020 Shopify has only recently targeted expansion into major interna- tional markets, pent up global demand for its platform is implied 2020 by adoption in emerging markets the company has not yet tar- geted or supported. l Blue Origin: Rocket l Softbank (9984): Softbank has invested $1b in OneWeb, and, with the Vision Fund, has the potential to put more capital to work 2020+ in this area. l United Technologies (UTX): United Technologies' Aerospace l NASA: Orion Exploration Mission (EM-2) in 2022 System business is a prime contractor of NASA's space suit / life l SpaceX: 2 Cargo Ships to Mars in 2022 support system. The company also produces environmental con- l SpaceX: 2 Crew Ships + 2 Cargo Ships to Mars in 2024 trol, life support, power management and distribution, and l Moon in 2030 thermal control systems for the International and l Mars in 2030s the Orion crew exploration vehicle. l XL Group (XL): XL Group is one of the top underwriters of space Morgan Stanley is acting as financial advisor and providing financing insurance, providing insurance coverage for launch and in-orbit services to United Technologies Corp.("UTC”) in connection with its events. We see room to grow this line of business, as launches definitive agreement to acquire Rockwell Collins, Inc. (“Rockwell”), as become more frequent, and there is a higher probability of poten- announced on September 4, 2017. The proposed transaction is subject tial damage that could occur while in-orbit. Due to the unique to approval by Rockwell’s shareholders, regulatory approval and nature of this line, XL can apply their expertise to underwrite other customary closing conditions. This report and the information more profitably than its space insurance competitors. provided herein is not intended to (i) provide voting advice, (ii) serve as an endorsement of the proposed transaction, or (iii) result in the pro- Companies that we believe could benefit from the expansion of their curement, withholding or revocation of a proxy or any other action by total addressable market, by increasing internet access to 3b+ a security holder. UTC has agreed to pay fees to Morgan Stanley for people, are Adobe (ADBE), Apple (AAPL), Intuit (INTU), and Mic- its financial services, including transaction fees and financing fees rosoft (MSFT). which are contingent upon consummation of the transaction. Please refer to the notes at the end of this report.

MORGAN STANLEY RESEARCH 7 M FOUNDATION Why Space?

The Autos & Shared Mobility team's work on autonomous vehicles teaches us how quickly a topic can move from complete obscurity and skepticism to a dominant investor theme, influencing the allocation of many hundreds of billions in capital. With autonomous vehicles, it was a combination of technical milestones, capital markets events, and investment allocation that accelerated the topic. With space, we face a similar event path… with SpaceX sitting at the starting point.

Among the wide range of industries facing possible disruption or Many think of the automobile industry as having been "born" with expansion from the space exploration theme, we point out: Gottlieb Daimler's internal combustion engine. But the evolution from the exotic horseless carriage to modern automobile required a l With the use of reusable rockets, SpaceX has managed to reduce series of subsequent innovations, including vanadium steel and the the cost to launch a satellite from ~$200M (at United Launch Alli- moving assembly line, both attributed to Henry Ford. Innovations ance) to ~$60M, and is targeting to reduce launch costs further, need charismatic capitalists with a relentless drive to progress. Elisha to ~$5M. Otis, Thomas Edison, and Henry Ford applied their craft of combining l OneWeb (a proposed network of 720 satellites providing internet capital and technology to lifts, electricity, and cars. Today, we have services) has said that mass production of satellites could reduce Elon Musk and Jeff Bezos, among others, occupying similar roles with the cost to make an individual satellite from $500M+ to less than transportation, commerce, and information. Elon Musk extends his $500k. efforts to extraterrestrial and interplanetary domains, but he is not l Processing power has improved to the point where Planet (an alone. Far from it. He is joined by many of the world's most successful Earth imaging satellite company), recently launched 88 satellites leaders, capitalists, and government bodies in a revolutionary pursuit the size of shoe boxes. to unlock the commercial, research, and military applications of l The time to market is coming down significantly. On its website, space. Space is actually an increasingly active area of innovation Planet writes that "the most advanced satellites [are] launching and capital deployment. Investors should take notice. into orbit every 3-4 months," compared to six years between ViaSat 1 and ViaSat 2. Exhibit 5: Remember What the Elevator Did to New York? We think of reusable rockets as an elevator to (LEO). When Elisha Otis demonstrated the safety elevator in 1854, the public may have struggled to comprehend the impact on archi- tecture and city design. Roughly 20 years later, every multistory building in New York, Boston, and Chicago was constructed around a central elevator shaft. These early applications of vertical transport were limited to structures of around 10 to 11 stories, as the cost to expand the height of a solid masonry structure was severely cost pro- Source: Library of Congress, Shutterstock, Morgan Stanley Research hibitive. The advent of steel frame construction in the 1880s, fol- lowing the Great Chicago Fire in 1871, enabled hydraulic elevators to reach a heigh of 20 floors. The electric elevator added power and tripled the speed of the elevator, enabling the building of the 60-story Woolworth Building in 1913, and, eventually, the 102-story Empire State Building in 1931. While a single breakthrough can usher in the beginning of a new era in an area such as vertical transport, it is a confluence of multiple complimentary innovations that com- plete the revolution.

8 M FOUNDATION SpaceX Significant Execution Risk

It all comes down to SpaceX. SpaceX has managed to reduce the Despite our enthusiasm for the potential in space, we want to cost to launch a satellite, although, according to the Wall Street temper expectations. History is littered with cautionary tales, Journal, the business generates limited operating income. Mean- including DBSD, Globalstar, Iridium, Teledesic, and TerreStar in the while, the company plans to launch a satellite broadband network for 1990s. We believe that it may be different this time, due to the lower $10b to $15b in 2019, and, eventually, send someone to Mars in 2024. costs to access space. However, satellite stocks have been incredibly volatile, and have historically underperformed the market. The We note that the company has recently denied that it was preparing industry is subject to funding risk, regulatory risk, delays, launch fail- for an IPO (Reuters), and we have no knowledge of any specific trans- ures, operational risk, , cybersecurity risks, and ques- actions. However, with upcoming projects that require significant tions about its ability to generate sufficient returns. amounts of capital, it seems reasonable to us to consider whether the company could look to access capital in the public markets. Exhibit 7: Have We Seen This Before? Past Mistakes in Space Exhibit 6: SpaceX Is at the Starting Point of the Disruption ● 48 Satellites @ $3.8b in 2000 ● 66 Satellites @ ~$5.0b in 1998 Investors: ● Acquired from Bankruptcy for $43M in 2004 ● Acquired from Bankruptcy for $25M in 2000 ● Craig McCaw (McCaw Cablevision + McCaw Problems: Problems: Cellular + Nextel) ● Bill Gates (Microsoft) ● Low Adoption ● Low Adoption ● Prince Alwaleed Bin Talal Bin Adbulaziz ● Expensive Devices ● Design in 1985 Underestimated the Impact of Cellular Networks in 1998 Plan to launch 21 x 40 satellites @ 700km ● Expensive Devices → 12 x 24 satellites @ 1,400km ● Service Limitations → 30 satellites ● Ineffective / Expensive Marketing Campaign → 1 test satellite in 1998 → Suspended work in 2002 → Returned the license in 2003

Problems:

● Unable to Raise Sufficient Capital

Source: Company Data, Morgan Stanley Research, Wikipedia.

Exhibit 8: Since the Intelsat IPO in 2014, Satellite Companies Have Been Incred- ibly Volatile, and Have Underperformed the S&P 500 Stock Performance of Satellite Companies

Source: : Shutterstock, Company Data, Morgan Stanley Research, Federal Aviation Administration, Equi- 64% date. United Launch Alliance includes V @ $158M and IV @ $282M. 49% 39%

-10% -5% -24%

-65%

I SESG ISAT ETL VSAT SATS SPX

Source: Bloomberg, Morgan Stanley Research. Chart Excludes IRDM + GSAT.

MORGAN STANLEY RESEARCH 9 M FOUNDATION Global Space Economy

We estimate that the ~$350b Global Space Industry will grow to a $1.1t+ Global Space Economy by 2040. Our Bull Case of ~$1.75t (+400 bps v. Global GDP) assumes global internet penetration goes to 100% by 2040, while our Bear Case of ~$600b (-60 bps v. Global GDP) assumes that the new satellite networks fail.

l Consumer TV (from ~$100b today to $100b+ in 2040, +0% l Satellite Manufacturing (from ~$14b today to $20b+ in 2040, CAGR): The outlook is challenging for Consumer TV, as customers +2% CAGR): We estimate that the amount of satellites launched transition from linear TV to over-the-top video. Our model grows at a ~11% CAGR (increasing the number of satellites in excludes any optionality from the spectrum holdings at DISH. space from ~1,500 today to ~20,000 in 2040), but the cost to l Consumer Broadband (from ~$2b today to $80b+ in 2040, +17% manufacture a satellite decreases at a ~8% CAGR (to ~$15M). CAGR): We estimate a $400b+ incremental revenue opportunity l Satellite Launch (from ~$5.5b today to $11b+ in 2040, +3% from providing internet access to under- or unserved parts of the CAGR): We estimate that the amount of satellite launches grows world. However, we assume that the global internet penetration at a ~8% CAGR (to ~10 launches / week), but the cost to launch (defined by the International Union as people a satellite decreases at ~4% CAGR (to ~$20M). who "use the internet") goes from ~50% in 2017 to ~75% in 2040 l Government Spending (from ~$85b today to $180b+ in 2040, (similar to the United States today), to account for some part of +3% CAGR): With the United States military spending expendi- the population that will either not sign up for the internet (due to tures exceeding $600b, and global military expenditures lifestyle, finances, and/or service availability) or decide to share an exceeding $1.1t, compared to NASA's budget of ~$20b, there is internet connection. Furthermore, we conservatively assume substantial room to increase investments in space. While we that the new satellite networks capture 35% of this opportunity expect the topic of space to increase in importance over time, our (slightly over indexing v. wireless and fixed networks). view is balanced by our recognition of budgetary constraints, and l Mobile Satellite Services (from ~$3.5b today to $20b+ in 2040, other priorities. +8% CAGR): We estimate a ~$10b revenue opportunity from con- l Insurance (from ~$700M today to ~$800M in 2040, +1% CAGR): nected aircraft, and ~$1b from maritime. We estimate a limited impact on insurance premiums, as less l Earth Observation Services (from ~$2b today to $30b+ in 2040, expensive + more frequent launches mean that a lower per- +12% CAGR): With launch costs coming down and processing centage of launches are insured + those launches that are insured power increasing, Planet recently launched 88 satellites the size are insured for a lower amount. However, we could see an of shoe boxes. While the capabilities of these new satellites are increase in insurance premiums for satellites that are in orbit, due not the same, they are sufficient for Earth imaging. We believe to higher amounts of space debris from smaller and shorter-lived that we will see more investment, and assume that the Earth satellites. Observation Services industry grows at an accelerating rate off of l Second Order Impacts ($400b+ for Internet): We estimate a a low base. ~$725b revenue opportunity for internet companies focused on l Ground Equipment (from ~$115b today to ~$215b in 2040, +3% social media, search/online advertising, and, in particular, e-com- CAGR): Low Earth orbit (LEO) satellites require more ground merce, if global internet penetration goes to 100%. If we estimate equipment, with more power and phased array antennas, but we global internet penetration goes from ~50% in 2017 to ~75% in could see improvements in technology that bring down the costs 2040, this will drive $400b+ of incremental revenue for these associated with the ground equipment. We estimated continued companies. growth in ground equipment, but at a decelerating pace. l Space Freight Transportation: Given the early stage nature of the BFR rocket, we exclude the "domestic" space transportation opportunity from our build up of the Global Space Economy, but the total addressable market could exceed $100b.

10 M FOUNDATION

Exhibit 9: Exhibit 12: Global Space Economy Going from ~$350b to $1.1t+ by 2040, with Bull Global Satellite Industry Revenue (2040e) Case of ~$1.75t Global Space Economy Revenue (2040e) Global Space Economy ($t) $2.0t Internet $109b, 10% $1.75 $1.5t $412b, 37% $85b, 8% Ground Equipment $1.10 $1.0t Government $103b, 9% $0.62 $0.5t $0.35 Consumer TV

$0.0t Consumer Broadband 2015 2016 2017e 2018e 2019e 2020e 2021e 2022e 2023e 2024e 2025e 2026e 2027e 2028e 2029e 2030e 2031e 2032e 2033e 2034e 2035e 2036e 2037e 2038e 2039e 2040e Bull Case Global Space Economy Bear Case $181b, 17% Other Source: Satellite Industry Association, Morgan Stanley Research, Thomson Reuters. $214b, 19%

Source: Satellite Industry Association, Morgan Stanley Research, Thomson Reuters.

Exhibit 10: Base Case for Global Space Economy at $1.1t+ Global Satellite Industry Global Space Economy ($MM) Consumer TV 1,250,000 Consumer Radio Exhibit 13: Consumer Broadband 1,000,000 Fixed Satellite Services Estimate ~20,000 Satellites In Orbit by 2040, with Cost Decreasing 750,000 Mobile Satellite Services ~8% CAGR (to ~$15M) Earth Observation Services Satellites Launched v. Cost to Manufacture 500,000 2,000 $120 Ground Equipment ~11% CAGR OneWeb + SpaceX 250,000 Satellite Manufacturing 1,500 $90 0 Satellite Launch Non Satellite Industry 1,000 $60 2015 2020e 2025e 2030e 2035e 2040e Second Order Impacts 500 $30 Source: Satellite Industry Association, Morgan Stanley Research, Thomson Reuters.

0 $0 Exhibit 11: 2015 2020e 2025e 2030e 2035e 2040e Global Satellite Industry Revenue (2016) Satellites Launched $ / Satellite

Global Space Industry Revenue (2016) Source: Satellite Industry Association, Federal Aviation Association, Space Flight Now, Morgan Stanley Research.

$44b, 13% Ground Equipment

$113b, 33% Exhibit 14:

Consumer TV Estimate ~10 Satellite Launches / Week by 2040, with Cost Decreasing ~4% CAGR (to ~$20M) Satellite Launches v. Cost to Launch Government 600 $80 $84b, 25%

450 $60 Other $98b, 29% 300 ~8% CAGR $40 Source: Satellite Industry Association, Morgan Stanley Research. 150 $20

0 $0 2015 2020e 2025e 2030e 2035e 2040e Satellite Launches $ / Launch

Source: Satellite Industry Association, Federal Aviation Association, Space Flight Now, Morgan Stanley Research.

MORGAN STANLEY RESEARCH 11 M FOUNDATION The Demand for Bandwidth

In the short to medium term, internet bandwidth is at the core of the discussion. Satellite broadband is responsible for ~50% of the Global Space Economy, and ~70% of our Bull Case. The demand for data is growing at an exponential rate, while the cost of access to space (and, by extension, data) is falling by orders of magnitude. We believe the largest opportu- nity comes from providing internet access to under- and unserved parts of the world, but there also is going to be increased demand for bandwidth from autonomous cars, the internet of things, artificial intelligence, virtual reality, and video. These new satellite networks will provide connectivity to new markets (new products and services), enhance existing terrestrial markets (new geographies), and create competition v. existing terrestrial markets (particularly, legacy wireline and satellite networks).

Exhibit 15: Exhibit 16: Demand for Data Growing at Exponential Rate v. Cost of Access to By 2040, We Estimate That Global Mobile Data Traffic Will Be ~200x v. Space (and, by Extension, Data) Is Falling by Orders of Magnitude 2016 Global Mobile Data Traffic (PB / Month)

1,500,000

1,200,000

900,000 ~25% CAGR

600,000

Source: Shutterstock, Morgan Stanley Research. 300,000 0 2010 2015 Demand for Data 2020e 2025e 2030e 2035e 2040e Mobile Data Traffic Mobile Data for Autonomous Cars Source: Morgan Stanley Research, Cisco Visual Networking Index. Cisco Estimates Through 2021 (Adjusted for Historical Accuracy) + Morgan Stanley Estimates for Autonomous Cars. Bull Case assumes By 2040, we estimate that global mobile data traffic will grow 80 TB / Hour to 100 TB / Hour (Based on DLPH Comments in May 2017). ~200x v. 2016 (+25% CAGR), and global IP traffic will grow ~60x v. 2016 (+20% CAGR). Our estimates are based on the Cisco Visual Exhibit 17: Networking Index, adjusted for historical accuracy (historically, the By 2040, We Estimate That Global IP Traffic Will Be ~60x v. 2016 estimates have been more optimistic than actual results) + adding Global IP Traffic (PB / Month) our estimates for data generated from autonomous (the Cisco Visual 6,000,000 Networking Index assumes very little from M2M, and this largely 5,000,000 comes from wearables). We conservatively assume that only 10% of 4,000,000 ~20% CAGR the data generated from autonomous cars will actually need to be 3,000,000 2,000,000 uploaded to the network, with most of this being done over WiFi. 1,000,000 0 Our Bull Case, which assumes 80 to 100 TB / hour, suggests that 2010 2015 global mobile data traffic will grow more than 5,000x v. 2016 (+45% 2020e 2025e 2030e 2035e 2040e CAGR), and global IP traffic will grow more than 1,500x v. 2016 Global IP Traffic Data for Autonomous Cars Source: Morgan Stanley Research, Cisco Visual Networking Index. Cisco Estimates Through 2021 (+35% CAGR). (Adjusted for Historical Accuracy) + Morgan Stanley Estimates for Autonomous Cars. Bull Case assumes 80 TB / Hour to 100 TB / Hour (Based on DLPH Comments in May 2017).

We believe that autonomous cars are going to be the most signif- icant driver of data usage in the future. If we imagine a world

12 M FOUNDATION where 100% of the cars are autonomous, at 4 TB of data / 90 minutes Exhibit 19: (based on Intel and Google's self-driving car today), the global data Improvements in Technology Lowering the Cost to Access Space (and for autonomous cars is going to be multiples of the current traffic. Data) Cost Curve for Improvements in Satellite Technology And, this does not contemplate the recent commentary from Delphi ViaSat 1 in 2011 Automotive CTO Glen W. De Vos, who suggested that data usage @ $1.5M / PB / Month could be north of 80 to 100 TB / hour, when you include the diagnos- tics, connectivity, interior cameras, and HD cameras. ViaSat 2 in 2017 @ 50%

Exhibit 18: Reusable Rockets* The Data Generated by Autonomous Cars is Going to be Multiples of @ 14% Mass Production* the Current Traffic ViaSat 3 in 2020 @ 6% @ 17% Demand for Data in the World (PB / Month) 0 6 9 … Technology Years Advancement? 255,556,842 Source: Company Data, Morgan Stanley Research. ViaSat 1 @ 130 Gbps for $500M v. ViaSat 2 @ 300 Gbps for $580M v. ViaSat 3 @ 1,000 Gbps for $650M. *Reusable Rockets @ 50% Cost Improvement (Based on Elon Musk Comments on Re Usability), Mass Production @ 70% Cost Improvement (Based on the Ford Model T).

Supply of Bandwidth + Cost of Data = Data Usage.From 7,241 96,054 2010 through 2016, wireless data usage in the United States has 2016 Global Mobile Data 2016 Global IP Traffic Global Data for Autonomous Cars grown at ~80% CAGR, while wireless service revenues have grown Source: Morgan Stanley Research, Cisco Visual Networking Index. Capacity for Autonomous Cars @ ~30t at ~3% CAGR, as the service revenue per megabyte has decreased at Miles / Year in the World in 2040 (Morgan Stanley Estimates) x 4 TB of Data / 90 Minutes (Intel and Ide- alab on Google's Self Driving Car) @ 25 mph. ~45% CAGR. Going forward, we estimate that wireless data usage will grow at ~25% CAGR, but the service revenue per megabyte will Cost of Data decrease at ~20% CAGR, to less than 1% of what it is today.

Exhibit 20: We see significant improvements in the cost of access to space By 2040, We Estimate the Cost of Wireless Data Will Be < 1% v. Today (and, by extension, data). ViaSat 3 represents an 80%+ cost US Demand for Mobile Data v. $ for Data improvement vs. ViaSat 1. We estimate another 60%+ cost improve- 8,000,000 $0.50 ment from reusable rockets (50% improvement for satellite launch, $0.40 based on Elon Musk comments on reusability), and mass production 6,000,000 of satellites (70% improvement for satellite manufacturing, based on $0.30 per $ MB 4,000,000 the Ford Model T in the early 1900s). Other improvements, such as $0.20 power or propulsion, could drive the cost lower. In addition, there

Petabytes/ Year 2,000,000 may be ways to drive down the cost for ground equipment / installa- $0.10 tion (similar to over-the-top video v. linear TV). 0 $0.00 2010 2015 2020e 2025e 2030e 2035e 2040e Wireless Data Usage (PB) $ per MB

Source: Morgan Stanley Research, CTIA.

MORGAN STANLEY RESEARCH 13 M FOUNDATION Comparing the Networks Medium Earth Orbit (MEO)

We believe that the new satellites may prove to be disruptive to legacy wireline and satellite networks, but unlikely to pose a sig- O3b mPower is an extension of the existing O3b plans. It involves nificant threat to cable or wireless, particularly in a world. the launch of seven 'super powered' MEO satellites built by Boeing OneWeb plans to offer 50 Mbps speeds / 50 ms latency, compared in 2021. These satellites will have 30,000 formed beams fully shape- to 8 Mbps / 42 ms for legacy wireline and 25 Mbps / 600 ms for legacy and steerable in real time (a bit like the Eutelsat Quantum con- satellite. Meanwhile, cable offers 100 Mbps / 15 ms today, before the cept). This allows for capacity to be picked up and dropped by upgrade to DOCSIS 3.1 (10x as much downstream capacity as the - customers at short notice and gives significant flexibility and revenue work), and, based on the preliminary specifications, 5G is designed to potential. provide 100 Mbps / 1 ms. Then contrast is with the existing O3b plans, where, then the next OneWeb and SpaceX acknowledged that the new satellite net- eight satellites are up, O3b will have a total of 200 beams (and, in works are designed to expand internet access, rather than to effect, 200 potential customers). Already, O3b has hit capacity con- compete with existing networks. OneWeb Founder Greg Wyler straints on some beams. The significant capacity advance and real has said, "We're not competing at all. These are areas [where] the cur- time flexibility of O3b mPOWER should remove such issues. The rent broadband infrastructure are not designed to provide services," capacity is mainly targeted at data applications, including maritime, and SpaceX Founder Elon Musk has said, "Still, probably 90% of aeronautical, energy, government, cloud applications, data centers, people's local access will still come from fiber, but we'll do about 10% remote offices / small towns, and remote applications. It is still business to consumer direct and more than half of the long distance mainly equatorially based, but will have coverage over 400M square traffic." miles. SES sees it as complementary to existing telecom capacity, and Exhibit 21: expects telecom operators to be amongst the major users. New Satellites Faster Than Legacy Wireline and Legacy Satellites Advertised Network Speeds (Mbps) SES: O3bmPOWER meets Q3 Video (15 Sep 2017) 100 100 100

Exhibit 23: O3b mPOWER is an Extension of the Existing O3b Plans

50

30

14 12 8

Cable 5G ViaSat 3 OneWeb ViaSat 2 4G ViaSat 1 DSL Source: Company Data, Morgan Stanley Research, FCC Measuring Broadband in America, OpenSignal, International Telecommunication Union (Draft Report for 5G on February 2017).

Exhibit 22: New Satellites Have Lower Latency Than Legacy Satellites Network Latency (ms) Source: Company Data, Morgan Stanley Research.

600

42 50 50 1 15 25

5G Cable Space X DSL 4G OneWeb ViaSat 1

Source: Company Data, Morgan Stanley Research, FCC Measuring Broadband in America, Cable Labs.

14 M FOUNDATION

Exhibit 24: Exhibit 25: O3b Looking to Expand the Addressable Market with mPOWER Expanding the TAM with Additional Bandwidth: New Geographies Incremental Revenue Opportunity for Broadband ($b)

$500

$403

$383

$362 $400

$342

$323

$303

$283

$300 $264

$245

$226

$206 $187

$200 $169

$150

$132

$114

$96 $78

$100 $60 $43 $26 $8 $0

United2019e States2020e 2021e 2022e 2023e Africa2024e 2025e 2026e 2027e 2028e 2029e 2030e Latin2031e America2032e 2033e 2034e 2035e 2036e Europe2037e 2038e 2039e 2040e India Rest of World Total Revenue Source: Company Data, Morgan Stanley Research. Source: Company Data, Morgan Stanley Research, The World Bank, United Nation, International Telecom- munication Union. Population in 2040 – Current Population Using the Internet @ $45 ARPU in United States, ~$17 ARPU in , $5 ARPU for Rest of World. Excludes ARPU increases Expanding the TAM: New Geographies Exhibit 26: Assume That Global Broadband Penetration Expands from ~50% in We estimate a $400b+ incremental revenue opportunity from 2017 to ~75% in 2040 % Broadband Penetration providing internet access to under / un served parts of the world.However, we assume that the global internet penetration 88% 90% 80% 80% 80% (defined by the International Telecommunication Union as people 76% 77% 74% 65% 60% 59% 61% who "use the internet") goes from ~50% in 2017 to ~75% in 2040 53% 48%

(similar to the United States today), to account for some part of the 30% 22% population that will either not sign up for the internet (due to lifes- tyle, finances, and/or service) or decide to share an internet connec- tion. Furthermore, we conservatively assume that the new satellite 2017 2040e networks capture 35% of this opportunity. United States Africa Latin America Europe China India Rest of World Global

Source: Company Data, Morgan Stanley Research, International Telecommunication Union. We estimate a ~$725b revenue opportunity for internet compa- nies focused on social media, search / online advertising, and, in particular, e-commerce, if global internet penetration goes to 100%. If we estimate global internet penetration goes from ~50% in 2017 to ~75% in 2040, this will drive $400b+ of incremental revenue for these companies.

The World Bank Study in 2012 concludes that a 10% increase in internet penetration would increase GDP growth by 0.78% in developed economies and 0.93% in developing economies.

MORGAN STANLEY RESEARCH 15 M FOUNDATION Expanding the TAM: New Products & Space Freight Transportation Services The freight transportation business – especially parcel delivery In addition, we estimate a ~$10b revenue opportunity from con- – is on the cusp of transformation from multiple new transporta- nected aircraft, and ~$1b from maritime. tion modalities, including drones, hyperloops, and autonomous trucks / vans set to be introduced in the coming years. Elon Musk Exhibit 27: recently announced a new option that could potentially have the big- Expanding the TAM with Additional Bandwidth: New Products & Ser- gest impact of all – rockets. vices

We see two potential TAMs for space related freight transportation:

1) Space as a Freight Transportation on Earth ("Domestic" Space Transportation): The most obvious and effective application of space / rockets in today’s freight transportation market is for Express Parcel delivery. The global cross-border Express market TAM is ~$25b, nearly equally split between North America, Europe and Asia / Other – and nearly equally split between DP-DHL, FDX and UPS / Other.

Source: Shutterstock.

Exhibit 28: Express Market Shares - Global Cross Border Parcel

Source: Deutsche Post DHL 2015. 16 M FOUNDATION The market today is characterized by GDP-ish growth (UPS domestic Exhibit 30: air grew +3.4% Y / Y in FY16 and FDX Express grew +2.3% Y / Y in the Cost of Shipping and per Shipment v. Transit Time By Mode recent quarter), and suffers from excess capacity, not just from the traditional parcel players, but also from airlines and air lessors using excess plane belly capacity to move freight using freight forwarders. However, this industry could see a fundamental reset with the intro- duction of rockets as a transportation modality.

One of the most fundamental principles of freight transportation is that time = money. The faster the transportation modality, the more expensive it will be to get from Point A to Point B. Similarly, the heavier your freight, the slower it will get from Point A to Point B, to keep costs in check. This linear relationship is perfectly illustrated in the below chart, which has historically been considered the holy grail of freight transportation...

Source: Company Data, Morgan Stanley Research, US Department of Transportation (USDOT). Exhibit 29: Cost of Shipping and Weight per Shipment v. Transit Time By Mode The new chart above shows that BFR can match the total payload of Air Express (higher than TL, LTL, and Ground Parcel, but much lower than Rail or Barge), while matching the cost of Barge (higher than Rail, but lower than TL, LTL, Ground, and Air Express) and delivering off the charts speed (if Elon’s promise of connecting most major cities on Earth in 30 min or less is true). To create this chart, we use the limited early information on the rocket, including its 18,000 mph cruising speed and 330,000 lbs payload. To calculate revenue / ton mile, we used Elon’s math of carrying 100 passengers at a cost of a full fare economy-class air ticket (we assume $2,000) as the total cost of operating the rocket ($200,000 being significantly lower than the $60+ million per launch cost of the current SpaceX rocket, due to the BFR’s reusability and smaller distances). Source: Company Data, Morgan Stanley Research. Note: Ton Miles Based on Company Disclosures; Barge Ton Miles May Include Backhaul. However, if the position of the BFR on that chart holds up, the TAM … until now. If Elon Musk’s plans and estimates for the BFR are real, for space freight transportation could be much larger than just it would break the holy grail chart in a way that would cause virtually global cross-border parcel Express. One assumes that there will be every transportation modality to reconsider its place in the supply a certain minimum distance required to make rocket travel viable as chain. In fact, the BFR broke the chart so comprehensively, that we one probably cannot travel between New York City and Boston on a had to figure out a new way to show it. sub-orbital vehicle. If we assume a minimum distance of 2,000 miles, the Domestic Express Parcel market (we estimate $22b between Overnight Express and Deferred Air), as well as overall Air Freight (estimated at $83b globally by Boeing) and select parts of the Rail and Shipping markets would come into play, given the BFR’s competi- tive revenue / ton mile operating costs and superior speed / service. All together, we estimate that the total “domestic” space trans- portation TAM could exceed $100b. We estimate TL, LTL, Ground parcel, and relatively regional forms of freight transportation will be relatively less impacted by rockets.

MORGAN STANLEY RESEARCH 17 M FOUNDATION 2) Interplanetary Space Freight: In addition to the “domestic” space ries of this growth. However, the capex requirements to enable this transportation opportunity (moving freight on Earth), space also will be ENORMOUS given that the carriers will have to set up opens up the market for interplanetary freight. If mankind is indeed launching facilities in major regions – essentially rebuild their air going to colonize the moon and Mars, the bases will need a lot of cargo hubs today, which will now be essentially worthless. cargo, given limited means of self-sustenance. We note that the Inter- national Space Station is re-supplied every 60-90 days, and while b. However, if rocket manufacturers / operators vertically inte- that vessel is much smaller than an interplanetary base is, the crew grate into the freight business, the global parcel carriers will be size is much smaller as well. We envision a future where we have the most impacted in the one area of parcels where they prob- monthly cargo replenishment departures from Earth to human bases ably have a moat – Express air freight. If SpaceX and others carry on other planets / satellites. We do not estimate to calculate the the cargo themselves instead of selling the rockets to third parties (a value of this TAM today, given the lack of concrete data points. business model that appears likely today), then these companies will vertically integrate to become competitors to legacy parcel carriers Stock implications of Space Freight Transportation with a significant competitive advantage – access to rockets and rocket infrastructure. Express accounts for 55% of total revenues at a. If rockets can transform the express freight business, global FDX and about 33% of total revenues at UPS, which could potentially parcel carriers can be huge winners, if they can buy rockets and be at risk. operate it themselves. We believe the Express parcel market will see significant growth given the speed and cost effectiveness of c. There could be collateral implications for Rails and Shipping global freight movements, we expect to see a vast increase in global companies, as well, if rockets encroach upon select parts of their ser- trade. If the legacy parcel carriers like UPS, FDX, DP-DHL, etc. can buy vice / end markets, though this is harder to size at this time. rockets from aerospace manufacturers and operate them like they do the Air Express business today, they will be the primary beneficia-

Exhibit 31: Exhibit 32: FDX 2016 Revenue Breakdown UPS 2016 Revenue Breakdown

Supply Ground Chain LTL 33% 4% Services 16% incl. Int'l Office Ground Domestic 21% 3% 43% LTL Air 12% 17% Domestic Int'l Air 20% 31%

Source: Company Data, Morgan Stanley Research. Source: Company Data, Morgan Stanley Research.

18 M FOUNDATION Sustainability

Satellite broadband services can have a profound effect educa- tion, health care, banking, agriculture, infrastructure, maritime, environmental management, disaster response. and govern- ment services. l Education: Connect communities to educational programs and resources, to ensure the equality of educational opportunity and empowerment. l Health Care: Remote service, consultation, and monitoring by medical specialists, to contribute to universal health coverage, disease prevention / mitigation, and reduce the need to expensive / life threatening travel. l Banking: Provide residents with convenient, flexible, reliable, and secure financial access. l Agriculture: Real time monitoring of fields and hyrdoponic instal- lations to maximize yield in harsh environment, and monitor pricing trends. l Infrastructure: Manage resources responsibility for a range of municipal services, including electricity, water, waste manage- ment, transportation, and lighting. l Maritime: Monitoring to meet requirements stemming from initi- atives towards conservation, marine sustainability, and welfare of fishermen. l Environmental Management: Track environmental and climate change, to aid in management of forests, nature preserves, and biodiversity. l Disaster Response: Establish critical lifelines following major nat- ural disasters, permitting humanitarian relief operators to clear blockages to aid. l Government Services: Ensure that all citizens can engage with their governments, to improve their well being and extend the benefits of public services.

In addition, higher asset utilization of reusable rockets enables a circular economy - e.g., retention of the value of products, materials, and resources within the economy for as long as pos- sible - and minimizes the generation of waste. A potential negative offset to this would be the increase in space debris.

MORGAN STANLEY RESEARCH 19 M FOUNDATION The Key Players

We are noticing the emergence of new players, and interest from accomplished individuals and well capitalized companies. In particular, we are focused on OneWeb (investors include Softbank), SpaceX (investors include Elon Musk, Fidelity, and Google), and Blue Origin (investors include Jeff Bezos).

Exhibit 33: Key Players

Source: Company Data, Morgan Stanley Research. AT&T and Intelsat covered by Simon Flannery. DISH and Sirius XM covered by Ben Swinburne. Sky, Eutelsat, and SES covered by Patrick Wellington. Inmarsat covered by Terence Tsui. Boeing and Lockheed Martin cov- ered by Rajeev Lalwani. Amazon, Facebook, and Google covered by Brian Nowak. Softbank covered by Tetsuro Tsusaka.

20 M FOUNDATION

Exhibit 34: Getting to Know OneWeb

720 Low Earth Orbit Satellites Network: @ Ka + Ku Band (Approved by the FCC) @ 150 kg Satellite Capacity: 7.5 Gbps @ 1,200 km Download: Up to 50 Mbps Upload: Up to 25 Mbps 1,280 Medium Earth Orbiut Satellites Latency: ~50 ms @ V band

= 2,740 Satellites

Investors: Launch Partners:

$1b from Softbank Arianespace: 21 Rockets for $1b+ $700M from Airbus + Bharti Enterprises Virgin Orbit: 39 Launches to Replenish + Grupo Salinas + Hughes Network Systems + Optionality for 100 Additional Launches (Echostar) + Intelsat + Qualcomm + Coca Blue Origin: 5 Launches Cola + Virgin Group + MacDonald, Dettwiler & Associates

Cost: Timeline:

< $500,000 per Satellite 10 Satellites in March 2018 32 Satellites Before the End of 2018 Low Latency Broadband Access in 2019?

Source: Company Data, Morgan Stanley Research.

MORGAN STANLEY RESEARCH 21 M FOUNDATION

Exhibit 35: Getting to Know SpaceX

4,425 Low Earth Orbit Satellites Network: @ Ka + Ku Band @ 850 lbs. / 386 kg Satellite Capacity: 17 Gbps to 23 Gbps @ 1,150 km to 1,275 km Broadband Speeds: Up to 1 Gbps Latency: 20 ms to 30 ms 7,518 Low Earth Orbit Satellites @ V Band

= 11,943 Satellites

Investors: Launch Partners:

$1b from Google + Fidelity SpaceX: 50 Satellites per Rocket

Cost: Timeline:

$10b to $15b 2019 to 2024 12 to 15 Years for Full Capacity

Source: Company Data, Morgan Stanley Research.

22 M FOUNDATION

Exhibit 36: Interest From Megatech Companies in Connectivity, Satellites & Space

"We're also making progress on our efforts to "The long-term vision is millions of people living $900M investment in SpaceX in January 2015. connect people living in some of the most and working in space." - Amazon Founder Jeff remote communities on earth. Our connectivity Bezos, March 2017 Project Loon lab is working on new technologies for connecting communities that include drones, Blue Origin "More than half of the world's population is still satellites, and laser communication systems." without internet access. Project Loon is a network - Facebook CEO Mark Zuckerberg, July 2015 Amazon Founder Jeff Bezos is selling ~$1 billion of balloons traveling on the edge of space, of Amazon stock / year to finance Blue Origin. designed to extend internet connectivity to Satellite: SpaceX rocket explosion destroyed people in rural and remote areas worldwide." the Amos-6 satellite in September 2016. ● 5 Successful Suborbital Flights in 2015 / 2016 ● Commercial Flights in 2018 ● Up to 10 Mbps Express WiFi: Connected 50M+ people by ● New Glenn Rocket in 2020 ● @ 65,000 Feet partnering with carriers, internet service ● OneWeb @ 5 Launches w/ New Glenn ● 100+ Days provides, and local entrepreneurs. ● in 2021 ● "… tens of thousands of dollars…" per Balloon ● Eutelsat Satellite Launch in 2021 - 2022 Acquila Unmanned Aircraft

Source: Company Data, Morgan Stanley Research.

Exhibit 37: Interest From Billionaires in Space Billionaire Source of Wealth Space Investment Net Worth ($b) Bill Gates Microsoft Kymeta $87 Jeff Bezos Amazon Blue Origin $85 Mark Zuckerberg Facebook SETI $73 Larry Page Google Planetary Resources $50 Sergey Brin Google SpaceX $48 La Ka-shing CK Hutchison Windward $34 Sheldon Adelson Las Vegas Sands SpaceIL $33 Paul Allen Microsoft Stratolaunch $23 Elon Musk Tesla SpaceX $21 Eric Schmidt Google Planetary Resources $13 Ricardo Salinas Grupo Elektra OneWeb $9 Richard Branson Virgin Group $5 Lynn Schusterman Samson Investment SpaceIL $5 Yuri Milner DST Global Planetary Resources $5 Marc Benoiff Salesforce Taranis $5

Source: Morgan Stanley Research, Bryce Space & Technology, Bloomberg Billionaires Index.

MORGAN STANLEY RESEARCH 23 M FOUNDATION SpaceX

Based on our own assumptions and limited disclosure by the Wall Street Journal, we estimate SpaceX could be worth ~$50b. Our Bear Case of ~$5b assumes that SpaceX never has a satellite internet business, and focuses on driving profitability in the satellite launch business. Our Bull Case of $120b+ assumes that satellites take 90% share of the incre- mental broadband opportunity (instead of 35% vs. fixed and wireless). Our estimates do not assume any launch failures, which could have a negative impact to the financials and cash balance of the company.

Ultimately, we believe that SpaceX is serious about attempting providing connectivity to under / un served parts of the world. We a mission to Mars. While SpaceX has managed to reduce the cost to believe that the goal of the satellite internet business is to generate launch a satellite, the business generates limited operating income. enough cash to be able to go to Mars. Whatever the success rate or We believe the reason for this is that SpaceX is willing to pass implications of going to Mars, we believe that Elon Musk at least through the cost savings to its customers in order to gather data on wants to attempt this. the launch, to perfect the process, and, eventually, go to Mars. Mean- while, we believe there is more to the satellite internet business than

Exhibit 38: Hypothetical DCF-Based Valuation Range for SpaceX BEAR CASE DCF VALUATION BULL CASE

Satellite Launch Satellite Launch Satellite Launch Terminal Value 10,019 Terminal Value 3,283 Terminal Value 3,283 NPV of Terminal Value 1,119 NPV of Terminal Value 367 NPV of Terminal Value 367 NPV of Cash Flows 2,182 NPV of Cash Flows 627 NPV of Cash Flows 627 NPV of Satellite Launch $3,301 NPV of Satellite Launch $993 NPV of Satellite Launch $993

Satellite Internet Satellite Internet Terminal Value 215,126 Terminal Value 455,815 NPV of Terminal Value 24,025 NPV of Terminal Value 50,905 NPV of Cash Flows 32,150 NPV of Cash Flows 79,868 Less: Investment (12,500) Less: Investment (12,500) NPV of Satellite Internet $43,675 NPV of Satellite Internet $118,273

Add: Cash 1,350 Add: Cash 1,350 Add: Cash 1,350 NPV $4,651 NPV $46,018 NPV $120,616

DCF Assumptions: DCF Assumptions: DCF Assumptions: % WACC 10.0% % WACC 10.0% % WACC 10.0% % Terminal Growth Rate 1.5% % Terminal Growth Rate 3.0% % Terminal Growth Rate 3.0% Source: Morgan Stanley Research, Wall Street Journal. For Satellite Launch, @ 1 / Week in 2019 + 1 / Month Thereafter @ ~$60M / Launch - 5% CAGR Thereafter, with 25 bps of Annual Margin Expansion from 0.5% in 2017e to 6.0%+ in 2040. For Satellite Internet, Incremental Revenue Opportunity for Broadband x 50% x 35% for Satellite + Autonomous Cars, Aviation Connectivity, Connected Aircraft, and Maritime x 33% for SpaceX with ~40% Adjusted EBITDA Margins in 2017 + 1.5% of Annual Margin Expansion Through 2024 + 70% Incremental Adjusted EBITDA Margins Thereafter.

24 M FOUNDATION

Exhibit 39: Exhibit 40: Estimate Satellite Launches Grows to ~10 / Week by 2040, with SpaceX Monitoring the Cash Balance for Potential Capital Raise/Plans for Mars Representing ~60% Market Share Missions Satellite Launches / Year Cash Balance ($b) $10b to $15b

600 60%

for Satellite $155

491

475

458 Internet in 2019 $140

441 424 $126 407

389

371 $113

400 353 40%

335 $100

316

296 $89

277

$78 257 Mars?

236 $68

215

$59 194

173 $50

150

200 20% $43

128 $35 116 $29 100 100

92 $24 86 85 85 81 78 $15 $19 $1 $1 0 0% ($0)($1) ($2) ($2) ($2) ($1) 2012 2014 2016 2018e 2020e 2022e 2024e 2026e 2028e 2030e 2032e 2034e 2036e 2038e 2040e

Launches % SpaceX Market Share 2017e 2018e 2019e 2020e 2021e 2022e 2023e 2024e 2025e 2026e 2027e 2028e 2029e 2030e 2031e 2032e 2033e 2034e 2035e 2036e 2037e 2038e 2039e 2040e Source: Morgan Stanley Research, Wall Street Journal, Federal Aviation Association, Space Flight Now. Source: Morgan Stanley Research, Wall Street Journal. For Satellite Launch, @ 1 / Week in 2019 + 1 / Month Thereafter @ ~$60M / Launch - 5% CAGR Thereafter, with 25 bps of Annual Margin Expansion from 0.5% in 2017e to 6.0%+ in 2040. For Satellite Internet, Incremental Revenue Opportunity for Broad- band x 50% x 35% for Satellite + Autonomous Cars, Aviation Connectivity, Connected Aircraft, and Mari- time x 33% for SpaceX with ~40% Adjusted EBITDA Margins in 2017 + 1.5% of Annual Margin Expansion Through 2024 + 70% Incremental Adjusted EBITDA Margins Thereafter.

Exhibit 41: SpaceX: Launch Log

Source: Space Flight Now.

MORGAN STANLEY RESEARCH 25 M FOUNDATION National Security and Civil Space

We estimate that government spending on space will grow at a ~3% CAGR from ~$85b today to $170b+ by 2040. With the United States military expenditures exceeding $600b, and global military expenditures exceeding $1.1t, compared to NASA's budget of ~$20b, there is substantial room to increase investments in space. While we expect the topic of space to increase in importance, over time, our view is balanced by budgetary constraints, and other priorities.

Exhibit 42: AFSPC, NRO, and NGA are Amongst the Key US Government Players

Source: Department of Defense, Office of the Director of National Intelligence, Morgan Stanley Research.

While the US Government utilizes the space domain for many While operational users such as the intelligence community and missions and purposes, the key players we highlighted above are Air Force have their own labs and technology development pro- currently focused on the resilience and persistence of their con- grams, they routinely turn to alternative channels to gain access stellations. The drivers of that focus are twofold and include the to burgeoning technology. In-Q-Tel and Defense Innovation Experi- emergence of threats to the current constellation and the necessity mental (DIUx) play the role of venture capital for the US Govern- to routinely observe targets in order to detect changes. The most ment, and have become increasingly interest in seeding space related critical space-based capabilities for AFSPC, NRO, and NGA are: businesses. l Communication: Relaying voice, video, and data transmissions from sources outside the range of terrestrial antennas. l Positioning, Navigation, and Timing (GPS): Broadcasting signals for synchronization of operations, routing, and munitions gui- dance. l Weather: Monitoring meteorological and oceanographic phe- nomena to support planning and execution of operations. l Surveillance: Intercepting signals, generating imagery to monitor military / intelligence targets, and nuclear detonation / detection.

26 M FOUNDATION

Exhibit 43: US Government-Sponsored Venture Capital Funds and Representative Investments in Space

Source: Company Data, Morgan Stanley Research.

This community of early stage Government sponsored investors approaches the domain in an end-to-end fashion, investing in everything from analytics for big data coming off satellites, to launch, and ground-based control systems.

MORGAN STANLEY RESEARCH 27 M FOUNDATION

Exhibit 44: The CosmiQ Works Framework for Commercial Space

Source: CosmiQ, IN-Q-TEL.

Current Military Efforts in Space

While many US Government sponsored space efforts are classified, Northrop Grumman are some of the larger contractors, with pro- based on unclassified programs and information, we can gain some grams that can generate several hundred million dollars in revenue insight into who the contracting participants are and the magnitude per year. of the space programs. As illustrated below, Lockheed Martin and

Exhibit 45: Major Domestic Unclassified Programs Programs Agency Contractor FY18 Budget Advanced Extremely High Frequency (AEHF) Air Force Lockheed Martin (Bus); Northrop Grumman (Payload) $203M Evolved Expendable (EELV) Air Force United Launch Alliance; SpaceX $1.9B Global Positioning System (GPS) III Air Force Lockheed Martin (Bus); Harris (Payload) $329M GPS Next Generation Operational Control Systems (GPS OCX) Air Force Raytheon $510M Space Based Infrared System (SBIRS) Air Force Lockheed Martin (Bus); Northrop Grumman (Payload) $1.4B Experimental One (XS-1) DARPA Boeing $60M Robotic Servicing of Geosynchronous Satellites (RSGS) DARPA MacDonald, Dettwiler and Associates $79M James Webb NASA Northrop Grumman $534M Orion Multi-Purpose Crew Vehicle NASA Lockheed Martin $1.3B

Source: Department of Defense, Company Data, Morgan Stanley Research.

28 M FOUNDATION Potential Catalysts Exhibit 46: United States Annual Military Expenditures Currently at $600b+ Military Expenditure (Based on 2015 $s, $t) l December 2017: Potential Establishment of Space Corp via $2.0 12.0% National Defense Authorization Act 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.6 l 1.4 1.5 January 2018: Department of Defense Quadrennial Defense $1.5 1.3 1.4 9.0% 1.2 1.2 Review 1.1 $1.0 6.0% l Spring 2019: NASA James Webb Space Telescope Launch l 4Q19: NASA Orion Exploration Mission (EM-1) Lunar Orbit $0.5 3.0% l 2020: Experimental Spaceplane-1 (XS-1) "Phantom Express" Flight Test $0.0 0.0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

USA China Russia Other % of GDP % of Gov. Spending

Could This “” Become a Matter Source: Stockholm International Peace Research Institute (SIPRI), Morgan Stanley Research. Based on 2015 $s, based on CPI Data. % of GDP and % of Government Spending for United States + China + Russia. of National Security? Exhibit 47: v. NASA Annual Budget Currently at ~$20b "Today, there is nothing we do, and I repeat, nothing we do as a NASA Budget (Based on 2015 $s, $b) joint force that isn't enabled by space." - General John Raymond, $50 5.0% Commander of Air Force $40 4.0%

"I don't think the general public realizes the extent to which the $30 3.0%

[Global Positioning System's] timing signal is critical for these $20 2.0% ATM transactions and every other point-of-sale transaction con- $10 1.0% ducted in the United States and most of the world." - Michael Griffin, Former Administrator of NASA $0 0.0% 1960 1970 1980 1990 2000 2010

$b % of Fed Budget

"The space threat has developed with alarming speed. Over the Source: White House, National Aeronautics & Space Administration, Morgan Stanley Research. Based on next five years, space must be a priority for additional funding to 2016 $s, based on CPI Data. ensure that the United States maintains its space superiority and Exhibit 48: has the capabilities and capacity to deter and defend our critical By 2040, We Estimate That US Government Spending on Space Will Be space assets." - Senator John McCain, Chairman of the Armed Ser- ~2x to $90b+, or 50%+ of Global Government Spending on Space at vices Committee, Recommendations for the FY 2018-FY 2022 $180b+ Defense Budget, in January 2017

Global Government Spending on Space ($b)

$200 $181

$174

$166

$159

“The intelligence community reports that Russia and China are $153

$147

$140

$150 $135 $129

$124

$120 $115 pursuing a full range of antisatellite technology designed to

$109 $107 $102 $95 $93 $93 $91 $83 $83 $100 $82 threaten our military's effectiveness.” - Michael Pence, Vice Presi- $81 dent of the United States, Chairman of the , $50 October 2017 $0 2018e 2019e 2020e 2021e 2022e 2023e 2024e 2025e 2026e 2027e 2028e 2029e 2030e 2031e 2032e 2033e 2034e 2035e 2036e 2037e 2038e 2039e 2040e United States Russia China Japan United Kingdom India Canada Germany France Luxembourg

Source: U.S. Military and Intelligence Space Budget for FY 2018, Department of Defense, Congressional Budget Office, National Aeronautics & Space Administration, Morgan Stanley Research.

MORGAN STANLEY RESEARCH 29 M FOUNDATION Deep Space Exploration

While we cannot begin to estimate the success of a mission to the moon and/or Mars, or begin to contemplate the investment implications, we believe the ambition is real, and there is capital behind the idea.

"We will refocus America's space program toward human explo- "We will return NASA to the moon, not only to leave ration and discovery. That means launching American astro- behind footprints and flags, but to build the foundation we need nauts beyond low-Earth orbit for the first time since 1972. It to send Americans to Mars and beyond." - Michael Pence, Vice means establishing a renewed American presence on the moon, President of the United States, Chairman of the National Space a vital strategic goal. And from the foundation of the moon, Council, October 2017 America will be the first nation to bring mankind to Mars." - Michael Pence, Vice President of the United States, Chairman of the National Space Council, October 2017

Could We Be Going to the Moon? Or Mars?

"I think we should build a permanent human settlement on one SpaceX plans to send at least two cargo ships to Mars in 2022 ("… of the poles of the moon. It’s time to go back to the moon, but that is not a typo, although it is aspirational..." - SpaceX Founder, CEO, this time to stay.” - Amazon Founder Jeff Bezos, May 2017 and CTO Elon Musk), followed by two crew ships and two cargo ships in 2024. Blue Origin CEO Bob Smith plans to have a lunar landing program ready within five years.

Exhibit 49: Exhibit 50: SpaceX Design for Travel to the Moon SpaceX Design for Travel to Mars

Source: Company data Source: Company data

30 M FOUNDATION SpaceX plans to build a new rocket for this initiative. BFR, in a Mars Science City fully reusable configuration, without re-fueling, is expected to have a payload capacity of 150 tons (compared to ~16 tons for Falcon 9 and Vice President, Prime Minister, and Ruler of Dubai, His Highness ~30 tons for Falcon Heavy, both of which are partially reusable). The Sheikh Mohammed bin Rashid Al Maktoum, and His Highness Sheikh same resources that are used for Falcon 9, Falcon Heavy, and Dragon Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and can be applied to BFR. SpaceX plans to start the construction of the Deputy Supreme Commander of the United Arab Emirates (UAE) first ship around 2Q18. Armed Forces, have launched the Mars Science City project, to be built in the UAE desert. The AED 500M City will cover 1.9M square Exhibit 51: feet, making it the largest space simulation city ever built and will SpaceX Design for BFR Rocket provide a viable and realistic model to simulate living on the surface of Mars. The Mars Science City project falls within the UAE's objec- tives to lead the global scientific race to take people to Mars, and is part of the Mars 2117 Strategy, launched during the fifth World Gov- ernment Summit, which seeks to build the first settlement on Mars in the next 100 years.

Exhibit 52: Mars Science City in UAE

Source: Company Data.

Source: Company data

Exhibit 53: Key Projects for the Moon

Source: Company Data, Morgan Stanley Research, National Aeronautics & Space Administration (NASA), Japan Aerospace Exploration Agency (JAXA), Roscomos, Indian Space Research Organisation (ISRO), The Tele- graph.

MORGAN STANLEY RESEARCH 31 M FOUNDATION

Exhibit 54: Key Projects for Mars

Source: Company Data, Morgan Stanley Research, National Aeronautics & Space Administration (NASA),Roscomos.

32 M FOUNDATION Appendix

Historical Timeline of Events

Exhibit 55: Historical Timeline of Events

Source: Wikipedia, Morgan Stanley Research.

MORGAN STANLEY RESEARCH 33 M FOUNDATION Orbital Slots

Since the 1960s, the International Union (ITU) The FCC requires applicants to submit an orbital debris mitigation has regulated the assignment of Geostationary (GEO) orbital slots. plan and self certify that low orbiting constellations will not interfere However, orbital assignments for low Earth orbit (LEO) and medium with satellites in orbit. We note that there have been recent concerns Earth orbit (MEO) are largely unrelated. In the United States, the Fed- from Congress regarding the "growing challenge presented by low eral Communications Commission (FCC) regulates spectrum rights. Earth orbit (LEO) space debris."

Exhibit 56: Geo Stationary Orbital Slots

Source: Boeing (June 2011), Morgan Stanley Research.

Exhibit 57: While low orbiting satellites are less expensive to manufacture and Low Earth Orbit (LEO) v. Medium Earth Orbit (MEO) v. Geo Stationary launch, the networks require more satellites and ground equipment. Orbit (GEO) In addition, the networks are more complicated (satellites require coordination with the rest of the constellation + cannot interfere with existing networks), and the satellites have shorter lives (due to atmospheric drag).

Source: Company Data, Morgan Stanley Research.

34 M FOUNDATION Media & Internet - Fixed Satellite Services: Where next for GEO-LEO? (12 Jun 2017)

Spectrum Bands Anatomy of a Satellite

Exhibit 58: Exhibit 59: Understanding the Spectrum Bands The Anatomy of a Satellite

Source: Company Data, Morgan Stanley Research, Federal Communications Commission, National Aero- nautics & Space Administration.

Applications for Non-Geostationary Satellites

Boeing

Source: National Aeronautics & Space Administration. l 2,956 Low Earth Orbit Satellites @ V Band What Are SmallSats? OneWeb

l Femtosatellite @ 10g to 100g l 720 Low Earth Orbit Satellites @ Ka + Ku Band (Approved by the l Picosatellite @ 100g to 1kg FCC) l Nanosatellite @ 1kg to 10kg l 720 Low Earth Orbit Satellites @ V Band l Microsatellite @ 10kg to 100kg l 1,280 Medium Earth Orbit Satellites @ V Band l Minisatellite @ 100kg to 180kg

Space X l 7,518 Low Earth Orbit Satellites @ V Band l 4,425 Low Earth Orbit Satellites @ Ka + Ku Band

MORGAN STANLEY RESEARCH 35 M FOUNDATION Launch Events

Exhibit 60: Exhibit 61: Satellite Launch Events (By Country) Satellite Launch Events (By Rocket) Satellite Launch Events (By Country) Satellite Launch Events (By Rocket)

92 92 86 85 86 86 85 86 78 81 78 81

2012 2013 2014 2015 2016 2017e 2012 2013 2014 2015 2016 2017e

United States China Russia Europe India Japan Other SpaceX ULA Soyuz Long March SLV Other

Source: Federal Aviation Administration, Space Flight Now. Source: Federal Aviation Administration, Space Flight Now.

36 M FOUNDATION Launch Rockets

Exhibit 62: Launch Rockets First # of LEO LEO GEO GEO Vehicle Operator Country % Success $ Launch Launches (kg) ($ / kg) (kg) ($ / kg) Alpha 1.0 Firefly USA 2017 $8 400 $20,000 1.2 VKS / / ILS Russia 2016 2,960 Angara A3 VKS / Roscosmos / ILS Russia TBD 14,000 3,000 Angara A5 VKS / Roscosmos / ILS Russia 2014 1 100% $100 24,000 $4,167 6,450 $15,504 Orbital ATK USA 2013 6 83% $83 6,400 $12,891 Arianespace France 1996 65 98% $178 21,000 $8,476 9,500 $18,737 Arianespace France 2020 $106 15,500 $6,806 8,000 $13,188 Arion 2 PLD Space Spain 2020 $5 150 $34,333 ULA / LMCLS USA 2002 68 100% $158 13,469 $11,731 5,795 $27,265 2 Horizon Space UK 2018 $6 500 $12,240 Bloostar Zero2Infinity Spain 2019 $4 Cab-3A CubeCab USA 2017 $0 5 $50,000 Delta II ULA USA 1989 153 99% $137 4,848 $28,321 1,875 $73,246 Delta IV ULA USA 2002 34 100% $282 19,105 $14,761 8,640 $32,639 ISC Kosmotras Russia 1999 22 95% $29 3,200 $9,063 Electron USA 2017 $5 JAXA Japan 2013 2 100% $39 950 $41,053 Falcon 9 SpaceX USA 2010 29 97% $61 22,800 $2,684 8,300 $7,373 Falcon Heavy SpaceX USA 2017 $270 54,400 $4,963 22,200 $12,162 GoLauncher-2 Generation Orbit USA 2017 $3 45 $55,066 GSLV ISRO / Antrix India 2001 10 70% $47 5,000 $9,400 2,500 $18,800 H-IIA/B MHI Launch Japan 2001 37 97% $101 13,250 $7,642 5,000 $20,250 MHI Launch Japan 2020 $50 10,000 $5,000 6,500 $7,692 2C ARCA Space USA 2018 400 Intrepid 1 Rocket Crafters USA 2018 $5 1/1A EXPACE / PLA China 2013 3 100% $3 300 $10,000 Kuaizhou 11 EXPACE / PLA China 2017 $15 1,500 $10,000 LauncherOne Virgin Galactic USA 2017 $10 500 $20,000 PLA / CGWIC China 1982 41 98% $30 3,850 $7,792 1,250 $24,000 PLA / CGWIC China 1992 31 100% $30 3,500 $8,571 PLA / CGWIC China 1999 13 100% 8,400 PLA / CGWIC China 1994 25 100% $70 8,500 $8,235 2,600 $26,923 /E PLA / CGWIC China 1996 37 97% $70 12,000 $5,833 5,500 $12,727 Long March 3C PLA / CGWIC China 2008 15 100% $70 3,800 $18,421 PLA / CGWIC China 1999 28 96% $30 4,200 $7,143 1,500 $20,000 PLA / CGWIC China 2006 20 95% $30 4,200 $7,143 1,500 $20,000 PLA / CGWIC China 2016 1 100% 25,000 14,000 PLA / CGWIC China 2015 1 100% 1,500 PLA / CGWIC China 2016 1 100% 13,500 1,500 PLA / CGWIC China 2015 2 100% $5 530 $10,000 LVM3 ISRO / Antrix India 2014 1 100% $60 8,000 $7,500 4,000 $15,000 I Orbital ATK USA 2000 11 100% $40 580 $68,966 Minotaur IV Orbital ATK USA 2010 3 100% $46 1,600 $28,750 Orbital ATK USA 2013 1 100% $55 532 $103,383 Minotaur VI Orbital ATK USA TBD $60 2,600 $23,077 860 $69,767 Minotaur C Orbital ATK USA 2017 $45 1,368 $32,895 New Glenn Blue Origin USA 2020 52,500 Pegasus XL Orbital ATK USA 1994 33 97% $40 450 $88,889 Proton M VKS / Roscosmos / ILS Russia 2001 98 91% $65 23,000 $2,826 6,920 $9,393 PSLV ISRO / Antrix India 1993 38 97% $26 3,250 $8,000 1,425 $18,246 Rockot VKS / Eurockot Russia 2000 27 93% $42 1,985 $21,058 Iranian Space Agency 2009 6 67% 50 Shavit 2 Israel 1988 10 90% Soyuz FG VKS / Roscosmos Russia 2001 58 100% $132 7,800 $16,859 Soyuz 2.1a/b VKS / Ariansepace / Starsem Russia 2004 60 93% $80 4,850 $16,495 3,250 $24,615 Soyuz 2.1v VKS / Roscosmos Russia 2013 2 100% $40 3,000 $13,333 NASA USA 2018 100,000 SS-520-4 Canon / JAXA Japan 2017 1 0% 4 Stratolaunch Stratolaunch USA 2018 3,000 Super Strypi ORS / Sandia USA 2015 1 0% 320 NADA North Korea 2009 4 50% 100 Vector H Vector USA 2019 $3 110 $27,273 Vector R Vector USA 2017 60 Arianespace France 2012 8 100% $37 1,963 $18,849 Vulcan ULA USA 2019 $173 13,940 $12,374 6,825 $25,275 XS-1 DARPA USA 2018 $5 2,267 $2,206 VKS / Russia 1985 83 88% $90 4,955 $18,163

Source: Federal Aviation Administration.

MORGAN STANLEY RESEARCH 37 M FOUNDATION Launch Log

Exhibit 63: Launch Log for 2017 / 2018

Source: Space Flight Now.

38 M FOUNDATION Models

Demand for Data

Exhibit 64: Global IP Traffic (PB / Month)

Global IP Traffic (PB / Month) 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040

2008 - 2013 10,174 14,832 21,478 30,972 42,310 55,587 2009 - 2014 14,686 20,396 28,491 38,242 49,919 63,904 2010 - 2015 20,151 28,023 37,603 49,420 63,267 80,456 2011 - 2016 30,734 43,441 54,812 69,028 87,331 110,282 2012 - 2017 43,570 55,553 68,892 83,835 101,055 120,643 2013 - 2018 51,168 62,476 75,739 91,260 109,705 131,553 2014 - 2019 59,851 72,434 88,443 108,999 135,489 167,973 2015 - 2020 72,521 88,719 108,533 132,101 160,561 194,374 2016 - 2021 96,054 121,694 150,910 186,453 228,411 278,108

Actual Results 10,174 14,686 20,151 30,734 43,570 51,168 59,851 72,521 96,054

Cisco Estimates 121,694 150,910 186,453 228,411 278,108 + Adjustment 0.0% 0.0% 0.0% -5% -10% Global IP Traffic 10,174 14,686 20,151 30,734 43,570 51,168 59,851 72,521 96,054 121,694 150,910 186,453 216,990 250,297 287,842 331,018 380,671 437,771 481,549 529,703 582,674 640,941 705,035 768,488 829,967 888,065 941,349 988,416 1,027,953 1,058,792 1,079,968 1,090,767 1,090,767

Miles / Year (trillion) 12 13 13 14 14 15 16 16 17 18 18 20 20 21 22 23 24 25 26 27 29 % of Production 0% 0% 1% 1% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% x Data Usage (TB / Hour) 3 33333333333333333333 % Transported 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% Data for Autonomous Cars 10,957 53,241 77,795 127,506 164,449 255,819 398,130 599,196 773,402 999,706 1,205,101 1,462,132 1,701,311 1,955,917 2,237,411 2,525,537 2,842,257 3,196,272 3,576,545 3,998,697 4,450,118

Global IP Traffic (PB / Month) 10,174 14,686 20,151 30,734 43,570 51,168 59,851 72,521 96,054 121,694 150,910 186,453 227,947 303,539 365,637 458,524 545,120 693,591 879,679 1,128,900 1,356,076 1,640,648 1,910,137 2,230,620 2,531,279 2,843,982 3,178,760 3,513,953 3,870,210 4,255,064 4,656,513 5,089,464 5,540,885 % Y/ Y 44.3% 37.2% 52.5% 41.8% 17.4% 17.0% 21.2% 32.4% 26.7% 24.0% 23.6% 22.3% 33.2% 20.5% 25.4% 18.9% 27.2% 26.8% 28.3% 20.1% 21.0% 16.4% 16.8% 13.5% 12.4% 11.8% 10.5% 10.1% 9.9% 9.4% 9.3% 8.9% @ 40 to 50 TB / Hour 96,054 121,694 150,910 186,453 401,883 1,148,747 1,600,634 2,482,686 3,155,744 4,754,721 7,199,992 10,641,139 13,633,834 17,510,987 21,041,123 25,441,968 29,539,598 33,894,162 38,697,665 43,606,846 48,991,037 54,995,882 61,434,168 68,568,771 76,186,503 @ 80 to 100 TB / Hour 96,054 121,694 150,910 186,453 586,775 2,047,196 2,913,426 4,634,354 5,930,818 9,071,671 13,918,436 20,752,574 26,684,994 34,381,034 41,377,210 50,115,448 58,249,229 66,900,259 76,453,982 86,225,276 96,954,122 108,932,972 121,788,368 136,046,774 151,282,239

Source: Morgan Stanley Research, Cisco Visual Network Index. Cisco Estimates Through 2021 (Adjusted for Historical Accuracy) + Morgan Stanley Estimates for Autonomous Cars.

MORGAN STANLEY RESEARCH 39 M FOUNDATION

Exhibit 65: Mobile Data Traffic (PB / Month)

Mobile Data Traffic (PB / Month) 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040

2008 - 2013 33 85 207 482 1,076 2,184 2009 - 2014 91 220 536 1,150 2,162 3,565 2010 - 2015 237 546 1,163 2,198 3,806 6,254 2011 - 2016 597 1,252 2,379 4,215 6,896 10,804 2012 - 2017 885 1,577 2,797 4,700 7,439 11,156 2013 - 2018 1,488 2,593 4,352 6,999 10,809 15,861 2014 - 2019 2,524 4,176 6,765 10,666 16,140 24,314 2015 - 2020 3,685 6,180 9,931 14,934 21,708 30,564 2016 - 2021 7,241 11,266 16,792 24,452 34,588 48,951

Actual Results 33 91 237 597 885 1,488 2,524 3,685 7,241

Cisco Estimates 11,266 16,792 24,452 34,588 48,951 + Adjustment 0.0% -5.0% -15.0% -25% -30% Mobile Data Traffic 33 91 237 597 885 1,488 2,524 3,685 7,241 11,266 15,953 20,785 25,941 34,266 40,513 47,900 56,633 66,958 73,062 79,723 86,990 94,920 103,573 108,294 113,230 118,391 123,787 129,430 132,379 135,396 138,482 141,638 144,866

Miles / Year (trillion) 12 13 13 14 14 15 16 16 17 18 18 20 20 21 22 23 24 25 26 27 29 % of Production 0% 0% 1% 1% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% x Data Usage (TB / Hour) 3 33333333333333333333 % Data Transported 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% Data for Autonomous Cars 10,957 53,241 77,795 127,506 164,449 255,819 398,130 599,196 773,402 999,706 1,205,101 1,462,132 1,701,311 1,955,917 2,237,411 2,525,537 2,842,257 3,196,272 3,576,545 3,998,697 4,450,118 x % WiFi 11% 33% 45% 46% 51% 60% 61% 61% 62% 62% 63% 64% 64% 65% 65% 66% 67% 67% 68% 68% 69% 70% 70% 71% 71% 72% 73% 73% 74% 74% Mobile Data for Autonomous Cars 4,120 19,699 28,317 45,647 57,886 88,513 135,364 200,132 253,676 321,905 380,812 453,261 517,199 582,863 653,324 722,303 795,832 875,779 958,514 1,047,658 1,139,230

Mobile Data Traffic (PB / Month) 33 91 237 597 885 1,488 2,524 3,685 7,241 11,266 15,953 20,785 30,061 53,965 68,831 93,547 114,519 155,472 208,426 279,854 340,666 416,826 484,385 561,555 630,429 701,254 777,112 851,733 928,211 1,011,175 1,096,996 1,189,297 1,284,096 % Y/ Y 174.7% 160.6% 152.4% 48.2% 68.1% 69.6% 46.0% 96.5% 55.6% 41.6% 30.3% 44.6% 79.5% 27.5% 35.9% 22.4% 35.8% 34.1% 34.3% 21.7% 22.4% 16.2% 15.9% 12.3% 11.2% 10.8% 9.6% 9.0% 8.9% 8.5% 8.4% 8.0% @ 40 to 50 TB / Hour 7,241 11,266 15,953 20,785 95,461 366,692 518,370 818,197 1,033,459 1,560,623 2,357,333 3,456,942 4,367,771 5,527,075 6,529,777 7,757,073 8,840,958 9,954,208 11,148,632 12,318,301 13,562,043 14,914,159 16,313,408 17,820,875 19,369,374 @ 80 to 100 TB / Hour 7,241 11,266 15,953 20,785 164,980 699,119 996,226 1,588,494 2,010,285 3,054,288 4,641,604 6,834,162 8,648,551 10,959,230 12,955,980 15,405,851 17,568,686 19,790,025 22,173,476 24,507,172 26,991,707 29,692,922 32,488,333 35,500,112 38,593,883

Source: Morgan Stanley Research, Cisco Visual Network Index. Cisco Estimates Through 2021 (Adjusted for Historical Accuracy) + Morgan Stanley Estimates for Autonomous Cars.

Global Space Economy

Exhibit 66: Global Space Economy ($MM)

GLOBAL SPACE ECONOMY Morgan Stanley Estimates ($ billions) 2012 2013 2014 2015 2016 2017e 2018e 2019e 2020e 2021e 2022e 2023e 2024e 2025e 2026e 2027e 2028e 2029e 2030e 2031e 2032e 2033e 2034e 2035e 2036e 2037e 2038e 2039e 2040e

Consumer TV 88,400 92,600 95,000 97,800 97,700 97,700 98,373 99,916 101,185 102,199 102,773 103,049 103,058 102,751 102,564 102,444 102,353 102,290 102,255 102,246 102,263 102,305 102,369 102,453 102,555 102,673 102,804 102,946 103,094 Consumer Radio 3,400 3,800 4,200 4,600 5,000 5,407 5,742 6,048 6,329 6,575 6,788 6,977 7,160 7,350 7,545 7,738 7,929 8,115 8,299 8,478 8,652 8,822 8,986 9,144 9,295 9,440 9,578 9,708 9,830 Consumer Broadband 1,500 1,700 1,800 1,900 2,000 1,986 2,045 3,608 6,961 10,328 13,749 17,239 20,798 24,426 28,098 31,814 35,591 39,432 43,336 47,270 51,233 55,255 59,334 63,470 67,622 71,784 75,990 80,231 84,503 Consumer Services 93,300 98,100 101,000 104,300 104,700 105,093 106,160 109,572 114,474 119,102 123,310 127,265 131,015 134,527 138,208 141,996 145,873 149,838 153,890 157,995 162,149 166,381 170,688 175,066 179,472 183,898 188,372 192,885 197,427 Fixed Satellite Services 16,400 16,400 17,100 17,900 17,400 16,931 16,712 17,379 17,926 18,473 19,036 19,606 20,183 20,765 21,353 21,946 22,544 23,146 23,751 24,359 24,969 25,581 26,194 26,807 27,419 28,030 28,639 29,245 29,848 Mobile Satellite Services 2,400 2,600 3,300 3,400 3,600 4,345 5,358 6,334 7,217 7,718 8,239 8,779 9,340 9,921 10,523 11,147 11,793 12,462 13,153 13,868 14,607 15,370 16,158 16,971 17,809 18,737 19,705 20,715 21,769 Earth Observation Services 1,300 1,500 1,600 1,800 2,000 2,224 2,476 2,758 3,076 3,433 3,835 4,288 4,799 5,375 6,026 6,762 7,594 8,537 9,605 10,816 12,191 13,753 15,529 17,549 19,850 22,472 25,464 28,879 32,781 Satellite Services 113,400 118,600 123,000 127,400 127,700 128,593 130,706 136,043 142,694 148,726 154,420 159,938 165,337 170,588 176,111 181,852 187,805 193,982 200,399 207,038 213,916 221,085 228,568 236,393 244,550 253,138 262,180 271,724 281,824

Consumer Navigation 52,700 66,800 74,600 78,100 84,600 91,563 98,345 104,901 111,195 117,200 122,896 128,271 133,321 138,044 142,446 146,533 150,318 153,812 157,030 159,987 162,698 165,179 167,446 169,515 171,399 173,114 174,673 176,089 177,374 Consumer Equipment 12,800 15,600 17,900 18,300 18,500 18,682 18,847 18,998 19,134 19,257 19,369 19,470 19,562 19,645 19,720 19,787 19,848 19,903 19,953 19,998 20,039 20,075 20,108 20,138 20,164 20,189 20,210 20,230 20,248 Network Equipment 9,900 8,800 9,300 9,600 10,300 10,856 11,384 11,882 12,349 12,787 13,195 13,573 13,924 14,247 14,545 14,819 15,070 15,300 15,510 15,702 15,876 16,035 16,180 16,311 16,430 16,538 16,635 16,724 16,804 Ground Equipment 75,400 91,200 101,800 106,000 113,400 121,101 128,576 135,781 142,679 149,244 155,459 161,315 166,806 171,936 176,711 181,140 185,237 189,016 192,494 195,687 198,613 201,289 203,734 205,963 207,994 209,841 211,519 213,043 214,425

Satellite Manufacturing 14,600 15,700 16,000 16,000 13,900 14,262 16,750 16,509 17,711 14,963 14,854 11,086 11,414 22,463 24,868 27,082 29,059 30,758 32,136 33,153 33,772 33,953 33,663 32,866 31,528 29,618 27,105 23,958 20,148

Satellite Launch 5,800 5,300 6,200 5,400 5,500 6,120 6,977 7,364 7,796 7,976 8,886 9,656 10,298 10,827 11,254 11,589 11,844 12,025 12,143 12,204 12,214 12,180 12,107 12,000 11,863 11,701 11,517 11,314 11,096

Global Satellite Industry 209,200 230,800 247,000 254,800 260,500 270,076 283,009 295,697 310,879 320,909 333,620 341,995 353,855 375,814 388,943 401,663 413,945 425,782 437,172 448,082 458,515 468,508 478,072 487,221 495,935 504,298 512,321 520,039 527,493

Non Satellite Industry 75,700 80,500 78,600 80,164 81,840 83,633 85,548 87,593 89,774 92,100 94,577 97,216 100,026 103,017 106,201 109,589 113,195 117,032 121,117 125,465 130,095 135,026 140,279 145,877 151,844 158,206 164,994

Global Space Industry 322,700 335,300 339,100 350,240 364,849 379,329 396,427 408,502 423,394 434,094 448,432 473,030 488,969 504,680 520,145 535,371 550,366 565,114 579,631 593,973 608,167 622,248 636,215 650,175 664,165 678,245 692,487

Second Order Impacts Internet 893 1,921 3,117 5,485 10,129 15,489 25,935 38,727 55,255 75,917 99,369 123,094 148,496 175,143 202,500 230,044 259,719 292,414 328,405 367,993 411,502

Global Space Economy 322,700 335,300 339,100 350,240 364,849 379,329 397,320 410,422 426,511 439,579 458,562 488,520 514,904 543,408 575,400 611,288 649,735 688,208 728,128 769,116 810,667 852,291 895,934 942,588 992,570 1,046,238 1,103,989 Bull Case 322,700 335,300 339,100 350,240 364,849 386,313 419,004 447,041 478,313 507,608 544,661 593,426 642,424 695,384 754,807 821,415 892,908 964,867 1,039,654 1,116,720 1,195,164 1,274,102 1,356,914 1,445,130 1,539,448 1,640,470 1,748,857 Bear Case 322,700 335,300 339,100 350,240 364,849 377,848 391,735 400,565 412,178 419,549 430,509 451,681 464,169 476,407 488,358 500,025 511,418 522,551 533,441 544,110 554,586 564,900 575,090 585,264 595,423 605,631 615,961

Global GDP 65,544 68,077 70,751 73,425 76,088 78,758 81,452 84,182 86,955 89,775 92,646 95,570 98,551 101,592 104,694 107,856 111,074 114,350 117,684 121,075 124,521 128,016 131,552 135,124 138,723 142,339 145,962 % of Global GDP 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.6% 0.6% 0.6% 0.6% 0.6% 0.7% 0.7% 0.7% 0.7% 0.7% 0.7% 0.8%

Commercial 241,601 250,897 253,561 263,779 279,199 293,160 310,854 324,115 328,653 337,094 350,600 372,180 380,935 390,840 403,816 412,000 420,281 430,249 438,294 445,550 452,184 458,188 463,512 468,208 472,250 475,630 478,339 Research 1,600 1,800 2,000 2,224 2,476 2,758 3,076 3,433 3,835 4,288 4,799 5,375 6,026 6,762 7,594 8,537 9,605 10,816 12,191 13,753 15,529 17,549 19,850 22,472 25,464 28,879 32,781 Government 79,499 82,603 83,539 84,237 83,174 83,411 82,497 80,953 90,906 92,712 93,034 95,475 102,008 107,079 108,734 114,834 120,480 124,048 129,146 134,670 140,454 146,511 152,853 159,495 166,451 173,736 181,368

Source: Satellite Industry Association, Morgan Stanley Research, Thomson Reuters.

40 M FOUNDATION

Exhibit 67: Government Spending on Space ($b)

GOVERNMENT Morgan Stanley Estimates ($ billions) 2018e 2019e 2020e 2021e 2022e 2023e 2024e 2025e 2026e 2027e 2028e 2029e 2030e 2031e 2032e 2033e 2034e 2035e 2036e 2037e 2038e 2039e 2040e

Satellites 4.7 4.1 3.7 3.4 5.5 5.1 4.2 3.9 4.8 5.2 4.5 5.1 5.5 5.2 5.3 5.5 5.6 5.8 6.0 6.1 6.3 6.5 6.7 Launch 1.9 1.9 1.6 1.2 1.5 1.5 1.5 1.6 1.6 1.6 1.6 1.6 1.6 1.7 1.7 1.7 1.7 1.7 1.7 1.8 1.8 1.8 1.8 Support 3.2 3.2 2.7 2.0 2.5 2.6 2.6 2.6 2.7 2.7 2.7 2.7 2.8 2.8 2.8 2.8 2.9 2.9 2.9 3.0 3.0 3.0 3.0 Other 15.0 15.8 16.5 17.4 18.2 19.1 20.1 21.1 22.2 23.3 24.4 25.7 26.9 28.3 29.7 31.2 32.7 34.4 36.1 37.9 39.8 41.8 43.9 National Security 24.8 24.9 24.5 23.9 27.8 28.3 28.4 29.2 31.2 32.7 33.2 35.1 36.8 37.9 39.5 41.2 42.9 44.8 46.7 48.8 50.9 53.1 55.4 NASA 19.1 19.1 19.1 19.1 19.1 19.5 19.5 20.1 21.4 22.5 22.8 24.1 25.3 26.1 27.1 28.3 29.5 30.8 32.1 33.5 35.0 36.5 38.1 United States 43.9 44.0 43.6 43.0 46.9 47.8 48.0 49.2 52.6 55.2 56.1 59.2 62.1 64.0 66.6 69.5 72.4 75.6 78.8 82.3 85.8 89.6 93.5

Russia 5.0 5.0 4.9 4.8 5.6 5.7 5.7 5.9 6.3 6.6 6.7 7.0 7.4 7.6 7.9 8.3 8.6 9.0 9.4 9.8 10.2 10.7 11.1 China 15.5 15.5 15.3 14.9 17.3 17.7 17.7 18.2 19.4 20.4 20.7 21.9 23.0 23.6 24.6 25.7 26.8 27.9 29.1 30.4 31.7 33.1 34.5 Japan 3.3 3.3 3.3 3.2 3.7 3.8 3.8 3.9 4.2 4.4 4.4 4.7 4.9 5.1 5.3 5.5 5.7 6.0 6.2 6.5 6.8 7.1 7.4 United Kingdom 3.5 3.5 3.4 3.3 3.9 4.0 4.0 4.1 4.4 4.6 4.6 4.9 5.1 5.3 5.5 5.8 6.0 6.3 6.5 6.8 7.1 7.4 7.7 India 4.0 4.0 4.0 3.9 4.5 4.6 4.6 4.7 5.1 5.3 5.4 5.7 6.0 6.1 6.4 6.7 7.0 7.3 7.6 7.9 8.2 8.6 9.0 Canada 1.1 1.1 1.1 1.1 1.2 1.2 1.2 1.3 1.4 1.4 1.5 1.5 1.6 1.7 1.7 1.8 1.9 2.0 2.1 2.1 2.2 2.3 2.4 Germany 2.9 3.0 2.9 2.8 3.3 3.4 3.4 3.5 3.7 3.9 4.0 4.2 4.4 4.5 4.7 4.9 5.1 5.3 5.6 5.8 6.1 6.3 6.6 France 4.0 4.0 4.0 3.9 4.5 4.6 4.6 4.7 5.0 5.3 5.4 5.7 5.9 6.1 6.4 6.6 6.9 7.2 7.5 7.9 8.2 8.6 9.0 Luxembourg 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Global Government Spending on Space 83.2 83.4 82.5 81.0 90.9 92.7 93.0 95.5 102.0 107.1 108.7 114.8 120.5 124.0 129.1 134.7 140.5 146.5 152.9 159.5 166.5 173.7 181.4

Source: U.S. Military and Intelligence Space Budget for FY 2018, Department of Defense, Congressional Budget Office, National Aeronautics & Space Administration, Morgan Stanley Research.

Exhibit 68: Space Insurance Premiums ($MM)

INSURANCE Morgan Stanley Estimates 2012 2013 2014 2015e 2016e 2017e 2018e 2019e 2020e 2021e 2022e 2023e 2024e 2025e 2026e 2027e 2028e 2029e 2030e 2031e 2032e 2033e 2034e 2035e 2036e 2037e 2038e 2039e 2040e

Total Launches 92 86 85 85 100 100 116 128 150 173 194 215 236 257 277 296 316 335 353 371 389 407 424 441 458 475 491 % Insured 46% 45% 44% 43% 42% 41% 40% 39% 38% 37% 36% 35% 34% 33% 32% 31% 30% 29% 28% 27% 26% 25% 24% 23% 22% 21% 20% $ Insured Value $200 $190 $181 $171 $163 $155 $147 $140 $133 $126 $120 $114 $108 $103 $98 $93 $88 $84 $79 $75 $72 $68 $65 $61 $58 $55 $53 Total Insured Value $8,464 $7,353 $6,751 $6,267 $6,842 $6,345 $6,796 $6,972 $7,588 $8,047 $8,371 $8,576 $8,679 $8,694 $8,634 $8,511 $8,334 $8,113 $7,856 $7,569 $7,259 $6,931 $6,590 $6,240 $5,886 $5,529 $5,173 % Premium 7.5% 7.5% 7.5% 7.5% 7.5% 7.5% 7.5% 7.5% 7.5% 7.5% 7.5% 7.5% 7.5% 7.5% 7.5% 7.5% 7.5% 7.5% 7.5% 7.5% 7.5% 7.5% 7.5% 7.5% 7.5% 7.5% 7.5% Launch + 1 Year Premiums ($MM) 635 551 506 470 513 476 510 523 569 604 628 643 651 652 648 638 625 608 589 568 544 520 494 468 441 415 388

Satellites 1,261 1,381 1,459 1,544 1,662 3,059 4,005 4,782 5,547 6,256 6,962 7,106 7,308 7,571 7,896 8,288 8,747 9,276 9,879 10,558 11,316 12,155 13,079 14,091 15,194 16,391 17,687 % Insured 17% 17% 17% 17% 17% 17% 17% 17% 17% 17% 17% 17% 17% 17% 17% 17% 17% 17% 17% 17% 17% 17% 17% 17% 17% 17% 17% $ Insured Value $50 $95 $90 $86 $81 $77 $74 $70 $66 $63 $60 $57 $54 $51 $49 $46 $44 $42 $40 $38 $36 $34 $32 $31 $29 $28 $26 Total Insured Value $10,804 $22,480 $22,563 $22,687 $23,194 $40,560 $50,447 $57,220 $63,060 $67,561 $71,430 $69,260 $67,667 $66,594 $65,985 $65,791 $65,964 $66,461 $67,242 $68,269 $69,510 $70,931 $72,507 $74,210 $76,018 $77,910 $79,866 % Premium 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% In Orbit Premiums ($MM) 54 112 113 113 116 203 252 286 315 338 357 346 338 333 330 329 330 332 336 341 348 355 363 371 380 390 399

Total Premiums 689 664 619 583 629 679 762 809 884 941 985 989 989 985 977 967 955 941 925 909 892 874 857 839 822 804 787

Source: Aon Risk Solutions, Willis Inspace, Morgan Stanley Research.

MORGAN STANLEY RESEARCH 41 M FOUNDATION

Exhibit 69: Second Order Impact - Benefit to Internet Companies ($MM)

Internet ($MM) 2020e 2021e 2022e 2023e 2024e 2025e 2026e 2027e 2028e 2029e 2030e 2031e 2032e 2033e 2034e 2035e 2036e 2037e 2038e 2039e 2040e

Global Population 7,795 7,874 7,952 8,030 8,108 8,186 8,259 8,332 8,405 8,478 8,551 8,619 8,688 8,756 8,824 8,893 8,956 9,020 9,083 9,147 9,210 % Broadband Penetration 50% 52% 53% 54% 55% 56% 57% 59% 60% 61% 62% 63% 65% 66% 67% 68% 69% 70% 72% 73% 74% Broadband Subscribers 3,926 4,058 4,193 4,329 4,467 4,606 4,745 4,885 5,028 5,172 5,317 5,462 5,608 5,755 5,904 6,055 6,204 6,355 6,507 6,661 6,816 Incremental Broadband Subscribers 133 132 134 136 138 140 139 140 142 144 146 144 146 148 149 151 149 151 152 154 155 People Without Internet 3,869 3,815 3,759 3,701 3,641 3,579 3,514 3,446 3,377 3,306 3,234 3,158 3,080 3,001 2,920 2,838 2,752 2,665 2,576 2,486 2,395

Social Media

Internet Users Added 263 396 530 666 804 944 1,082 1,223 1,365 1,509 1,655 1,799 1,945 2,093 2,242 2,392 2,542 2,692 2,844 2,998 3,153 x Potential Monetization / User $1.5 $2.1 $2.4 $3.2 $4.5 $5.5 $7.2 $8.8 $10.5 $12.2 $13.5 $14.3 $14.9 $15.5 $16.0 $16.4 $16.8 $17.1 $17.4 $17.8 $18.2 Potential Monetization of Social Media 390 821 1,257 2,126 3,603 5,194 7,833 10,745 14,356 18,380 22,336 25,645 29,065 32,528 35,958 39,331 42,618 46,046 49,621 53,346 57,229

Search / Online Advertising

Internet Users Added 263 396 530 666 804 944 1,082 1,223 1,365 1,509 1,655 1,799 1,945 2,093 2,242 2,392 2,542 2,692 2,844 2,998 3,153 Social v. Search Spend 1.0x 1.0x 1.0x 1.0x 1.0x 1.0x 1.0x 1.0x 1.0x 1.0x 1.0x 1.0x 1.0x 1.0x 1.0x 1.0x 1.0x 1.0x 1.0x 1.0x 1.0x x Potential Monetization / User $1.5 $2.1 $2.4 $3.2 $4.5 $5.5 $7.2 $8.8 $10.5 $12.2 $13.5 $14.3 $14.9 $15.5 $16.0 $16.4 $16.8 $17.1 $17.4 $17.8 $18.2 Potential Monetization of Search 390 821 1,257 2,126 3,603 5,194 7,833 10,745 14,356 18,380 22,336 25,645 29,065 32,528 35,958 39,331 42,618 46,046 49,621 53,346 57,229

eCommerce

Internet Users Added 263 396 530 666 804 944 1,082 1,223 1,365 1,509 1,655 1,799 1,945 2,093 2,242 2,392 2,542 2,692 2,844 2,998 3,153 eCommerce (as % of Total ) 0.1% 0.1% 0.2% 0.3% 0.6% 0.8% 1.4% 2.0% 2.6% 3.3% 4.0% 4.6% 5.1% 5.5% 5.8% 6.0% 6.2% 6.4% 6.6% 6.8% 7.0% Total Retail (% of Income) 26.4% 26.4% 26.4% 26.4% 26.4% 26.4% 26.4% 26.4% 26.4% 26.4% 26.4% 26.4% 26.4% 26.4% 26.4% 26.4% 26.4% 26.4% 26.4% 26.4% 26.4% Spend per Person $0.4 $0.7 $1.1 $1.9 $3.6 $5.4 $9.5 $14.1 $19.4 $25.9 $33.1 $39.9 $46.5 $52.6 $58.3 $63.3 $68.7 $74.4 $80.6 $87.2 $94.2 Potential Monetization of eCommerce 113 279 602 1,232 2,923 5,101 10,268 17,237 26,544 39,158 54,697 71,804 90,366 110,087 130,584 151,381 174,483 200,322 229,164 261,300 297,045

Total Potential Monetization 893 1,921 3,117 5,485 10,129 15,489 25,935 38,727 55,255 75,917 99,369 123,094 148,496 175,143 202,500 230,044 259,719 292,414 328,405 367,993 411,502

Source: Company Data, Morgan Stanley Research, The World Bank, United Nation, Magna Global Ad Forecast Spring 2017.

SpaceX

Exhibit 70: Satellite Launch

Satellite Launch 2011 2012 2013 2014 2015 2016 2017e 2018e 2019e 2020e 2021e 2022e 2023e 2024e 2025e 2026e 2027e 2028e 2029e 2030e 2031e 2032e 2033e 2034e 2035e 2036e 2037e 2038e 2039e 2040e Launches 0 2 3 6 6 8 20 30 40 52 64 76 88 100 112 124 136 148 160 172 184 196 208 220 232 244 256 268 280 292 % Y / Y 50.0% 33.3% 30.0% 23.1% 18.8% 15.8% 13.6% 12.0% 10.7% 9.7% 8.8% 8.1% 7.5% 7.0% 6.5% 6.1% 5.8% 5.5% 5.2% 4.9% 4.7% 4.5% 4.3% Launches 78 81 92 86 85 85 100 100 116 128 150 173 194 215 236 257 277 296 316 335 353 371 389 407 424 441 458 475 491 % Market Share 0.0% 2.6% 3.7% 6.5% 7.0% 9.4% 23.5% 30.0% 40.0% 45.0% 50.0% 50.5% 51.0% 51.5% 52.0% 52.5% 53.0% 53.5% 54.0% 54.5% 55.0% 55.5% 56.0% 56.5% 57.0% 57.5% 58.0% 58.5% 59.0% 59.5%

Avg. Revenue per Launch 158 90 61 58 55 52 50 47 45 43 41 39 37 35 33 31 30 28 27 26 24 23 22 21 20 19 % Y / Y -42.9% -32.0% -5.0% -5.0% -5.0% -5.0% -5.0% -5.0% -5.0% -5.0% -5.0% -5.0% -5.0% -5.0% -5.0% -5.0% -5.0% -5.0% -5.0% -5.0% -5.0% -5.0% -5.0% -5.0% -5.0%

Satellite Launch ($MM) Revenue 175 400 700 1,000 945 720 1,224 1,744 2,209 2,729 3,190 3,599 3,959 4,274 4,547 4,783 4,983 5,152 5,291 5,404 5,492 5,557 5,603 5,630 5,640 5,635 5,616 5,586 5,544 5,493 % Y / Y -23.8% 70.0% 42.5% 26.7% 23.5% 16.9% 12.8% 10.0% 8.0% 6.4% 5.2% 4.2% 3.4% 2.7% 2.1% 1.6% 1.2% 0.8% 0.5% 0.2% -0.1% -0.3% -0.5% -0.7% -0.9%

Operating Profit 1 2 4 5 (250) 2 6 13 22 34 48 63 79 96 114 132 150 167 185 203 220 236 252 267 282 296 309 321 333 343 % Margin 0.5% 0.5% 0.5% 0.5% -26.5% 0.3% 0.5% 0.8% 1.0% 1.3% 1.5% 1.8% 2.0% 2.3% 2.5% 2.8% 3.0% 3.3% 3.5% 3.8% 4.0% 4.3% 4.5% 4.8% 5.0% 5.3% 5.5% 5.8% 6.0% 6.3%

% Tax Rate 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0%

NOPAT 1 2 3 4 (188) 2 4 9 14 22 31 41 51 63 74 85 97 109 120 132 143 154 164 174 183 192 201 209 216 223 % Y / Y 165.2% 113.8% 68.9% 54.4% 40.3% 31.6% 25.7% 21.4% 18.2% 15.7% 13.7% 12.0% 10.6% 9.4% 8.4% 7.5% 6.7% 6.1% 5.5% 4.9% 4.4% 4.0% 3.6% 3.2%

Source: Morgan Stanley Research, Wall Street Journal, Space Flight Now, Federal Aviation Administration.

42 M FOUNDATION

Exhibit 71: Satellite Internet

Satellite Internet 2011 2012 2013 2014 2015 2016 2017e 2018e 2019e 2020e 2021e 2022e 2023e 2024e 2025e 2026e 2027e 2028e 2029e 2030e 2031e 2032e 2033e 2034e 2035e 2036e 2037e 2038e 2039e 2040e

Incremental Revenue from Broadband ($MM) Incremental Broadband Subscribers 222 448 675 906 1,141 1,379 1,621 1,863 2,109 2,358 2,611 2,867 3,123 3,382 3,645 3,910 4,179 4,447 4,718 4,991 5,268 5,548 x ARPU $7 $7 $7 $7 $7 $7 $7 $7 $7 $6 $6 $6 $6 $6 $6 $6 $6 $6 $6 $6 $6 $6 Total Revenue 8,466 25,527 42,744 60,111 77,724 95,582 113,686 131,892 150,195 168,727 187,488 206,479 225,512 244,580 263,860 283,352 303,057 322,774 342,494 362,411 382,523 402,831 % Incremental Penetration 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% % Share for Satellites 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% Satellite Revenue from Broadband 1,481 4,467 7,480 10,519 13,602 16,727 19,895 23,081 26,284 29,527 32,810 36,134 39,465 42,801 46,175 49,587 53,035 56,485 59,937 63,422 66,942 70,495

Revenue Opportunity - Autonomous Cars ($MM) Global Car Park 1,207 1,229 1,250 1,270 1,291 1,310 1,328 1,345 1,361 1,375 1,388 1,401 1,414 1,427 1,442 1,458 1,476 1,494 1,513 1,533 1,553 1,572 x ARPU $3 $3 $3 $3 $3 $3 $3 $3 $3 $3 $3 $3 $3 $3 $3 $3 $3 $3 $3 $3 $3 $3 Total Revenue 44,071 44,894 45,658 46,398 47,161 47,847 48,495 49,116 49,718 50,227 50,705 51,163 51,634 52,137 52,673 53,260 53,910 54,583 55,270 55,995 56,721 57,435 x % for Satellite 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 7.0% 7.5% 8.0% 8.5% 9.0% 9.5% 10.0% 10.5% Satellite Revenue from Autonomous Cars 0 224 457 696 943 1,196 1,455 1,719 1,989 2,260 2,535 2,814 3,098 3,389 3,687 3,994 4,313 4,640 4,974 5,320 5,672 6,031

Revenue Opportunity - Commercial Aviation Connectivity ($MM) Global Commercial Aircraft 21,670 22,783 23,895 25,008 26,120 27,233 28,345 29,458 30,570 31,683 32,795 33,908 35,020 36,133 37,245 38,358 39,470 40,583 41,695 42,808 43,920 45,499 47,135 48,830 50,585 x ARPA $11,263 $11,519 $11,749 $11,984 $12,224 $12,469 $12,718 $12,972 $13,232 $13,496 $13,766 $14,042 $14,323 $14,609 $14,901 $15,199 $15,503 $15,813 $16,130 $16,452 $16,781 $17,117 $17,459 $17,808 $18,164 $18,528 x % Penetration 27.3% 27.3% 29.0% 30.8% 32.6% 34.3% 36.1% 37.8% 39.6% 41.3% 43.1% 44.8% 46.6% 48.4% 50.1% 51.9% 53.6% 55.4% 57.1% 58.9% 60.6% 62.4% 64.2% 65.9% 67.7% Total Revenue 818 877 998 1,130 1,272 1,426 1,591 1,769 1,960 2,163 2,381 2,613 2,861 3,124 3,404 3,701 4,016 4,350 4,703 5,076 5,470 5,948 6,462 7,015 7,610 x % for Satellite 63.3% 63.3% 63.8% 64.3% 64.8% 65.3% 65.8% 66.3% 66.8% 67.3% 67.8% 68.3% 68.8% 69.3% 69.8% 70.3% 70.8% 71.3% 71.8% 72.3% 72.8% 73.3% 73.8% 74.3% 74.8% Satellite Revenue from Commercial Aviation Connectivity 518 555 637 727 825 932 1,048 1,174 1,310 1,457 1,615 1,786 1,969 2,166 2,377 2,603 2,845 3,103 3,378 3,672 3,984 4,362 4,771 5,214 5,695

Revenue Opportunity - Business Aviation Connectivity ($MM) Global Business Aircraft 29,840 29,840 30,840 31,840 32,840 33,840 34,840 35,840 36,840 37,840 38,840 39,840 40,840 41,840 42,840 43,840 44,840 45,840 46,840 47,840 48,840 49,840 50,840 51,840 52,840 x ARPA $2,302 $2,548 $2,803 $2,817 $2,831 $2,845 $2,859 $2,874 $2,888 $2,902 $2,917 $2,931 $2,946 $2,961 $2,976 $2,991 $3,006 $3,021 $3,036 $3,051 $3,066 $3,081 $3,097 $3,112 $3,128 $3,143 x % Penetration 34.5% 34.5% 36.0% 37.4% 38.9% 40.3% 41.7% 43.2% 44.6% 46.1% 47.5% 48.9% 50.4% 51.8% 53.3% 54.7% 56.1% 57.6% 59.0% 60.5% 61.9% 63.3% 64.8% 66.2% 67.7% Total Revenue 315 347 375 405 436 468 501 536 572 610 649 689 731 774 819 865 912 961 1,012 1,064 1,118 1,173 1,230 1,288 1,349 x % for Satellite 48.4% 48.4% 49.7% 51.0% 52.2% 53.5% 54.8% 56.1% 57.3% 58.6% 59.9% 61.2% 62.4% 63.7% 65.0% 66.2% 67.5% 68.8% 70.1% 71.3% 72.6% 73.9% 75.2% 76.4% 77.7% Satellite Revenue from Business Aviation Connectivity 153 168 186 206 228 250 275 301 328 358 389 422 456 493 532 573 616 661 709 759 812 867 924 985 1,048

Revenue Opportunity - Connected Aircraft ($MM) Global Aircraft 52,623 54,735 56,848 58,960 61,073 63,185 65,298 67,410 69,523 71,635 73,748 75,860 77,973 80,085 82,198 84,310 86,423 88,535 90,648 92,760 95,339 97,975 100,670 103,425 x ARPA $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 x % Penetration 36.1% 37.6% 39.2% 40.8% 42.3% 43.9% 45.5% 47.1% 48.6% 50.2% 51.8% 53.4% 55.0% 56.5% 58.1% 59.7% 61.3% 62.9% 64.5% 66.1% 67.7% Total Revenue 3,230 3,346 3,462 3,578 3,693 3,809 3,925 4,041 4,156 4,272 4,388 4,503 4,619 4,735 4,851 4,966 5,082 5,223 5,368 5,516 5,667 x % for Satellite 61.6% 62.4% 63.2% 63.9% 64.7% 65.4% 66.1% 66.8% 67.5% 68.2% 68.9% 69.6% 70.2% 70.9% 71.5% 72.2% 72.8% 73.4% 74.0% 74.7% 75.3% Satellite Revenue from Connected Aircraft 0 498 995 1,493 1,991 2,088 2,187 2,288 2,389 2,492 2,595 2,701 2,807 2,914 3,023 3,133 3,244 3,356 3,469 3,584 3,700 3,835 3,975 4,118 4,265

Revenue Opportunity - Maritime ($MM) Global Fleet 11111111111111111111111111 x ARPA $3,333 $3,333 $3,333 $3,333 $3,333 $3,333 $3,333 $3,333 $3,333 $3,333 $3,333 $3,333 $3,333 $3,333 $3,333 $3,333 $3,333 $3,333 $3,333 $3,333 $3,333 $3,333 $3,333 $3,333 $3,333 $3,333 x % Penetration 0.1% 0.2% 0.4% 0.5% 0.6% 0.7% 0.8% 1.0% 1.1% 1.2% 1.3% 1.4% 1.6% 1.7% 1.8% 1.9% 2.0% 2.2% 2.3% 2.4% 2.5% 2.6% 2.8% 2.9% 3.0% 3.1% Total Revenue 33 67 100 133 167 200 233 267 300 333 367 400 433 467 500 533 567 600 633 667 700 733 767 800 833 867 x % for Satellite 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Satellite Revenue from Maritime 33 67 100 133 167 200 233 267 300 333 367 400 433 467 500 533 567 600 633 667 700 733 767 800 833 867

Aircraft & Maritime Revenue Opportunity 737 1,321 1,952 2,593 3,243 3,504 3,777 4,062 4,360 4,673 4,999 5,341 5,699 6,073 6,465 6,875 7,304 7,753 8,223 8,715 9,229 9,830 10,470 11,150 11,874 % Y / Y 79.2% 47.8% 32.8% 25.1% 8.0% 7.8% 7.6% 7.3% 7.2% 7.0% 6.8% 6.7% 6.6% 6.5% 6.3% 6.2% 6.1% 6.1% 6.0% 5.9% 6.5% 6.5% 6.5% 6.5%

Satellite Internet ($MM) Total Revenue 4,074 7,935 11,441 14,992 18,607 22,283 26,022 29,799 33,614 37,486 41,419 45,413 49,438 53,495 57,616 61,804 66,063 70,354 74,741 79,211 83,764 88,400 x % Market Share 33.3% 33.3% 33.3% 33.3% 33.3% 33.3% 33.3% 33.3% 33.3% 33.3% 33.3% 33.3% 33.3% 33.3% 33.3% 33.3% 33.3% 33.3% 33.3% 33.3% 33.3% 33.3% Revenue 1,358 2,645 3,814 4,997 6,202 7,428 8,674 9,933 11,205 12,495 13,806 15,138 16,479 17,832 19,205 20,601 22,021 23,451 24,914 26,404 27,921 29,467 % Y / Y 94.8% 44.2% 31.0% 24.1% 19.8% 16.8% 14.5% 12.8% 11.5% 10.5% 9.6% 8.9% 8.2% 7.7% 7.3% 6.9% 6.5% 6.2% 6.0% 5.7% 5.5%

Adjusted EBITDA 522 1,057 1,582 2,147 2,758 3,415 4,287 5,168 6,058 6,962 7,880 8,812 9,751 10,697 11,659 12,636 13,630 14,631 15,655 16,698 17,760 18,842 % Margin 38.5% 40.0% 41.5% 43.0% 44.5% 46.0% 49.4% 52.0% 54.1% 55.7% 57.1% 58.2% 59.2% 60.0% 60.7% 61.3% 61.9% 62.4% 62.8% 63.2% 63.6% 63.9%

Depreciation & Amortization 362 707 1,023 1,345 1,676 2,015 2,361 2,714 3,073 3,439 3,814 4,197 4,585 4,979 5,382 5,794 6,215 6,642 7,081 7,531 7,992 8,464 % of Revenue 26.6% 26.7% 26.8% 26.9% 27.0% 27.1% 27.2% 27.3% 27.4% 27.5% 27.6% 27.7% 27.8% 27.9% 28.0% 28.1% 28.2% 28.3% 28.4% 28.5% 28.6% 28.7%

Operating Profit 161 350 559 802 1,082 1,400 1,926 2,454 2,986 3,523 4,066 4,615 5,166 5,718 6,277 6,842 7,415 7,989 8,574 9,167 9,768 10,378 % Margin 11.8% 13.2% 14.6% 16.0% 17.4% 18.8% 22.2% 24.7% 26.6% 28.2% 29.4% 30.5% 31.3% 32.1% 32.7% 33.2% 33.7% 34.1% 34.4% 34.7% 35.0% 35.2%

% Tax Rate 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0%

Capital Expenditures 27 53 76 100 124 149 173 199 224 250 276 303 330 357 384 412 440 469 498 528 558 589 % Capital Intensity 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%

Free Cash Flow 0 0 439 882 1,310 1,767 2,255 2,776 3,440 4,111 4,789 5,479 6,180 6,894 7,613 8,339 9,078 9,829 10,594 11,366 12,156 12,961 13,783 14,620 % Y / Y 100.8% 48.6% 34.9% 27.7% 23.1% 23.9% 19.5% 16.5% 14.4% 12.8% 11.5% 10.4% 9.5% 8.9% 8.3% 7.8% 7.3% 6.9% 6.6% 6.3% 6.1%

Source: Company Data, Morgan Stanley Research, Wall Street Journal, United Nations Population Projections.

MORGAN STANLEY RESEARCH 43 M FOUNDATION Disclosure Section

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The following analyst or strategist (or a household member) owns securities (or related derivatives) in a company that he or she covers or recommends in Morgan Stanley Research: Ethan C Ellison - Activision Blizzard Inc(common or preferred stock), Amazon.com Inc(common or preferred stock), Apple, Inc.(common or preferred stock), Priceline Group Inc(common or preferred stock); Carmen Hundley - Orange(common or preferred stock); Brian Nowak, CFA - Dover(common or preferred stock), Northrop Grumman Corp.(common or preferred stock); Armintas Sinkevicius, CFA, CPA - Alphabet Inc.(common or preferred stock), Amazon.com Inc(common or preferred stock), CenturyLink, Inc.(common or preferred stock), Facebook Inc(common or preferred stock), SBA Communications(common or preferred stock), Uniti Group Inc(common or preferred stock).

As of September 29, 2017, Morgan Stanley beneficially owned 1% or more of a class of common equity securities of the following companies covered in Morgan Stanley Research: Acacia Communications Inc, Activision Blizzard Inc, Alphabet Inc., Altice NV, Amazon.com Inc, Ambarella Inc, Analog Devices Inc., Appian Corp, Apple, Inc., Asbury Automotive Group Inc, Avis Budget Group Inc, Berkshire Hathaway Inc, Blue Apron Holdings Inc, Boeing Co., Bouygues, Brocade Communications Systems, BT Group plc, Canadian Pacific Railway Ltd., CDK Global Inc, Cellnex Telecom SA, CenturyLink, Inc., Chubb LTD, Holding AB, Corning Inc, Coupa Software Inc, Criteo SA, Crown Castle Corp., Cypress Semiconductor Corp, Eaton Corp PLC, Electronics for Imaging Inc, Ellie Mae Inc, Emerson Electric, Euskaltel SA, Eutelsat Communications, Everest Re Group, Ltd., Facebook Inc, Ferrari NV, FireEye Inc, Fitbit Inc, , Frontier Communications Corp, Co., Goodyear Tire & Rubber Company, Groupon, Inc., GrubHub Inc., Hertz Global Holdings Inc, Honeywell International, HubSpot, Inc., IBM, Impinj Inc, Informa, Ingersoll Rand, Inmarsat, Inphi Corporation, Intuit, ITV, Juniper Networks Inc, KPN, Lagardere, Lennox International, Level 3 Communications, Inc., Mediaset Espana Comunicacion SA, Micron Technology Inc., Microsoft, Nos SGPS SA, Nutanix Inc, NXP Semiconductor NV, ON Semiconductor Corp., Palo Alto Networks Inc, Pearson, Priceline Group Inc, ProSiebenSat.1 Media SE, Publicis Groupe, Pure Storage Inc, QTS Realty Trust Inc, Raytheon Co, RELX, Sabre Corp, Salesforce.com, ServiceNow Inc, Sky plc, Splunk Inc, Stroeer SE, Sunrise Communications Group AG, Swisscom, TDC A/S, , Telecom Italia, Tesla Motors Inc., TF1, TransDigm Group Inc., TRIVAGO NV, TrueCar Inc, Twitter Inc, Union Pacific Corp., United Technologies Corp, Uniti Group Inc, Veeva Systems Inc, Verizon Communications, Viavi Solutions Inc, Visteon Corporation, Vivendi, Vodafone Group, Watsco Inc., Western Digital, Workday Inc, WPP Group Plc, Xilinx, Yelp Inc, Zayo Group Holdings, Inc., Zillow Group Inc, Zynga Inc.

Within the last 12 months, Morgan Stanley managed or co-managed a public offering (or 144A offering) of securities of 3M Co., AerCap Holdings NV, Air Lease Corp, Allstate Corporation, Altice NV, Altice USA Inc, American Tower Corp., Appian Corp, Apple, Inc., Arch Capital Group Ltd., AT&T, Inc., Autodesk, Avis Budget Group Inc, Axis Capital Holdings, Berkshire Hathaway Inc, Blue Apron Holdings Inc, Boeing Co., Broadcom Ltd, CDK Global Inc, CDW Corporation, Cellnex Telecom SA, CenturyLink, Inc., Charter Communications Inc., Cincinnati Bell Inc., Cloudera Inc, Comcast Corporation, CommScope Holding Company Inc, Coupa Software Inc, Crown Castle Corp., CSX Corporation, CyrusOne Inc, Deutsche Telekom, DNA OYJ, Eaton Corp PLC, eBay Inc, Expedia Inc., FedEx Corporation, Ford Motor Company, General Electric Co., General Motors Company, GoDaddy Inc, Gogo Inc, Hewlett Packard Enterprise, Honeywell International, HubSpot, Inc., Impinj Inc, Intel Corporation, Intelsat S.A., Liberty Braves Group, Liberty Formula One, Liberty Global plc, Liberty SiriusXM Group, Marsh & McLennan Cos, Maxim Integrated Products Inc., Microsoft, NetApp Inc, Nuance Communications Inc., ON Semiconductor Corp., Orange, Priceline Group Inc, Quantenna Communications Inc, Schneider National Inc., Seagate Technology, ServiceNow Inc, Shopify Inc, Sirius XM Radio Inc., Snap Inc., Softbank Group, Stanley Black & Decker, Tesla Motors Inc., Texas Instruments, Textron Inc., The Travelers Companies, Inc., Tintri Inc, TransDigm Group Inc., TRIVAGO NV, Union Pacific Corp., United Parcel Service, United Technologies Corp, Uniti Group Inc, Verizon Communications, Viavi Solutions Inc, VMware Inc, Vodafone Group, W.W. Grainger Inc., Workday Inc, WPP Group Plc, XPO Logistics, Inc., Yext Inc, Zayo Group Holdings, Inc..

Within the last 12 months, Morgan Stanley has received compensation for investment banking services from 3M Co., Acacia Communications Inc, Adobe Systems, Advanced Micro Devices, AerCap Holdings NV, Air Lease Corp, Akamai Technologies, Inc., Allstate Corporation, Alphabet Inc., Altice NV, Altice USA Inc, American Int'l Grp, American Tower Corp., Aon PLC, Appian Corp, Apple, Inc., Arch Capital Group Ltd., Arconic Inc, AT&T, Inc., Autodesk, Avis Budget Group Inc, Axis Capital Holdings, Berkshire Hathaway Inc, Blue Apron Holdings Inc, Boeing Co., Box Inc, Broadcom Ltd, CDK Global Inc, CDW Corporation, Cellnex Telecom SA, CenturyLink, Inc., Charter Communications Inc., Ciena Corporation, Cincinnati Bell Inc., Inc, Cloudera Inc, Comcast Corporation, CommScope Holding Company Inc, Corning Inc, Coupa Software Inc, Crown Castle Corp., CSX Corporation, Cypress Semiconductor Corp, CyrusOne Inc, Delphi Automotive PLC, Deutsche Telekom, DNA OYJ, eBay Inc, Endurance International Group Holdings, Inc., Expedia Inc., FedEx Corporation, Ford Motor Company, Frontier Communications Corp, General Electric

44 M FOUNDATION Co., General Motors Company, Genesee & Wyoming Inc., GoDaddy Inc, Gogo Inc, Hartford Fin. Services Grp., Hewlett Packard Enterprise, Honeywell International, HubSpot, Inc., Illinois Tool Works, Impinj Inc, Inphi Corporation, Intel Corporation, Kansas City Southern, KDDI, Lennox International, Level 3 Communications, Inc., Liberty Braves Group, Liberty Formula One, Liberty Global plc, Liberty SiriusXM Group, Marsh & McLennan Cos, Maxim Integrated Products Inc., Microsoft, NetApp Inc, Norfolk Southern Corp., NTT, NTT DOCOMO, Nuance Communications Inc., Nutanix Inc, NVIDIA Corp., ON Semiconductor Corp., Orange, Priceline Group Inc, QTS Realty Trust Inc, Quantenna Communications Inc, RenaissanceRe, Sabre Corp, Schneider National Inc., Seagate Technology, ServiceNow Inc, Shopify Inc, Sirius XM Radio Inc., Sky plc, Snap Inc., Softbank Group, SS&C Technologies Holdings, Inc., Stanley Black & Decker, AB, Tenneco Inc., Tesla Motors Inc., Texas Instruments, Textron Inc., The Travelers Companies, Inc., Tintri Inc, TransDigm Group Inc., Travelport Worldwide Limited, TRIVAGO NV, Union Pacific Corp., United Parcel Service, United Technologies Corp, Uniti Group Inc, Verizon Communications, Viavi Solutions Inc, VMware Inc, Vodafone Group, W.W. Grainger Inc., Windstream Corp., Workday Inc, XPO Logistics, Inc., Yext Inc, Zayo Group Holdings, Inc., Zebra Technologies Corporation.

In the next 3 months, Morgan Stanley expects to receive or intends to seek compensation for investment banking services from 3M Co., 8x8 Inc, A10 Networks, Inc., Acacia Communications Inc, Activision Blizzard Inc, Adobe Systems, Advanced Micro Devices, AerCap Holdings NV, Air Lease Corp, Akamai Technologies, Inc., Allstate Corporation, Alphabet Inc., Altice NV, Altice USA Inc, Amazon.com Inc, Ambarella Inc, American Int'l Grp, American Tower Corp., Ametek Inc., Analog Devices Inc., Aon PLC, AppFolio Inc, Appian Corp, Apple, Inc., ArcBest Corp, Arch Capital Group Ltd., Arconic Inc, Arista Networks, Arthur J. Gallagher, AT&T, Inc., Atlassian Corporation PLC, Autodesk, Avis Budget Group Inc, Axel Springer SE, Axis Capital Holdings, Barracuda Networks Inc, Bazaarvoice Inc, BCE Inc., Berkshire Hathaway Inc, BlackBerry Ltd, Blue Apron Holdings Inc, Boeing Co., BorgWarner Inc., Bouygues, Box Inc, Broadcom Ltd, Brocade Communications Systems, Brown & Brown Inc., BT Group plc, C.H. Robinson Worldwide Inc., Canadian National Railway Co., Canadian Pacific Railway Ltd., Care.com Inc, Cavium Inc, CDK Global Inc, CDW Corporation, Cellnex Telecom SA, CenturyLink, Inc., Charter Communications Inc., Check Point Software Technologies Ltd., Chubb LTD, Ciena Corporation, Cincinnati Bell Inc., Cisco Systems Inc, Citrix Systems Inc, Cloudera Inc, Com Hem Holding AB, Comcast Corporation, CommScope Holding Company Inc, Corning Inc, Coupa Software Inc, Criteo SA, Crown Castle Corp., CSX Corporation, CyberArk Software Ltd, Cypress Semiconductor Corp, CyrusOne Inc, Delphi Automotive PLC, Descartes Systems Group Inc, Deutsche Telekom, DISH Network, DMGT, DNA OYJ, Dover, Eaton Corp PLC, eBay Inc, Echo Global Logistics Inc, Electronic Arts Inc, Electronics for Imaging Inc, Ellie Mae Inc, Emerson Electric, Endurance International Group Holdings, Inc., Equinix Inc., Etsy Inc, Euskaltel SA, Eutelsat Communications, Everest Re Group, Ltd., Expedia Inc., F5 Networks Inc, Facebook Inc, Fastenal Co., FedEx Corporation, Fiat Chrysler Automobiles NV, FireEye Inc, Fitbit Inc, Five9 Inc, Ford Motor Company, Fortinet Inc., Fortive Corp, Frontier Communications Corp, Garmin Ltd, General Dynamics Corp., General Electric Co., General Motors Company, Genesee & Wyoming Inc., GoDaddy Inc, Gogo Inc, Goodyear Tire & Rubber Company, GoPro Inc, Groupon, Inc., GrubHub Inc., Harley-Davidson Inc, Hartford Fin. Services Grp., Havas, HD Supply Holdings Inc, Heartland Express Inc., Hewlett Packard Enterprise, Honeywell International, HP Inc., Hub Group Inc, Hubbell Inc., HubSpot, Inc., IBM, Iliad, Illinois Tool Works, Imperva Inc., Impinj Inc, Infinera Corp, Ingersoll Rand, Inmarsat, Inphi Corporation, Instructure Inc, Intact Financial Corp, Intel Corporation, Intelsat S.A., Intuit, ITV, J.B. Hunt Transport Services Inc., JCDecaux, Johnson Controls International, Juniper Networks Inc, Kansas City Southern, KDDI, KPN, Lagardere, Landstar System Inc, Lear Corporation, Lennox International, Level 3 Communications, Inc., Liberty Braves Group, Liberty Formula One, Liberty Global plc, Liberty SiriusXM Group, Lockheed Martin Corp., Magna International Inc., Marsh & McLennan Cos, Marvell Technology Group Ltd, Maxim Integrated Products Inc., Mediaset, Mediaset Espana Comunicacion SA, Microchip Technology Inc., Micron Technology Inc., Microsoft, MINDBODY INC, MobileIron, Mobileye NV, Modern Times Group, National General Holdings Corp, NetApp Inc, New Relic Inc, Norfolk Southern Corp., Northrop Grumman Corp., NTT, NTT DOCOMO, Nuance Communications Inc., Nutanix Inc, NVIDIA Corp., NXP Semiconductor NV, Old Dominion Freight Line Inc, ON Semiconductor Corp., Oracle Corporation, Orange, OTE (Hellenic Telecoms.), Palo Alto Networks Inc, Pearson, Pentair plc, Priceline Group Inc, Proofpoint Inc, ProSiebenSat.1 Media SE, Proximus, Publicis Groupe, Pure Storage Inc, Qorvo Inc, QTS Realty Trust Inc, Qualcomm Inc., Qualys Inc, Quantenna Communications Inc, Rapid7 Inc, Raytheon Co, Red Hat, Inc., Regal Beloit Corp, RELX, RenaissanceRe, RingCentral Inc, Rockwell Automation, Rockwell Collins Inc, Rogers Communications, Inc., RTL Group SA, Rubicon Project Inc, Sabre Corp, Saia, Inc., Salesforce.com, SBA Communications, Schneider National Inc., Seagate Technology, Sensata Technologies Holding .V., ServiceNow Inc, SES, Shopify Inc, Sirius XM Radio Inc., Sky plc, Skyworks Solutions Inc, Snap Inc., Softbank Group, Spirit AeroSystems Holdings Inc, Splunk Inc, Sprint Corp, SPX Flow, SS&C Technologies Holdings, Inc., Stanley Black & Decker, Stroeer SE, Sunrise Communications Group AG, Swisscom, Symantec, T-Mobile US, Inc., Tableau Software, TDC A/S, Te Connectivity Ltd, Tele2, Telecom Italia, Telefonica, , Telephone & Data Systems, Telia Company AB, TELUS Corp., Tenneco Inc., Teradata, Tesla Motors Inc., Texas Instruments, Textron Inc., TF1, The Travelers Companies, Inc., Third Point Reinsurance Ltd, Tintri Inc, TransDigm Group Inc., Travelport Worldwide Limited, Trimble Inc., TRIVAGO NV, TrueCar Inc, Twitter Inc, UBM plc, Union Pacific Corp., United Parcel Service, United Technologies Corp, Uniti Group Inc, Varonis Systems, Inc., Veeva Systems Inc, Verizon Communications, Viavi Solutions Inc, Visteon Corporation, Vivendi, VMware Inc, Vodafone Group, W.R. Berkley Corp., W.W. Grainger Inc., Watsco Inc., Werner Enterprises, WESCO International Inc., Willis Towers Watson PLC, Windstream Corp., Wolters Kluwer, Workday Inc, Workiva Inc, WPP Group Plc, Xerox Corp, Xilinx, XL Group PLC, XPO Logistics, Inc., Yelp Inc, Yext Inc, Zayo Group Holdings, Inc., Zebra Technologies Corporation, Zendesk, Inc, Zillow Group Inc, Zynga Inc.

Within the last 12 months, Morgan Stanley has received compensation for products and services other than investment banking services from 3M Co., Adobe Systems, Advanced Micro Devices, AerCap Holdings NV, Akamai Technologies, Inc., Allstate Corporation, Alphabet Inc., Altice NV, Altice USA Inc, Ambarella Inc, American Axle & Manufacturing Holdings Inc, American Int'l Grp, American Tower Corp., Amphenol Corp., Analog Devices Inc., Aon PLC, Arch Capital Group Ltd., Arconic Inc, Arris International plc, Arthur J. Gallagher, AT&T, Inc., Autodesk, Avis Budget Group Inc, BCE Inc., Berkshire Hathaway Inc, Boeing Co., BorgWarner Inc., Broadcom Ltd, Brocade Communications Systems, BT Group plc, Canadian Pacific Railway Ltd., CDW Corporation, CenturyLink, Inc., Charter Communications Inc., Check Point Software Technologies Ltd., Chubb LTD, Cincinnati Bell Inc., Cisco Systems Inc, Com Hem Holding AB, Comcast Corporation, CommScope Holding Company Inc, Corning Inc, Crown Castle Corp., CSX Corporation, Cypress Semiconductor Corp, Delphi Automotive PLC, Deutsche Telekom, Dover, Eaton Corp PLC, eBay Inc, Echo Global Logistics Inc, Electronic Arts Inc, Electronics for Imaging Inc, Equinix Inc., Euskaltel SA, Eutelsat Communications, Expedia Inc., Facebook Inc, Fiat Chrysler Automobiles NV, Fitbit Inc, Ford Motor Company, Fortinet Inc., Garmin Ltd, General Electric Co., General Motors Company, Genesee & Wyoming Inc., Goodyear Tire & Rubber Company, Harley-Davidson Inc, Hartford Fin. Services Grp., Hewlett Packard Enterprise, Honeywell International, HP Inc., Hubbell Inc., IBM, Illinois Tool Works, Intact Financial Corp, Intel Corporation, Intelsat S.A., Intuit, J.B. Hunt Transport Services Inc., Johnson Controls International, Kansas City Southern, Lagardere, Lear Corporation, Level 3 Communications, Inc., Liberty Braves Group, Liberty Formula One, Liberty Global plc, Liberty SiriusXM Group, Lockheed Martin Corp., Marsh & McLennan Cos, Marvell Technology Group Ltd, Maxim Integrated Products Inc., Micron Technology Inc., Microsoft, Modern Times Group, NCR Corp., NetApp Inc, Norfolk Southern Corp., Northrop Grumman Corp., NTT, Nuance Communications Inc., NVIDIA Corp., NXP Semiconductor NV, Old Dominion Freight Line Inc, ON Semicon- ductor Corp., Oracle Corporation, Orange, OTE (Hellenic Telecoms.), Priceline Group Inc, Progressive Corp, ProSiebenSat.1 Media SE, QTS Realty Trust Inc, Raytheon Co, Red Hat, Inc., Regal Beloit Corp, RELX, RenaissanceRe, Rogers Communications, Inc., Sabre Corp, Salesforce.com, Seagate Technology, Sensata Technologies Holding N.V., SES, Sirius XM Radio Inc., Sky plc, Softbank Group, Spirit AeroSystems Holdings Inc, Sprint Corp, SS&C Technologies Holdings, Inc., Stanley Black & Decker, Stroeer SE, Sunrise Communications Group AG, Symantec, T-Mobile US, Inc., Tableau Software, Te Connectivity Ltd, Telecom Italia, Telefonica, Group Holding, Telenor, Telia Company AB, TELUS Corp., Tenneco Inc., Texas Instruments, Textron Inc., The Travelers Companies, Inc., TransDigm Group Inc., Travelport Worldwide Limited, UBM plc, Union Pacific Corp., United Parcel Service, Verizon Communications, Viavi Solutions Inc, Visteon Corporation, VMware Inc, Vodafone Group, W.R. Berkley Corp., W.W. Grainger Inc., WESCO International Inc., Willis Towers Watson PLC, Windstream Corp., WPP Group Plc, Xerox Corp, XL Group PLC, XPO Logistics, Inc., Zayo Group Holdings, Inc..

Within the last 12 months, Morgan Stanley has provided or is providing investment banking services to, or has an investment banking client relationship with, the following company: 3M Co., 8x8 Inc, A10 Networks, Inc., Acacia Communications Inc, Activision Blizzard Inc, Adobe Systems, Advanced Micro Devices, AerCap Holdings NV, Air Lease Corp, Akamai Technologies, Inc., Allstate

MORGAN STANLEY RESEARCH 45 M FOUNDATION Corporation, Alphabet Inc., Altice NV, Altice USA Inc, Amazon.com Inc, Ambarella Inc, American Int'l Grp, American Tower Corp., Ametek Inc., Analog Devices Inc., Aon PLC, AppFolio Inc, Appian Corp, Apple, Inc., ArcBest Corp, Arch Capital Group Ltd., Arconic Inc, Arista Networks, Arthur J. Gallagher, AT&T, Inc., Atlassian Corporation PLC, Autodesk, Avis Budget Group Inc, Axel Springer SE, Axis Capital Holdings, Barracuda Networks Inc, Bazaarvoice Inc, BCE Inc., Berkshire Hathaway Inc, BlackBerry Ltd, Blue Apron Holdings Inc, Boeing Co., BorgWarner Inc., Bouygues, Box Inc, Broadcom Ltd, Brocade Communications Systems, Brown & Brown Inc., BT Group plc, C.H. Robinson Worldwide Inc., Canadian National Railway Co., Canadian Pacific Railway Ltd., Care.com Inc, Cavium Inc, CDK Global Inc, CDW Corporation, Cellnex Telecom SA, CenturyLink, Inc., Charter Communications Inc., Check Point Software Technologies Ltd., Chubb LTD, Ciena Corporation, Cincinnati Bell Inc., Cisco Systems Inc, Citrix Systems Inc, Cloudera Inc, Com Hem Holding AB, Comcast Corporation, CommScope Holding Company Inc, Corning Inc, Coupa Software Inc, Criteo SA, Crown Castle Corp., CSX Corporation, CyberArk Software Ltd, Cypress Semiconductor Corp, CyrusOne Inc, Delphi Automotive PLC, Descartes Systems Group Inc, Deutsche Telekom, DISH Network, DMGT, DNA OYJ, Dover, Eaton Corp PLC, eBay Inc, Echo Global Logistics Inc, Electronic Arts Inc, Electronics for Imaging Inc, Ellie Mae Inc, Emerson Electric, Endurance International Group Holdings, Inc., Equinix Inc., Etsy Inc, Euskaltel SA, Eutelsat Communications, Everest Re Group, Ltd., Expedia Inc., F5 Networks Inc, Facebook Inc, Fastenal Co., FedEx Corporation, Fiat Chrysler Automobiles NV, FireEye Inc, Fitbit Inc, Five9 Inc, Ford Motor Company, Fortinet Inc., Fortive Corp, Frontier Communications Corp, Garmin Ltd, General Dynamics Corp., General Electric Co., General Motors Company, Genesee & Wyoming Inc., GoDaddy Inc, Gogo Inc, Goodyear Tire & Rubber Company, GoPro Inc, Groupon, Inc., GrubHub Inc., Harley-Davidson Inc, Hartford Fin. Services Grp., Havas, HD Supply Holdings Inc, Heartland Express Inc., Hewlett Packard Enterprise, Honeywell International, HP Inc., Hub Group Inc, Hubbell Inc., HubSpot, Inc., IBM, Iliad, Illinois Tool Works, Imperva Inc., Impinj Inc, Infinera Corp, Ingersoll Rand, Inmarsat, Inphi Corporation, Instructure Inc, Intact Financial Corp, Intel Corporation, Intelsat S.A., Intuit, ITV, J.B. Hunt Transport Services Inc., JCDecaux, Johnson Controls International, Juniper Networks Inc, Kansas City Southern, KDDI, KPN, Lagardere, Landstar System Inc, Lear Corporation, Lennox International, Level 3 Communications, Inc., Liberty Braves Group, Liberty Formula One, Liberty Global plc, Liberty SiriusXM Group, Lockheed Martin Corp., Magna International Inc., Marsh & McLennan Cos, Marvell Technology Group Ltd, Maxim Integrated Products Inc., Mediaset, Mediaset Espana Comunicacion SA, Microchip Technology Inc., Micron Technology Inc., Microsoft, MINDBODY INC, MobileIron, Mobileye NV, Modern Times Group, National General Holdings Corp, NetApp Inc, New Relic Inc, Norfolk Southern Corp., Northrop Grumman Corp., NTT, NTT DOCOMO, Nuance Communications Inc., Nutanix Inc, NVIDIA Corp., NXP Semiconductor NV, Old Dominion Freight Line Inc, ON Semiconductor Corp., Oracle Corporation, Orange, OTE (Hellenic Telecoms.), Palo Alto Networks Inc, Pearson, Pentair plc, Priceline Group Inc, Proofpoint Inc, ProSiebenSat.1 Media SE, Proximus, Publicis Groupe, Pure Storage Inc, Qorvo Inc, QTS Realty Trust Inc, Qualcomm Inc., Qualys Inc, Quantenna Communications Inc, Rapid7 Inc, Raytheon Co, Red Hat, Inc., Regal Beloit Corp, RELX, RenaissanceRe, RingCentral Inc, Rockwell Automation, Rockwell Collins Inc, Rogers Communica- tions, Inc., RTL Group SA, Rubicon Project Inc, Sabre Corp, Saia, Inc., Salesforce.com, SBA Communications, Schneider National Inc., Seagate Technology, Sensata Technologies Holding N.V., ServiceNow Inc, SES, Shopify Inc, Sirius XM Radio Inc., Sky plc, Skyworks Solutions Inc, Snap Inc., Softbank Group, Spirit AeroSystems Holdings Inc, Splunk Inc, Sprint Corp, SPX Flow, SS&C Technologies Holdings, Inc., Stanley Black & Decker, Stroeer SE, Sunrise Communications Group AG, Swisscom, Symantec, T-Mobile US, Inc., Tableau Software, TDC A/S, Te Connectivity Ltd, Tele2, Telecom Italia, Telefonica, Telenor, Telephone & Data Systems, Telia Company AB, TELUS Corp., Tenneco Inc., Teradata, Tesla Motors Inc., Texas Instruments, Textron Inc., TF1, The Travelers Companies, Inc., Third Point Reinsurance Ltd, Tintri Inc, TransDigm Group Inc., Travelport Worldwide Limited, Trimble Inc., TRIVAGO NV, TrueCar Inc, Twitter Inc, UBM plc, Union Pacific Corp., United Parcel Service, United Technologies Corp, Uniti Group Inc, Varonis Systems, Inc., Veeva Systems Inc, Verizon Communications, Viavi Solutions Inc, Visteon Corporation, Vivendi, VMware Inc, Vodafone Group, W.R. Berkley Corp., W.W. Grainger Inc., Watsco Inc., Werner Enterprises, WESCO International Inc., Willis Towers Watson PLC, Windstream Corp., Wolters Kluwer, Workday Inc, Workiva Inc, WPP Group Plc, Xerox Corp, Xilinx, XL Group PLC, XPO Logistics, Inc., Yelp Inc, Yext Inc, Zayo Group Holdings, Inc., Zebra Technologies Corporation, Zendesk, Inc, Zillow Group Inc, Zynga Inc.

Within the last 12 months, Morgan Stanley has either provided or is providing non-investment banking, securities-related services to and/or in the past has entered into an agreement to provide services or has a client relationship with the following company: 3M Co., Activision Blizzard Inc, Adobe Systems, Advanced Micro Devices, AerCap Holdings NV, Akamai Technologies, Inc., Allstate Corporation, Alphabet Inc., Altice NV, Altice USA Inc, Amazon.com Inc, Ambarella Inc, American Axle & Manufacturing Holdings Inc, American Int'l Grp, American Tower Corp., Amphenol Corp., Analog Devices Inc., Aon PLC, Apple, Inc., Arch Capital Group Ltd., Arconic Inc, Arris International plc, Arthur J. Gallagher, AT&T, Inc., Autodesk, Avis Budget Group Inc, Axis Capital Holdings, BCE Inc., Berkshire Hathaway Inc, Boeing Co., BorgWarner Inc., Broadcom Ltd, Brocade Communications Systems, BT Group plc, C.H. Robinson Worldwide Inc., Canadian National Railway Co., Canadian Pacific Railway Ltd., CDK Global Inc, CDW Corporation, CenturyLink, Inc., Charter Communications Inc., Check Point Software Technologies Ltd., Chubb LTD, Cincinnati Bell Inc., Cisco Systems Inc, Citrix Systems Inc, Com Hem Holding AB, Comcast Corporation, CommScope Holding Company Inc, Corning Inc, Crown Castle Corp., CSX Corporation, Cypress Semiconductor Corp, Delphi Automotive PLC, Deutsche Telekom, Dover, Eaton Corp PLC, eBay Inc, Echo Global Logistics Inc, Electronic Arts Inc, Electronics for Imaging Inc, Emerson Electric, Equinix Inc., Euskaltel SA, Eutelsat Communications, Expedia Inc., F5 Networks Inc, Facebook Inc, FedEx Corporation, Fiat Chrysler Automobiles NV, FireEye Inc, Fitbit Inc, Ford Motor Company, Fortinet Inc., Fortive Corp, Frontier Communications Corp, Garmin Ltd, General Electric Co., General Motors Company, Genesee & Wyoming Inc., GoDaddy Inc, Gogo Inc, Goodyear Tire & Rubber Company, GoPro Inc, Groupon, Inc., Harley-Davidson Inc, Hartford Fin. Services Grp., Hewlett Packard Enterprise, Honeywell International, HP Inc., Hubbell Inc., HubSpot, Inc., IBM, Illinois Tool Works, Infinera Corp, Inphi Corporation, Intact Financial Corp, Intel Corporation, Intelsat S.A., Intuit, J.B. Hunt Transport Services Inc., Johnson Controls International, Juniper Networks Inc, Kansas City Southern, Lagardere, Lear Corporation, Lennox International, Level 3 Communications, Inc., Liberty Braves Group, Liberty Formula One, Liberty Global plc, Liberty SiriusXM Group, Lockheed Martin Corp., Marsh & McLennan Cos, Marvell Technology Group Ltd, Maxim Integrated Products Inc., Mediaset Espana Comunicacion SA, Micron Technology Inc., Microsoft, Modern Times Group, NCR Corp., NetApp Inc, Norfolk Southern Corp., Northrop Grumman Corp., NTT, NTT DOCOMO, Nuance Communications Inc., NVIDIA Corp., NXP Semiconductor NV, Old Dominion Freight Line Inc, ON Semiconductor Corp., Oracle Corporation, Orange, OTE (Hellenic Telecoms.), Pearson, Priceline Group Inc, Progressive Corp, ProSiebenSat.1 Media SE, QTS Realty Trust Inc, Qualcomm Inc., Raytheon Co, Red Hat, Inc., Regal Beloit Corp, RELX, RenaissanceRe, Rockwell Automation, Rogers Communications, Inc., Sabre Corp, Salesforce.com, Seagate Technology, Sensata Technologies Holding N.V., ServiceNow Inc, SES, Sirius XM Radio Inc., Sky plc, Softbank Group, Sonic Automotive Inc, Spirit AeroSystems Holdings Inc, Sprint Corp, SS&C Technologies Holdings, Inc., Stanley Black & Decker, Stroeer SE, Sunrise Communications Group AG, Symantec, T-Mobile US, Inc., Tableau Software, TDC A/S, Te Connectivity Ltd, Telecom Italia, Telefonica, Telefonica Deutschland Holding AG, Telenet Group Holding, Telenor, Telia Company AB, TELUS Corp., Tenneco Inc., Tesla Motors Inc., Texas Instruments, Textron Inc., The Travelers Companies, Inc., TransDigm Group Inc., Travelport Worldwide Limited, Twitter Inc, UBM plc, Union Pacific Corp., United Parcel Service, United Technologies Corp, Verizon Communications, Viavi Solutions Inc, Visteon Corporation, Vivendi, VMware Inc, Vodafone Group, W.R. Berkley Corp., W.W. Grainger Inc., WESCO International Inc., Willis Towers Watson PLC, Windstream Corp., Workday Inc, WPP Group Plc, Xerox Corp, Xilinx, XL Group PLC, XPO Logistics, Inc., Zayo Group Holdings, Inc., Zebra Technologies Corporation, Zynga Inc.

An employee, director or consultant of Morgan Stanley is a director of Allstate Corporation, eBay Inc, Facebook Inc, IBM, Norfolk Southern Corp., Workiva Inc. This person is not a research analyst or a member of a research analyst's household.

Morgan Stanley & Co. LLC makes a market in the securities of 3M Co., 8x8 Inc, A10 Networks, Inc., Activision Blizzard Inc, Adobe Systems, Advanced Micro Devices, AerCap Holdings NV, Air Lease Corp, Akamai Technologies, Inc., Allstate Corporation, Alphabet Inc., Amazon.com Inc, Ambarella Inc, American Axle & Manufacturing Holdings Inc, American Int'l Grp, American Tower Corp., Ametek Inc., Amphenol Corp., Analog Devices Inc., Aon PLC, Appian Corp, Apple, Inc., ArcBest Corp, Arch Capital Group Ltd., Arconic Inc, Arista Networks, Arris International plc, Arthur J. Gallagher, Asbury Automotive Group Inc, AT&T, Inc., Atlassian Corporation PLC, Autodesk, AutoNation Inc., Avis Budget Group Inc, Axis Capital Holdings, Barracuda Networks Inc, Bazaarvoice Inc, BCE Inc., Berkshire Hathaway Inc, BlackBerry Ltd, Boeing Co., BorgWarner Inc., Box Inc, Broadcom Ltd, Brocade Communications Systems, Brown & Brown Inc., BT Group plc, C.H. Robinson

46 M FOUNDATION Worldwide Inc., Canadian National Railway Co., Canadian Pacific Railway Ltd., Carmax Inc, Cavium Inc, CDK Global Inc, CDW Corporation, CenturyLink, Inc., Charter Communications Inc., Check Point Software Technologies Ltd., Chubb LTD, Ciena Corporation, Cincinnati Bell Inc., Cisco Systems Inc, Citrix Systems Inc, Comcast Corporation, CommScope Holding Company Inc, Corning Inc, Criteo SA, Crown Castle Corp., CSX Corporation, CyberArk Software Ltd, Cypress Semiconductor Corp, CyrusOne Inc, Delphi Automotive PLC, Deutsche Telekom, DISH Network, Dover, Eaton Corp PLC, eBay Inc, Echo Global Logistics Inc, Electronic Arts Inc, Electronics for Imaging Inc, Ellie Mae Inc, Emerson Electric, Endurance International Group Holdings, Inc., Equinix Inc., Etsy Inc, Everest Re Group, Ltd., Expedia Inc., Expeditors International of Washington I, F5 Networks Inc, Facebook Inc, Fastenal Co., FedEx Corporation, Ferrari NV, Fiat Chrysler Automobiles NV, FireEye Inc, Fitbit Inc, Five9 Inc, Ford Motor Company, Fortinet Inc., Frontier Communications Corp, Garmin Ltd, General Dynamics Corp., General Electric Co., General Motors Company, Genesee & Wyoming Inc., GoDaddy Inc, Gogo Inc, Goodyear Tire & Rubber Company, GoPro Inc, Group 1 Automotive, Inc, Groupon, Inc., GrubHub Inc., Harley-Davidson Inc, Hartford Fin. Services Grp., HD Supply Holdings Inc, Heartland Express Inc., Hewlett Packard Enterprise, Honeywell International, HP Inc., Hub Group Inc, Hubbell Inc., HubSpot, Inc., IBM, Illinois Tool Works, Infinera Corp, Ingersoll Rand, Inphi Corporation, Instructure Inc, Intel Corporation, Intuit, J.B. Hunt Transport Services Inc., Johnson Controls International, Juniper Networks Inc, Kansas City Southern, Knight-Swift Transportation Holdings Inc, Landstar System Inc, Lear Corporation, Lennox International, Level 3 Communications, Inc., Liberty Braves Group, Liberty Broadband Corporation, Liberty Formula One, Liberty Global plc, Liberty SiriusXM Group, Lithia Motors Inc., Lockheed Martin Corp., Lumentum Holdings Inc, Magna International Inc., Marsh & McLennan Cos, Marvell Technology Group Ltd, Maxim Integrated Products Inc., Microchip Technology Inc., Micron Technology Inc., Microsoft, MINDBODY INC, National General Holdings Corp, NCR Corp., NetApp Inc, New Relic Inc, Norfolk Southern Corp., Northrop Grumman Corp., NTT, NTT DOCOMO, Nuance Communications Inc., NVIDIA Corp., NXP Semiconductor NV, Old Dominion Freight Line Inc, ON Semiconductor Corp., Oracle Corporation, Orange, Palo Alto Networks Inc, Pearson, Penske Automotive Group, Inc, Pentair plc, Priceline Group Inc, Progressive Corp, Proofpoint Inc, Pure Storage Inc, Q2 Holdings Inc, Qorvo Inc, QTS Realty Trust Inc, Qualcomm Inc., Qualys Inc, Quantenna Communications Inc, Rapid7 Inc, Raytheon Co, Red Hat, Inc., Regal Beloit Corp, RenaissanceRe, RingCentral Inc, Rockwell Automation, Rockwell Collins Inc, Rogers Communications, Inc., Rubicon Project Inc, Sabre Corp, Saia, Inc., Salesforce.com, SBA Communications, Seagate Technology, Sensata Technologies Holding N.V., ServiceNow Inc, Shopify Inc, Sirius XM Radio Inc., Skyworks Solutions Inc, Softbank Group, Sonic Automotive Inc, Spirit AeroSystems Holdings Inc, Splunk Inc, Sprint Corp, SPX Flow, SS&C Technologies Holdings, Inc., Stanley Black & Decker, Symantec, T-Mobile US, Inc., Tableau Software, Te Connectivity Ltd, Telecom Italia, Telefonica, Telephone & Data Systems, TELUS Corp., Tenneco Inc., Teradata, Tesla Motors Inc., Texas Instruments, Textron Inc., The Travelers Companies, Inc., Third Point Reinsurance Ltd, Tintri Inc, TransDigm Group Inc., Travelport Worldwide Limited, Trimble Inc., TrueCar Inc, Twitter Inc, Union Pacific Corp., United Parcel Service, United Technologies Corp, US Cellular Corporation, Varonis Systems, Inc., Veeva Systems Inc, Verizon Communications, Viavi Solutions Inc, Visteon Corporation, VMware Inc, Vodafone Group, W.R. Berkley Corp., W.W. Grainger Inc., Watsco Inc., Werner Enterprises, WESCO International Inc., Western Digital, Willis Towers Watson PLC, Windstream Corp., Workday Inc, WPP Group Plc, Xerox Corp, Xilinx, XL Group PLC, XPO Logistics, Inc., Yelp Inc, Zayo Group Holdings, Inc., Zebra Technologies Corporation, Zendesk, Inc, Zillow Group Inc, Zynga Inc.

Morgan Stanley & Co. International plc is a corporate broker to Sky plc.

The equity research analysts or strategists principally responsible for the preparation of Morgan Stanley Research have received compensation based upon various factors, including quality of research, investor client feedback, stock picking, competitive factors, firm revenues and overall investment banking revenues. Equity Research analysts' or strategists' compensation is not linked to investment banking or capital markets transactions performed by Morgan Stanley or the profitability or revenues of particular trading desks.

Morgan Stanley and its affiliates do business that relates to companies/instruments covered in Morgan Stanley Research, including market making, providing liquidity, fund management, commercial banking, extension of credit, investment services and investment banking. Morgan Stanley sells to and buys from customers the securities/instruments of companies covered in Morgan Stanley Research on a principal basis. Morgan Stanley may have a position in the debt of the Company or instruments discussed in this report. Morgan Stanley trades or may trade as principal in the debt securities (or in related derivatives) that are the subject of the debt research report.

Certain disclosures listed above are also for compliance with applicable regulations in non-US jurisdictions. STOCK RATINGS

Morgan Stanley uses a relative rating system using terms such as Overweight, Equal-weight, Not-Rated or Underweight (see definitions below). Morgan Stanley does not assign ratings of Buy, Hold or Sell to the stocks we cover. Overweight, Equal-weight, Not-Rated and Underweight are not the equivalent of buy, hold and sell. Investors should carefully read the definitions of all ratings used in Morgan Stanley Research. In addition, since Morgan Stanley Research contains more complete information concerning the analyst's views, investors should carefully read Morgan Stanley Research, in its entirety, and not infer the contents from the rating alone. In any case, ratings (or research) should not be used or relied upon as investment advice. An investor's decision to buy or sell a stock should depend on individual circumstances (such as the investor's existing holdings) and other considerations. Global Stock Ratings Distribution

(as of September 30, 2017)

The Stock Ratings described below apply to Morgan Stanley's Fundamental Equity Research and do not apply to Debt Research produced by the Firm.

For disclosure purposes only (in accordance with NASD and NYSE requirements), we include the category headings of Buy, Hold, and Sell alongside our ratings of Overweight, Equal-weight, Not-Rated and Underweight. Morgan Stanley does not assign ratings of Buy, Hold or Sell to the stocks we cover. Overweight, Equal-weight, Not-Rated and Underweight are not the equivalent of buy, hold, and sell but represent recommended relative weightings (see definitions below). To satisfy regulatory requirements, we correspond Overweight, our most positive stock rating, with a buy recommendation; we correspond Equal-weight and Not-Rated to hold and Underweight to sell recommendations, respectively.

Other Material Investment Services Clients Coverage Universe Investment Banking Clients (IBC) (MISC) Stock Rating Cate- Count % of Total Count % of Total IBC % of Rating Category Count % of Total Other MISC gory Overweight/Buy 1162 36% 304 40% 26% 560 37% Equal-weight/Hold 1420 44% 363 48% 26% 697 46% Not-Rated/Hold 58 2% 6 1% 10% 9 1% Underweight/Sell 612 19% 91 12% 15% 242 16%

MORGAN STANLEY RESEARCH 47 M FOUNDATION Total 3,252 764 1508

Data include common stock and ADRs currently assigned ratings. Investment Banking Clients are companies from whom Morgan Stanley received investment banking compensation in the last 12 months. Due to rounding off of decimals, the percentages provided in the "% of total" column may not add up to exactly 100 percent. Analyst Stock Ratings

Overweight (O). The stock's total return is expected to exceed the average total return of the analyst's industry (or industry team's) coverage universe, on a risk-adjusted basis, over the next 12-18 months.

Equal-weight (E). The stock's total return is expected to be in line with the average total return of the analyst's industry (or industry team's) coverage universe, on a risk-adjusted basis, over the next 12-18 months.

Not-Rated (NR). Currently the analyst does not have adequate conviction about the stock's total return relative to the average total return of the analyst's industry (or industry team's) coverage universe, on a risk-adjusted basis, over the next 12-18 months.

Underweight (U). The stock's total return is expected to be below the average total return of the analyst's industry (or industry team's) coverage universe, on a risk-adjusted basis, over the next 12-18 months.

Unless otherwise specified, the time frame for price targets included in Morgan Stanley Research is 12 to 18 months. Analyst Industry Views

Attractive (A): The analyst expects the performance of his or her industry coverage universe over the next 12-18 months to be attractive vs. the relevant broad market benchmark, as indicated below.

In-Line (I): The analyst expects the performance of his or her industry coverage universe over the next 12-18 months to be in line with the relevant broad market benchmark, as indicated below.

Cautious (C): The analyst views the performance of his or her industry coverage universe over the next 12-18 months with caution vs. the relevant broad market benchmark, as indicated below.

Benchmarks for each region are as follows: North America - S&P 500; Latin America - relevant MSCI country index or MSCI Latin America Index; Europe - MSCI Europe; Japan - TOPIX; Asia - relevant MSCI country index or MSCI sub-regional index or MSCI AC Asia Pacific ex Japan Index. Important Disclosures for Morgan Stanley Smith Barney LLC Customers

Important disclosures regarding the relationship between the companies that are the subject of Morgan Stanley Research and Morgan Stanley Smith Barney LLC or Morgan Stanley or any of their affiliates, are available on the Morgan Stanley Wealth Management disclosure website at www.morganstanley.com/online/researchdisclosures. For Morgan Stanley specific disclosures, you may refer to www.morganstanley.com/researchdisclosures.

Each Morgan Stanley Equity Research report is reviewed and approved on behalf of Morgan Stanley Smith Barney LLC. This review and approval is conducted by the same person who reviews the Equity Research report on behalf of Morgan Stanley. This could create a conflict of interest. Other Important Disclosures

Morgan Stanley & Co. International PLC and its affiliates have a significant financial interest in the debt securities of 3M Co., Activision Blizzard Inc, Adobe Systems, Advanced Micro Devices, AerCap Holdings NV, Air Lease Corp, Allstate Corporation, Alphabet Inc., Altice NV, Amazon.com Inc, American Int'l Grp, American Tower Corp., Analog Devices Inc., Apple, Inc., Arconic Inc, AT&T, Inc., Autodesk, Avis Budget Group Inc, Bazaarvoice Inc, BCE Inc., Berkshire Hathaway Inc, Boeing Co., BorgWarner Inc., Bouygues, C.H. Robinson Worldwide Inc., Canadian National Railway Co., CDK Global Inc, Cellnex Telecom SA, CenturyLink, Inc., Chubb LTD, Ciena Corporation, Cincinnati Bell Inc., Cisco Systems Inc, Citrix Systems Inc, Comcast Corporation, Corning Inc, Crown Castle Corp., CSX Corporation, Cypress Semiconductor Corp, Delphi Automotive PLC, Deutsche Telekom, DISH Network, Dover, Eaton Corp PLC, eBay Inc, Electronic Arts Inc, Oyj, Emerson Electric, Equinix Inc., Etsy Inc, Expedia Inc., Facebook Inc, FedEx Corporation, Fiat Chrysler Automobiles NV, Fitbit Inc, Ford Motor Company, Fortive Corp, Frontier Communications Corp, General Dynamics Corp., General Electric Co., General Motors Company, Goodyear Tire & Rubber Company, GoPro Inc, Groupon, Inc., Hartford Fin. Services Grp., Havas, Hewlett Packard Enterprise, Honeywell International, HP Inc., Hubbell Inc., HubSpot, Inc., IBM, Illinois Tool Works, Inmarsat, Intel Corporation, Intelsat S.A., ITV, Johnson Controls International, Juniper Networks Inc, Kansas City Southern, KDDI, KPN, Lear Corporation, Level 3 Communications, Inc., Lockheed Martin Corp., Magna International Inc., Marsh & McLennan Cos, Maxim Integrated Products Inc., Microchip Technology Inc., Micron Technology Inc., Microsoft, National General Holdings Corp, NCR Corp., NetApp Inc, Norfolk Southern Corp., Northrop Grumman Corp., Nuance Communications Inc., NVIDIA Corp., NXP Semiconductor NV, ON Semiconductor Corp., Oracle Corporation, Orange, OTE (Hellenic Telecoms.), Palo Alto Networks Inc, Pearson, Penske Automotive Group, Inc, Priceline Group Inc, Publicis Groupe, Qorvo Inc, Qualcomm Inc., Raytheon Co, RELX, Rockwell Collins Inc, Rogers Communications, Inc., SBA Communications, ServiceNow Inc, SES, Sky plc, Snap Inc., Softbank Group, Sprint Corp, Stanley Black & Decker, Swisscom, Symantec, T-Mobile US, Inc., TDC A/S, Te Connectivity Ltd, Telecom Italia, Telefonica, Telenor, Telephone & Data Systems, Telia Company AB, TELUS Corp., Tenneco Inc., Tesla Motors Inc., Texas Instruments, Textron Inc., TF1, The Travelers Companies, Inc., Twitter Inc, Union Pacific Corp., United Parcel Service, United Technologies Corp, Uniti Group Inc, US Cellular Corporation, Verizon Communications, Visteon Corporation, Vivendi, VMware Inc, Vodafone Group, W.W. Grainger Inc., Western Digital, Wind- stream Corp., Wolters Kluwer, Workday Inc, Xerox Corp, Xilinx, XL Group PLC, XPO Logistics, Inc., Zebra Technologies Corporation.

Morgan Stanley Research policy is to update research reports as and when the Research Analyst and Research Management deem appropriate, based on developments with the issuer, the sector, or the market that may have a material impact on the research views or opinions stated therein. In addition, certain Research publications are intended to be updated on a regular periodic basis (weekly/monthly/quarterly/annual) and will ordinarily be updated with that frequency, unless the Research Analyst and Research Management determine that a different publication schedule is appropriate based on current conditions.

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INDUSTRY COVERAGE: Autos & Shared Mobility

COMPANY (TICKER) RATING (AS OF) PRICE* (10/11/2017)

Adam Jonas, CFA

Adient PLC (ADNT.N) O (02/21/2017) $84.49 American Axle & Manufacturing Holdings Inc (AXL.N) U (09/08/2011) $17.60 Asbury Automotive Group Inc (ABG.N) U (09/12/2012) $58.55 AutoNation Inc. (AN.N) O (07/13/2015) $45.21 Avis Budget Group Inc (CAR.O) U (03/19/2013) $40.83 BorgWarner Inc. (BWA.N) U (10/19/2015) $52.01 Carmax Inc (KMX.N) U (02/01/2017) $76.06 Delphi Automotive PLC (DLPH.N) U (11/29/2016) $99.25 Ferrari NV (RACE.N) U (09/07/2017) $116.52 Fiat Chrysler Automobiles NV (FCHA.MI) O (02/24/2016) €14.95 Fiat Chrysler Automobiles NV (FCAU.N) O (02/24/2016) $17.96 Ford Motor Company (F.N) U (09/08/2014) $12.38 General Motors Company (GM.N) O (06/28/2017) $45.47 Goodyear Tire & Rubber Company (GT.O) O (06/01/2017) $32.99 Group 1 Automotive, Inc (GPI.N) U (10/08/2013) $70.45 Harley-Davidson Inc (HOG.N) O (05/06/2013) $46.27 Hertz Global Holdings Inc (HTZ.N) U (09/14/2017) $26.24 Lear Corporation (LEA.N) U (06/08/2017) $173.41 Lithia Motors Inc. (LAD.N) O (10/15/2014) $116.76 Magna International Inc. (MGA.N) E (08/28/2017) $54.81

50 M FOUNDATION Mobileye NV (MBBYF.PK) E (02/01/2017) $62.37 Penske Automotive Group, Inc (PAG.N) O (09/06/2011) $45.50 Sonic Automotive Inc (SAH.N) O (09/29/2014) $20.85 Tenneco Inc. (TEN.N) U (09/23/2010) $61.09 Tesla Motors Inc. (TSLA.O) E (05/15/2017) $354.60 Visteon Corporation (VC.N) O (05/12/2017) $124.51 Stock Ratings are subject to change. Please see latest research for each company. * Historical prices are not split adjusted.

INDUSTRY COVERAGE: Telecom Services

COMPANY (TICKER) RATING (AS OF) PRICE* (10/11/2017)

Simon Flannery

American Tower Corp. (AMT.N) O (08/06/2015) $137.93 AT&T, Inc. (T.N) ++ $38.19 BCE Inc. (BCE.TO) E (12/17/2015) C$58.89 CenturyLink, Inc. (CTL.N) O (03/29/2017) $20.27 Cincinnati Bell Inc. (CBB.N) ++ $20.25 Crown Castle Corp. (CCI.N) O (11/11/2009) $102.21 CyrusOne Inc (CONE.O) O (05/28/2013) $62.05 Equinix Inc. (EQIX.O) E (05/13/2009) $458.97 Frontier Communications Corp (FTR.O) E (07/18/2016) $12.20 Gogo Inc (GOGO.O) U (11/15/2013) $11.69 Intelsat S.A. (I.N) U (05/12/2015) $6.86 Level 3 Communications, Inc. (LVLT.N) E (03/29/2017) $55.39 QTS Realty Trust Inc (QTS.N) E (11/04/2014) $53.74 Rogers Communications, Inc. (RCIb.TO) E (12/17/2015) C$66.12 SBA Communications (SBAC.O) O (03/28/2011) $151.35 Sprint Corp (S.N) U (10/19/2009) $7.19 Telephone & Data Systems (TDS.N) E (05/30/2014) $29.02 TELUS Corp. (T.TO) E (03/25/2014) C$45.00 T-Mobile US, Inc. (TMUS.O) O (10/20/2014) $61.18 Uniti Group Inc (UNIT.O) O (10/06/2015) $15.13 US Cellular Corporation (USM.N) E (12/14/2016) $37.39 Verizon Communications (VZ.N) O (02/27/2014) $48.86 Windstream Corp. (WIN.O) E (07/01/2015) $2.06 Zayo Group Holdings, Inc. (ZAYO.N) E (12/14/2016) $34.65 Stock Ratings are subject to change. Please see latest research for each company. * Historical prices are not split adjusted.

INDUSTRY COVERAGE: Cable/Satellite

COMPANY (TICKER) RATING (AS OF) PRICE* (10/11/2017)

Benjamin Swinburne, CFA

Altice USA Inc (ATUS.N) E (07/17/2017) $25.86 Charter Communications Inc. (CHTR.O) O (06/14/2016) $365.12 Comcast Corporation (CMCSA.O) O (04/30/2015) $37.42 DISH Network (DISH.O) O (01/23/2017) $51.65 Liberty Braves Group (BATRK.O) U (04/19/2016) $25.04 Liberty Broadband Corporation (LBRDK.O) E (12/12/2014) $96.86 Liberty Formula One (FWONK.O) E (01/26/2017) $39.23 Liberty Global plc (LBTYA.O) E (01/23/2017) $32.46 Liberty SiriusXM Group (LSXMK.O) E (01/23/2017) $43.80 Sirius XM Radio Inc. (SIRI.O) U (04/19/2017) $5.72

MORGAN STANLEY RESEARCH 51 M FOUNDATION Stock Ratings are subject to change. Please see latest research for each company. * Historical prices are not split adjusted.

INDUSTRY COVERAGE: Media & Internet

COMPANY (TICKER) RATING (AS OF) PRICE* (10/11/2017)

Patrick Wellington

Axel Springer SE (SPRGn.DE) E (01/08/2014) €56.49 DMGT (DMGOa.L) E (10/01/2014) 656p Eutelsat Communications (ETL.PA) O (02/20/2017) €23.20 Havas (HAVA.PA) E (03/31/2015) €9.05 Informa (INF.L) E (11/10/2016) 688p ITV (ITV.L) O (06/23/2017) 174p JCDecaux (JCDX.PA) U (01/06/2016) €32.40 Lagardere (LAGA.PA) E (01/08/2013) €28.28 M6 (MMTP.PA) E (10/03/2011) €20.40 Mediaset (MS.MI) E (05/08/2013) €3.18 Mediaset Espana Comunicacion SA (TL5.MC) E (08/03/2017) €9.53 Modern Times Group (MTGb.ST) U (01/10/2017) SKr 309.80 Pearson (PSON.L) E (10/26/2016) 617p ProSiebenSat.1 Media SE (PSMGn.DE) O (01/10/2017) €29.74 Publicis Groupe (PUBP.PA) E (11/23/2015) €60.20 RELX (RELN.AS) O (07/14/2015) €18.33 RELX (REL.L) O (07/14/2015) 1,683p RTL Group SA (RRTL.DE) E (03/09/2015) €64.82 SES (SESFd.PA) U (10/11/2017) €16.78 Sky plc (SKYB.L) ++ 914p Stroeer SE (SAXG.DE) O (05/21/2015) €57.90 TF1 (TFFP.PA) U (01/10/2017) €12.95 UBM plc (UBM.L) E (07/11/2016) 692p Vivendi (VIV.PA) O (10/06/2015) €21.27 Wolters Kluwer (WLSNc.AS) O (01/07/2016) €39.99 WPP Group Plc (WPP.L) E (09/26/2017) 1,372p Stock Ratings are subject to change. Please see latest research for each company. * Historical prices are not split adjusted.

INDUSTRY COVERAGE: Telecommunications Services

COMPANY (TICKER) RATING (AS OF) PRICE* (10/11/2017)

Emmet B Kelly

Altice NV (ATCA.AS) E (10/26/2015) €17.19 Bouygues (BOUY.PA) NA (03/06/2014) €39.86 Cellnex Telecom SA (CLNX.MC) O (06/16/2015) €19.81 Deutsche Telekom (DTEGn.DE) E (11/30/2015) €15.66 Iliad (ILD.PA) NA (07/31/2014) €222.70 Orange (ORAN.PA) O (01/27/2016) €13.92 Telefonica Deutschland Holding AG (O2Dn.DE) U (12/17/2015) €4.67 Vodafone Group (VOD.L) O (03/20/2017) 215p

Luis Prota

KPN (KPN.AS) O (10/14/2014) €2.98 OTE (Hellenic Telecoms.) (OTEr.AT) O (05/12/2016) €10.27 Proximus (PROX.BR) U (01/27/2017) €28.89 Sunrise Communications Group AG (SRCG.S) O (08/08/2017) SFr 82.35 Swisscom (SCMN.S) U (09/16/2015) SFr 501.50

52 M FOUNDATION Telecom Italia (TLIT.MI) O (07/08/2015) €0.77 Telecom Italia (TLITn.MI) O (07/08/2015) €0.62 Telefonica (TEF.MC) E (05/06/2015) €9.22

Ricard Boada

Euskaltel SA (EKTL.MC) O (02/17/2017) €7.75 Infrastrutture Wireless Italiane SpA (INWT.MI) E (10/24/2016) €5.73 MasMovil Ibercom SA (MASM.MC) O (07/19/2017) €64.29 Nos SGPS SA (NOS.LS) O (12/17/2015) €5.31 Rai Way SpA (RWAY.MI) E (05/18/2017) €5.05 Telenet Group Holding (TNET.BR) U (12/15/2016) €58.68

Terence Tsui

BT Group plc (BT.L) E (05/31/2017) 276p Com Hem Holding AB (COMH.ST) O (03/20/2015) SKr 114.00 DNA OYJ (DNAO.HE) E (09/12/2017) €14.83 Elisa Oyj (ELISA.HE) E (09/14/2016) €36.13 Inmarsat (ISA.L) E (05/23/2016) 628p TalkTalk Telecom Group PLC (TALK.L) E (10/28/2015) 217p TDC A/S (TDC.CO) E (12/15/2016) DKr 37.65 Tele2 (TEL2b.ST) U (06/15/2016) SKr 93.25 Telenor (TEL.OL) O (03/04/2013) NKr 165.00 Telia Company AB (TELIA.ST) E (06/15/2016) SKr 39.20 Stock Ratings are subject to change. Please see latest research for each company. * Historical prices are not split adjusted.

INDUSTRY COVERAGE: Aerospace & Defense

COMPANY (TICKER) RATING (AS OF) PRICE* (10/11/2017)

Rajeev Lalwani, CFA

AerCap Holdings NV (AER.N) U (04/06/2017) $52.00 Air Lease Corp (AL.N) E (04/06/2017) $43.84 Arconic Inc (ARNC.N) E (06/13/2017) $27.35 Boeing Co. (BA.N) E (03/13/2017) $261.44 General Dynamics Corp. (GD.N) U (08/07/2017) $212.83 Lockheed Martin Corp. (LMT.N) O (08/07/2017) $318.59 Northrop Grumman Corp. (NOC.N) E (08/07/2017) $295.19 Raytheon Co (RTN.N) O (08/07/2017) $187.22 Rockwell Collins Inc (COL.N) ++ $134.60 Spirit AeroSystems Holdings Inc (SPR.N) O (06/22/2016) $78.73 Textron Inc. (TXT.N) U (06/22/2016) $53.92 TransDigm Group Inc. (TDG.N) E (06/22/2016) $264.56 Stock Ratings are subject to change. Please see latest research for each company. * Historical prices are not split adjusted.

INDUSTRY COVERAGE: Communications Systems and Applications

COMPANY (TICKER) RATING (AS OF) PRICE* (10/11/2017)

James E Faucette

A10 Networks, Inc. (ATEN.N) E (08/28/2014) $7.63 Arista Networks (ANET.N) O (09/20/2017) $192.95 BlackBerry Ltd (BBRY.O) E (07/28/2015) $11.39 Brocade Communications Systems (BRCD.O) E (07/12/2016) $12.29 Cisco Systems Inc (CSCO.O) O (05/15/2017) $33.59 Corning Inc (GLW.N) E (12/11/2014) $29.89

MORGAN STANLEY RESEARCH 53 M FOUNDATION F5 Networks Inc (FFIV.O) E (06/17/2014) $115.99 Juniper Networks Inc (JNPR.N) U (11/01/2016) $26.86 MobileIron (MOBL.O) E (04/23/2015) $3.95 Qualcomm Inc. (QCOM.O) E (11/10/2016) $54.12 Trimble Inc. (TRMB.O) E (09/21/2015) $40.59 Zebra Technologies Corporation (ZBRA.O) E (05/31/2017) $111.30

Meta A Marshall

Acacia Communications Inc (ACIA.O) E (05/11/2017) $46.20 Arris International plc (ARRS.O) O (09/20/2016) $28.39 Calix Inc. (CALX.N) E (05/20/2015) $5.45 Ciena Corporation (CIEN.N) E (09/02/2016) $21.60 CommScope Holding Company Inc (COMM.O) O (08/17/2017) $32.34 Infinera Corp (INFN.O) E (02/22/2016) $8.59 Lumentum Holdings Inc (LITE.O) U (08/11/2016) $58.00 Viavi Solutions Inc (VIAV.O) E (05/20/2015) $9.43 Stock Ratings are subject to change. Please see latest research for each company. * Historical prices are not split adjusted.

INDUSTRY COVERAGE: Internet

COMPANY (TICKER) RATING (AS OF) PRICE* (10/11/2017)

Brian Nowak, CFA

Activision Blizzard Inc (ATVI.O) O (09/23/2016) $61.36 Alphabet Inc. (GOOGL.O) O (08/11/2015) $1,005.65 Amazon.com Inc (AMZN.O) O (04/24/2015) $995.00 Blue Apron Holdings Inc (APRN.N) E (07/24/2017) $5.09 Care.com Inc (CRCM.N) E (06/29/2016) $16.42 Criteo SA (CRTO.O) E (01/26/2016) $45.60 eBay Inc (EBAY.O) U (04/19/2016) $38.31 Electronic Arts Inc (EA.O) O (09/23/2016) $116.05 Etsy Inc (ETSY.O) E (05/11/2015) $16.34 Expedia Inc. (EXPE.O) E (01/10/2017) $147.17 Facebook Inc (FB.O) O (04/27/2016) $172.74 Groupon, Inc. (GRPN.O) U (04/23/2017) $4.83 GrubHub Inc. (GRUB.N) O (08/06/2017) $51.98 Priceline Group Inc (PCLN.O) O (06/30/2016) $1,920.20 Rubicon Project Inc (RUBI.N) U (09/12/2016) $3.72 Snap Inc. (SNAP.N) E (07/11/2017) $15.98 TRIVAGO NV (TRVG.O) E (09/28/2017) $10.60 TrueCar Inc (TRUE.O) E (10/01/2017) $15.27 Twitter Inc (TWTR.N) U (10/21/2015) $17.73 Yelp Inc (YELP.N) E (07/29/2015) $43.98 Zillow Group Inc (Z.O) E (01/13/2017) $41.41 Zynga Inc (ZNGA.O) O (06/08/2017) $3.70 Stock Ratings are subject to change. Please see latest research for each company. * Historical prices are not split adjusted.

INDUSTRY COVERAGE: Freight Transportation

COMPANY (TICKER) RATING (AS OF) PRICE* (10/11/2017)

Ravi Shanker

ArcBest Corp (ARCB.O) E (10/06/2011) $32.45 C.H. Robinson Worldwide Inc. (CHRW.O) U (06/09/2013) $76.70 Canadian National Railway Co. (CNR.TO) O (02/23/2016) C$100.96

54 M FOUNDATION Canadian Pacific Railway Ltd. (CP.TO) O (06/03/2016) C$208.44 CSX Corporation (CSX.O) U (10/02/2017) $53.08 Echo Global Logistics Inc (ECHO.O) E (08/07/2017) $19.30 Expeditors International of Washington I (EXPD.O) E (02/25/2015) $60.26 FedEx Corporation (FDX.N) E (06/20/2013) $222.68 Genesee & Wyoming Inc. (GWR.N) E (02/23/2016) $71.97 Heartland Express Inc. (HTLD.O) U (05/06/2011) $23.69 Hub Group Inc (HUBG.O) E (07/16/2012) $40.00 J.B. Hunt Transport Services Inc. (JBHT.O) E (05/06/2011) $105.68 Kansas City Southern (KSU.N) E (02/23/2016) $104.89 Knight-Swift Transportation Holdings Inc (KNX.N) $40.09 Landstar System Inc (LSTR.O) U (02/23/2016) $99.60 Norfolk Southern Corp. (NSC.N) U (06/03/2016) $131.49 Old Dominion Freight Line Inc (ODFL.O) O (10/06/2011) $108.41 Saia, Inc. (SAIA.O) U (02/23/2016) $59.40 Schneider National Inc. (SNDR.N) O (05/01/2017) $24.40 Union Pacific Corp. (UNP.N) E (10/02/2017) $113.05 United Parcel Service (UPS.N) U (02/23/2016) $118.92 Werner Enterprises (WERN.O) O (02/23/2016) $35.65 XPO Logistics, Inc. (XPO.N) O (11/16/2015) $68.27 Stock Ratings are subject to change. Please see latest research for each company. * Historical prices are not split adjusted.

INDUSTRY COVERAGE: Insurance - Property & Casualty

COMPANY (TICKER) RATING (AS OF) PRICE* (10/11/2017)

Kai Pan

Allstate Corporation (ALL.N) E (07/06/2010) $93.09 American Int'l Grp (AIG.N) O (05/16/2017) $61.84 Aon PLC (AON.N) E (05/31/2012) $147.77 Arch Capital Group Ltd. (ACGL.O) E (07/06/2010) $98.59 Arthur J. Gallagher (AJG.N) E (05/31/2012) $61.72 Axis Capital Holdings (AXS.N) E (08/14/2015) $55.46 Berkshire Hathaway Inc (BRKb.N) E (03/20/2017) $187.46 Brown & Brown Inc. (BRO.N) U (01/27/2016) $48.89 Chubb LTD (CB.N) O (11/12/2015) $147.37 Everest Re Group, Ltd. (RE.N) E (05/16/2013) $222.51 Hartford Fin. Services Grp. (HIG.N) E (07/28/2017) $55.87 Intact Financial Corp (IFC.TO) O (05/23/2016) C$102.98 Marsh & McLennan Cos (MMC.N) E (02/09/2015) $83.58 National General Holdings Corp (NGHC.O) E (11/18/2016) $20.30 Progressive Corp (PGR.N) E (01/05/2017) $49.25 RenaissanceRe (RNR.N) E (03/09/2015) $137.73 The Travelers Companies, Inc. (TRV.N) U (01/05/2017) $125.61 Third Point Reinsurance Ltd (TPRE.N) E (01/06/2014) $16.25 W.R. Berkley Corp. (WRB.N) E (01/21/2016) $67.29 Willis Towers Watson PLC (WLTW.O) O (02/12/2015) $155.96 XL Group PLC (XL.N) O (05/12/2015) $39.35 Stock Ratings are subject to change. Please see latest research for each company. * Historical prices are not split adjusted.

MORGAN STANLEY RESEARCH 55 M FOUNDATION INDUSTRY COVERAGE: Multi-Industry

COMPANY (TICKER) RATING (AS OF) PRICE* (10/11/2017)

Jiayan Zhou, CFA

Fastenal Co. (FAST.O) E (07/07/2016) $44.51 HD Supply Holdings Inc (HDS.O) E (06/07/2017) $34.95 W.W. Grainger Inc. (GWW.N) U (01/11/2016) $172.50 Watsco Inc. (WSO.N) U (12/19/2016) $159.96 WESCO International Inc. (WCC.N) O (05/02/2017) $57.90

Nigel Coe, CFA

3M Co. (MMM.N) U (12/02/2013) $216.51 Ametek Inc. (AME.N) E (10/03/2012) $66.97 Dover (DOV.N) O (04/03/2017) $93.82 Eaton Corp PLC (ETN.N) O (09/09/2013) $78.53 Emerson Electric (EMR.N) E (01/08/2013) $63.43 Fortive Corp (FTV.N) E (05/02/2017) $72.35 General Electric Co. (GE.N) E (07/17/2017) $23.07 Honeywell International (HON.N) O (01/04/2012) $142.72 Hubbell Inc. (HUBB.N) O (12/19/2016) $115.03 Illinois Tool Works (ITW.N) E (01/13/2016) $151.44 Ingersoll Rand (IR.N) O (01/12/2015) $91.43 Johnson Controls International (JCI.N) O (07/01/2013) $41.35 Lennox International (LII.N) U (12/19/2016) $180.29 Pentair plc (PNR.N) E (10/15/2015) $69.95 Regal Beloit Corp (RBC.N) E (05/11/2016) $78.80 Rockwell Automation (ROK.N) E (01/09/2017) $183.75 SPX Flow (FLOW.N) E (11/25/2015) $40.16 Stanley Black & Decker (SWK.N) O (10/02/2017) $156.49 United Technologies Corp (UTX.N) ++ $117.75 Stock Ratings are subject to change. Please see latest research for each company. * Historical prices are not split adjusted.

INDUSTRY COVERAGE: Software

COMPANY (TICKER) RATING (AS OF) PRICE* (10/11/2017)

Brian Essex, CFA

AppFolio Inc (APPF.O) E (05/13/2016) $51.65 CDK Global Inc (CDK.O) E (02/03/2017) $64.85 Descartes Systems Group Inc (DSGX.O) E (11/25/2014) $28.85 Ellie Mae Inc (ELLI.N) E (01/12/2017) $83.97 Endurance International Group Holdings, Inc. (EIGI.O) U (02/21/2017) $7.95 GoDaddy Inc (GDDY.N) O (05/11/2015) $43.92 Instructure Inc (INST.N) O (09/18/2017) $33.85 MINDBODY INC (MB.O) E (09/28/2015) $27.75 Q2 Holdings Inc (QTWO.N) E (07/22/2016) $41.95 Sabre Corp (SABR.O) E (04/06/2017) $18.19 Shopify Inc (SHOP.N) E (09/28/2016) $95.02 SS&C Technologies Holdings, Inc. (SSNC.O) O (09/27/2016) $40.70 Travelport Worldwide Limited (TVPT.N) E (01/23/2017) $15.65

Keith Weiss, CFA

Adobe Systems (ADBE.O) E (09/10/2010) $153.65 Akamai Technologies, Inc. (AKAM.O) U (04/27/2017) $50.52 Autodesk (ADSK.O) O (05/01/2017) $118.57 Check Point Software Technologies Ltd. (CHKP.O) E (04/18/2017) $117.71 Citrix Systems Inc (CTXS.O) U (01/19/2016) $80.57

56 M FOUNDATION Intuit (INTU.O) U (09/13/2016) $143.66 Microsoft (MSFT.O) O (01/13/2016) $76.42 Oracle Corporation (ORCL.N) E (11/11/2015) $48.28 Palo Alto Networks Inc (PANW.N) O (10/10/2017) $149.00 Red Hat, Inc. (RHT.N) E (07/07/2016) $119.37 Salesforce.com (CRM.N) O (05/23/2011) $96.01 ServiceNow Inc (NOW.N) O (09/18/2013) $120.68 Symantec (SYMC.O) E (10/10/2017) $31.61 VMware Inc (VMW.N) O (07/25/2016) $112.03 Workday Inc (WDAY.O) E (11/06/2012) $108.51

Melissa Franchi

Barracuda Networks Inc (CUDA.N) E (01/08/2016) $22.65 Box Inc (BOX.N) E (02/17/2015) $19.20 CyberArk Software Ltd (CYBR.O) E (03/30/2017) $42.11 FireEye Inc (FEYE.O) O (09/07/2017) $17.49 Fortinet Inc. (FTNT.O) O (11/15/2016) $38.68 Imperva Inc. (IMPV.O) U (04/21/2016) $43.25 Proofpoint Inc (PFPT.O) O (09/10/2015) $93.10 Qualys Inc (QLYS.O) E (10/10/2017) $50.40 Rapid7 Inc (RPD.O) E (08/11/2015) $18.06 Secureworks Corp (SCWX.O) O (05/17/2016) $12.39 Splunk Inc (SPLK.O) E (10/02/2017) $63.48 Varonis Systems, Inc. (VRNS.O) E (06/21/2017) $43.90

Meta A Marshall

8x8 Inc (EGHT.O) E (04/11/2017) $13.70 Five9 Inc (FIVN.O) E (04/11/2017) $25.30 RingCentral Inc (RNG.N) E (07/19/2017) $43.40

Sanjit K Singh

Appian Corp (APPN.OQ) E (06/19/2017) $23.28 Atlassian Corporation PLC (TEAM.O) O (07/25/2017) $40.39 Cloudera Inc (CLDR.N) E (05/23/2017) $15.78 New Relic Inc (NEWR.N) E (07/19/2017) $50.79 Nuance Communications Inc. (NUAN.O) E (05/01/2013) $15.80 Tableau Software (DATA.N) E (02/08/2016) $76.94

Stan Zlotsky, CFA

Bazaarvoice Inc (BV.O) E (09/02/2015) $4.75 Coupa Software Inc (COUP.O) E (10/31/2016) $35.37 HubSpot, Inc. (HUBS.N) O (09/10/2015) $83.80 Veeva Systems Inc (VEEV.N) E (06/05/2017) $57.42 Workiva Inc (WK.N) E (01/23/2017) $22.35 Yext Inc (YEXT.N) E (05/08/2017) $12.13 Zendesk, Inc (ZEN.N) O (09/10/2015) $29.30 Stock Ratings are subject to change. Please see latest research for each company. * Historical prices are not split adjusted.

INDUSTRY COVERAGE: Semiconductors

COMPANY (TICKER) RATING (AS OF) PRICE* (10/11/2017)

Craig Hettenbach

Amphenol Corp. (APH.N) E (09/10/2014) $86.78 Analog Devices Inc. (ADI.O) O (07/27/2016) $88.57 Broadcom Ltd (AVGO.O) O (07/02/2013) $250.40 Cypress Semiconductor Corp (CY.O) U (03/30/2017) $15.99 Impinj Inc (PI.OQ) E (06/19/2017) $37.08

MORGAN STANLEY RESEARCH 57 M FOUNDATION Maxim Integrated Products Inc. (MXIM.O) U (07/30/2014) $49.16 Microchip Technology Inc. (MCHP.O) O (01/19/2016) $91.93 NXP Semiconductor NV (NXPI.O) E (10/28/2016) $115.46 ON Semiconductor Corp. (ON.O) E (09/22/2016) $19.42 Qorvo Inc (QRVO.O) E (06/27/2016) $72.94 Sensata Technologies Holding N.V. (ST.N) E (09/10/2014) $48.49 Skyworks Solutions Inc (SWKS.O) U (06/27/2016) $105.47 Te Connectivity Ltd (TEL.N) O (09/10/2014) $86.75

Joseph Moore

Advanced Micro Devices (AMD.O) E (12/14/2016) $13.88 Ambarella Inc (AMBA.O) O (03/29/2016) $51.51 Cavium Inc (CAVM.O) O (09/26/2013) $68.94 Inphi Corporation (IPHI.N) O (08/17/2015) $38.86 Intel Corporation (INTC.O) E (01/27/2017) $39.30 Marvell Technology Group Ltd (MRVL.O) E (09/14/2015) $18.51 Micron Technology Inc. (MU.O) O (12/17/2015) $41.61 NVIDIA Corp. (NVDA.O) E (10/30/2015) $190.94 Quantenna Communications Inc (QTNA.O) O (11/22/2016) $16.94 Texas Instruments (TXN.O) E (05/30/2012) $92.87 Xilinx (XLNX.O) O (12/14/2016) $72.76 Stock Ratings are subject to change. Please see latest research for each company. * Historical prices are not split adjusted.

INDUSTRY COVERAGE: IT Hardware

COMPANY (TICKER) RATING (AS OF) PRICE* (10/11/2017)

Katy L. Huberty, CFA

Apple, Inc. (AAPL.O) O (05/26/2009) $156.55 CDW Corporation (CDW.O) E (08/06/2013) $69.04 Electronics for Imaging Inc (EFII.O) U (08/03/2017) $41.68 Hewlett Packard Enterprise (HPE.N) E (11/11/2015) $14.94 HP Inc. (HPQ.N) O (03/18/2013) $20.41 IBM (IBM.N) O (02/18/2016) $147.62 NCR Corp. (NCR.N) E (09/25/2011) $37.40 NetApp Inc (NTAP.O) U (03/24/2014) $43.51 Nutanix Inc (NTNX.O) E (05/10/2017) $26.66 Pure Storage Inc (PSTG.N) E (05/18/2017) $16.01 Seagate Technology (STX.O) E (07/11/2016) $33.50 Teradata (TDC.N) U (12/03/2013) $32.69 Tintri Inc (TNTR.O) E (08/23/2017) $3.02 Western Digital (WDC.O) O (04/28/2017) $85.62 Xerox Corp (XRX.N) O (01/12/2017) $32.74

Yuuji Anderson

Fitbit Inc (FIT.N) E (07/30/2017) $6.56 Garmin Ltd (GRMN.O) E (01/07/2015) $54.38 GoPro Inc (GPRO.O) E (07/30/2017) $9.63 Stock Ratings are subject to change. Please see latest research for each company. * Historical prices are not split adjusted.

INDUSTRY COVERAGE: Telecommunications

COMPANY (TICKER) RATING (AS OF) PRICE* (10/11/2017)

Tetsuro Tsusaka, CFA

58 M FOUNDATION KDDI (9433.T) E (07/24/2014) ¥2,953 NTT (9432.T) O (11/17/2012) ¥5,180 NTT DOCOMO (9437.T) E (07/23/2015) ¥2,586 Softbank Group (9984.T) E (11/10/2014) ¥9,499 Stock Ratings are subject to change. Please see latest research for each company. * Historical prices are not split adjusted.

MORGAN STANLEY RESEARCH 59 © Morgan Stanley 2017

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