This Is a Title That Goes Over Two Lines
Investor Day 2016 beyond frontiers
21 June 2016
Investor Day 2016 Agenda
Corporate perspective Karim Michel Sabbagh, President and CEO
Video Ferdinand Kayser, CCO
Enterprise Aslan Tricha, SVP & MSC Leader (Enterprise)
Mobility Elias Zaacack, SVP & MSC Leader (Mobility)
Global government Nicole Robinson, VP & MSC Leader (Government)
U.S. government Pete Hoene, CEO of SES Government Solutions
O3b Networks Steve Collar, CEO of O3b Networks
SES HTS+ Christophe de Hauwer, CDO
Media Solutions Wilfried Urner, CEO of SES Platform Services
SES technology framework Martin Halliwell, CTO
SES financial framework Padraig McCarthy, CFO
Investor Day 2016 2 Corporate perspective
Karim Michel Sabbagh, President and CEO
Investor Day 2016 Executing differentiated strategy to deliver sustainable growth
Delivering a scalable and global satellite-enabled network
Focusing on value-added, end-to-end solutions in four key market verticals, where SES is well positioned to accelerate
Innovating at all levels of the business to create future-proof differentiation
Accelerating growth with attractive and differentiated investments
Execution of financial framework supporting sustainable growth and progressive dividend
Investor Day 2016 4 Strong growth outlook for satellite in all four of SES’s verticals
Global capacity revenues by vertical(1) USD 5 billion in additional satellite capacity USD billion revenues to be captured by 2020
17.8 (+39%) Video key growth drivers: +13% CAGR • Transition from SD to HD +54% CAGR 12.8 • Further development of Ultra HD
+3% CAGR • DTH growth in emerging markets Data verticals key growth drivers:
• Growing demand for global connectivity
+3% CAGR • Connectivity anytime and anywhere
• HTS capabilities essential for delivering efficient bandwidth, tailored to specific applications 2015 2020 Video Enterprise Mobility Government
1) Source: NSR
Investor Day 2016 5 Further growth potential from delivering value-added services
Global back-end video services revenues(1) USD 15 billion in additional services revenues USD billion to be captured by 2020 24.4 (+53%) Generating additional “pull through” 15.9 opportunities
Enhancing a key differentiator for SES
2015 2020 • Merging RR Media with SES Platform Services to Traditional Next generation create a world-leading media solutions provider Overall strengthening strategic relationship Global network platform and service provider(1) with key clients USD billion 12.7 (+108%)
6.1
2015 2020 Enterprise Mobility Government
1) Source: NSR
Investor Day 2016 6 Globalising the business
SES’s global satellite network Developing the strongest, most scalable and flexible hybrid platforms Over 50 GEO Plus 12 MEO satellites satellites • Ubiquitous and flexible global coverage • Robust global ground network Over 20 Over 20 office teleports locations • Complemented by local presence • Value-added ancillary services
Scaling up SES’s business around the globe
• 317 million TV households served by SES
• 11 managed IP platforms delivered by SES
• Major global mobility providers supported by SES
• 57 global governments served by SES
Investor Day 2016 7 Focusing on four verticals
Building the strongest, most scalable platforms across each market vertical
Leading share in global Prime neighbourhoods with significant technical reach HD/UHD; providing media solutions for End-to-end services across linear and non-linear distribution Video 1,000 customers
Supporting over one Combining global coverage across multiple frequencies million simultaneous fixed internet Innovative IP-based solutions and network management systems Enterprise connections
Creating user experiences with major partners Largest provider of aero connectivity; Unprecedented connectivity and ‘game-changing’ solutions growing in maritime Mobility
Supporting 57 global End-to-end solutions for the most demanding applications governments (including 13 U.S. government Partnering with global governments to orchestrate capabilities Government agencies)
Investor Day 2016 8 Enabling markets through end-to-end solutions
SES – from infrastructure to holistic solutions Integrated space and ground assets are essential to providing end-to-end solutions
Backend Infrastructure Experience provider provider provider Accelerating the scalability of resources downstream
Fast-tracking deployment of solutions and applications:
• Video: SD to HD/UHD acceleration; LIQUID VoD; East Africa platform
Infrastructure Network Service • Enterprise: Service Provider+, Telco+, provider platform provider Enterprise+ products
• Mobility: Aero+ and Maritime+ products
• Government: Tactical Persistent Surveillance, e-inclusion
Investor Day 2016 9 Seizing leading position and synergies by moving to 100% of O3b
Adding unique and complementary products and solutions
Generating IRR in excess of SES’s hurdle rates, and enhancing return on existing investment
Accelerating transformational and combination synergies not possible under a 50.5% scenario
Transformational synergies Combinational synergies
▲ Executing a common technology ▲ Financing synergies roadmap • Refinancing O3b’s USD 1.2 billion of debt • Fulfilling data requirements in a unique (currently at an average cost of 9.5%) way with O3b’s differentiated, global ▲ Commercial synergies solution • Combining O3b’s capabilities in managed • Enhancing future CapEx efficiency and services with SES’s data-centric services reducing consolidated normalised CapEx • Unified approach to customer interface
EUR 53 million of synergies by 2017, growing to EUR 106 million by 2021
Investor Day 2016 10 Having foremost at industry foresight
SES’s way of working New foresight on the future of Video, Enterprise, Mobility and Government
New investments across the value Be bold and chain, while remaining compliant with perseverant SES’s financial framework Think ahead New partnership models to strengthen SES’s capability systems and amplify resources Roll up your Develop and bring sleeves New business models to enable the best of SES evolving markets on the smartest critical worldwide path
Investor Day 2016 11 Sleeves rolled up in innovation and delivery
SES’s way of working Expanding capability systems across the value chain
Deploying globally SES’s capabilities Be bold and and facilitating timely customisation perseverant Think ahead Evolving business models, while retaining the principles of SES’s financial framework
Roll up your Influencing policies and regulations to Develop and bring sleeves accelerate the rollout of new solutions the best of SES for the benefit of end users worldwide
Investor Day 2016 12 Developing and bringing the best of SES globally
SES’s way of working Unrestricted commitment to serve clients globally
• Global networks Be bold and perseverant • Global capabilities Think ahead • Global talents
• Global mobilisation Roll up your Develop and bring sleeves the best of SES worldwide
Investor Day 2016 13 SES’s growth markets: Video
Ferdinand Kayser, CCO
Investor Day 2016 Strong growth potential from globalising SES’s video business
TV households in emerging markets(1) Significant audience growth driving demand for Millions +206 new video platforms in emerging markets (+22%) 1126 Growing audiences demanding more choice 920 and more TV channels
SES expanding in global video
2016 2023 • Serving 76 million TV households in International
• Broadcasting over 2,750 TV channels in International Satellite TV channels in emerging markets(2) Number +8,884 • 52% of SES’s available capacity serving International (+35%) markets (including SES-9) 34,194 25,310 • Growing capacity in Latin America at established video neighbourhoods with anchor customers
2015 2024
1) Source: NSR 2) Source: Euroconsult
Investor Day 2016 15 Driving growth from the transition to HD and Ultra HD
Global HDTV channels over satellite(1) Increasing demand for higher quality viewing Number +9,588 experience (+181%) +3,757 • TV screen sizes >49” represent the biggest growth 14,897 (2) (+102%) segment 7,419 5,309 3,662 Higher quality signals require more capacity Emerging markets Developed markets • Compression enhancements stimulating transition 2015 2024 from SD to HD and UHD
Global UHD channels over satellite(1) SES benefiting from transition to HD/UHD, Number +465 and outperforming the industry (+29x) +282 481 (+12x) • ~60% of all TV channels in MPEG-4
305 • HDTV now 32.5% of all TV channels, compared to 16 23 19.8% for the rest of the industry Emerging markets Developed markets
2015 2024
1) Source: Euroconsult 2) Source: IHS
Investor Day 2016 16 Enabling higher quality content with compression
Higher signal quality requires more capacity(1) HDTV channels broadcast by SES satellites Transponders required to broadcast ten TV channels Number 32.5% of total SES channels ~5 txps (7,309) 2,375
23.1% of total SES channels ~2½ txps (5,210)
1,202 ~1 txps
SD HD UHD End-2011 Q1 2016 (MPEG-2) (MPEG-4) (HEVC) ~40%(2) MPEG-4 ~60%(2)
1) Based on one 36 MHz transponder delivering approximately 40 Mbit/s 2) MPEG-4 TV channels as a proportion of SES’s total TV channels
Investor Day 2016 17 Providing scalable, global solutions
50 pay-TV and FTA platforms Supporting over 500 broadcasters/operators
New platforms since 2010
317 million households 7,309 TV channels (+61 million since 2011) (+44% since 2011)
32.5% HD penetration 120 VoD platforms (2011: 23.1%)
Investor Day 2016 18 Scaling up SES’s global video offering
2011 2016
Liberalising the 256 million TV 317 million TV 1 broadcast environment households households
Facilitating the digital 2 5,210 TV channels 7,309 TV channels switchover
Enabling the move to 23.1% HD penetration 32.5% HD penetration 3 higher quality
Delivering holistic and 0 VoD platform 120 VoD platforms 4 hybrid solutions
Replicating the SES ▲ +23% available capacity in Asia-Pacific 5 way of working globally ▲ +15% available capacity in Latin America
Investor Day 2016 19 Delivering differentiated, holistic solutions
SES already delivering end-to-end solutions for major customers
Backend Provider
Infrastructure Provider
Experience 3 million TV households in Germany Provider
Investor Day 2016 20 Offering scalable, linear/non-linear end-to-end solutions
Media Tool Box Core DTH Core OTT SES well placed to deliver end-to-end hybrid solutions Broadcast Digital rights Backend services management Provider Providing all the technical Conditional Live and VoD elements to deliver content access processing from end-to-end
Offering ‘turnkey’ solutions, to best suit each customer’s Infrastructure Satellite Content requirements Provider capacity delivery Combining DTH and OTT capabilities to deliver the best viewing experience across all Set-top-box WebTV devices specs apps Experience Provider Subscription Subscription and order and order management management
Investor Day 2016 21 Complementing satellite’s competitive advantages
Average daily linear TV viewing times(1) Linear TV consumption remains stable Minutes Satellite delivers compelling advantages:
251 252 241 • 100% global coverage
• Consistent and high quality bandwidth 190 189 187 • Highly cost-efficient delivery method
Non-linear adding incremental viewing times, mostly during daytime
• OTT increasingly substituting Blu-Ray/DVD
Developed Emerging Hybrid approach is essential markets markets 2005 2010 2015
1) Source: Eurodata TV
Investor Day 2016 22 Case studies: complementing satellite with OTT
Task Task Create a financially viable model for German FTA TV Create a pan-European TV Broadcast and VoD platform for broadcasters to broadcast content in HD quality expatriates in Europe Extend to multi-screen distribution Implement complete end-to-end distribution on DTH and OTT Implementation Implementation Introduction of HD+ extrascreen, using SAT>IP technology Content contribution, back-end services and distribution via satellite and Content Delivery Network Extending the reach of HD in Germany Provide OTT reception via iOS, Android and Webplayer Benefit Benefit Addressable market grown to over 3 million HD+ homes End consumers have choice to select DTH and/or OTT End consumers able to watch 21 encrypted HD and all FTA Based on LUCID OVP to enable reception on all common IP HD channels on their mobile devices, using SAT>IP devices, in addition to the main TV screen
Investor Day 2016 23 Shaping the future by innovating at all levels
Expanding in fast-growing emerging markets Space SES-9 (Asia)/SES-10 (Latin America): +80 txps
Developing new DTH platforms (e.g. West Africa) Platform HD+ grown to 1.9 million paying subscribers(1)
Anytime, anywhere and any screen Application Orchestrating opportunities with SES’s Industry Days
Ground
1) Excluding 1.2 million households currently within the six months free introductory period
Investor Day 2016 24 Accelerating SES’s future-proof differentiation
Three key principles:
Prime neighbourhoods and substantial technical reach Distinct infrastructure Complemented by world-leading media solutions provision to holistic solution Rapidly scaling up SES’s capabilities globally
Complementing infrastructure sales with services Yield management to 50% increase in “pull-through” from SES PS since 2012 value management
Orchestrating the transition to HD and UHD
Relevance to resilience Complementing satellite with terrestrial capabilities
Delivering the best experience across all devices
Investor Day 2016 25 Becoming the first choice for delivery of global video content
Growing SES’s prime neighbourhoods and substantial technical reach Enhancing SES’s hybrid capabilities and ancillary services globally
127 million DTH homes
>500 global broadcasters & Satellite 148 million operators Cable homes
42 million IPTV homes
OTT 120 VoD portals
Investor Day 2016 26 SES’s growth markets: Enterprise
Aslan Tricha, SVP & MSC Leader for Enterprise
Investor Day 2016 Strong growth potential in global enterprise
Satellite capacity revenues(1) Connectivity adoption is a growth enabler USD billion Satellite services growing in relevance within 2.6 the global IP traffic explosion 2.3 • Providing reach to reduce connectivity gap 0.5 1.3 - Worldwide ICT development plans to bridge digital divide, broadband adoption, mobile broadband subscriber CAGR Widebeam FSS GEO-HTS 15%(2) (proliferation of 3G/4G/LTE networks) 2015 2024 • Fulfilling performance requirements by application
(2) Network platform/service provider revenues(1) - Mobile traffic +45% CAGR (capacity usage per user doubling every three years) USD billion • Fulfilling user experience requirements with high performance networks (throughput and latency) 3.2 2.7 Focusing on key growth applications: 1.7 0.5 • Addressing point-to-multi-point enterprise needs Widebeam FSS GEO-HTS • Extending terrestrial networks 2015 2024 • Connecting the ‘sub-urban unconnected’ 1) Source: NSR 2) Source: Ericsson (2015-2021)
Investor Day 2016 28 Reshaping SES’s Enterprise business to changing market dynamics
Reshaping SES’s Enterprise business with enhanced product offerings
Expanding commercial relationships with ‘tier one’ telcos/MNOs and channels
Delivering Enterprise+ managed solutions to optimise the Capacity value per application commoditisation Developing a combined GEO/MEO HTS offering
Executing a focused strategy on tier one Telcos/MNOs Mbps price Targeting new customer segments (next gen data providers) pressure Reshaping approach to tier two/three Service Providers
Satellite No exposure to trunking (less than 1% of overall business) substitution by Serving point-to-multi-point applications adjacent solutions Connecting the ‘sub-urban unconnected’ with hybrid solutions
Developing channels (VAR and vendors) to increase Complex ground customer proximity and reduce time-to-market requirements Enhancing business models to create new opportunities
Investor Day 2016 29 Driving growth from backhaul services
Sites share by BTS technology(1) Monetising demand from 3G and 4G/LTE % of sites sites by providing competitive solutions with HTS 35% 75% • 10 to 40 times traffic growth per site with 3G/4G/LTE, compared to 2G
• Robust solutions to handle complex network 2015 2025 requirements and quality of experience 2G 3G 4G Capturing growth in Internet of Things
• Connected devices to reach 28 billion by 2021 Connected devices(2) Billion 28.2 (+83%) • Growing range of applications
- Smart buildings, smart cities, smart home, smart grid, 15.4 smart agriculture and smart industries
• New business models supported by falling modem costs and HTS capacity 2015 2021 Fixed phones PC/Laptop/Tablet Satellite solution advantages: ubiquity, scale, M2M & consumer electronics Mobile phones security, resilience and network management
1) Source: NSR 2) Source: Ericsson
Investor Day 2016 30 Providing scalable, global solutions
SES’s global Enterprise solutions Partnering with major global customers
Telco+ Wireless+
Enterprise+
Service Provider+
11 SES-managed IP platforms serving Europe, Asia, Americas and Africa
Over one million simultaneous fixed internet connections supported by SES
Investor Day 2016 31
Scaling up SES’s global enterprise offering
2011 2016
1 Increasing the connectivity reach in 21% of households 35% of households developing markets with internet with internet
2 Facilitating the network proximity 15 Teleports 25 Teleports - Nodes 25 PoP >3,000 PoP - Customer connectivity points
L2 & L3 MPLS (support - Network transport L3 connectivity for MEF 2.0 services)
3 Improving application and user 3 Mbps average 12 Mbps average experience data rate per site data rate per site
4 Delivering holistic and hybrid 0 hybrid platforms 6 hybrid platforms solutions
5 Replicating the SES way of working Vendor partnerships with Gilat & iDirect enhancing globally channels to market for Enterprise+, Telco+, Wireless+
Investor Day 2016 32 Delivering differentiated, holistic solutions
SES already delivering end-to-end solutions for major customers
Infrastructure Provider
Network Platform
Service Provider
Investor Day 2016 33 Shaping the future by innovating at all levels
Global GEO HTS platform (equivalent to 250 TPEs) Space O3b unique MEO HTS constellation
Global IP/MPLS network roadmap deployment Platform Building a future-proof carrier-grade routing platform
Fostering the Internet of Things ecosystem Application Deploying next generation low-cost solutions
Next generation chipsets in spread spectrum Ground Ultra low-cost antennas and modems
Investor Day 2016 34 Accelerating SES’s future-proof differentiation
Three key principles:
Investing in HTS and next gen data network capabilities Distinct infrastructure Delivering complete suite of enterprise solutions globally to holistic solution Enhancing satellite solutions with hybrid features
Complementing infrastructure sales with services
Yield management to Increasing revenues from tier one Telcos/MNOs and value management Service Providers from 36% to 42% in 2015
Providing satellite services to next gen data providers
Relevance to resilience Delivering highest service performance (exceeding 99.97% since 2004) and fastest implementation
Investor Day 2016 35 Providing value in delivering global enterprise solutions
Delivering tailored solutions on a regional, national, and/or local level for customers
Coverage Global Regional National Local
SES enterprise offerings
Scale
Service Provider+
Enterprise+ Flexibility
Telco+ Customisation
Wireless+ Product attributes Product Proximity
Investor Day 2016 36 Case study: Providing a turnkey solution for Facebook in Africa
Task Benefit
Support Facebook’s Express Wi-Fi Complete and tailored solution deploying programme roll-out in Sub-Sahara customer-specific protocol enhancement features Africa
Implementation
Simplified customer front- end solution
Combining complex service elements in the back-end
• Satellite and ground infrastructure
• Managed services
High level performance and SLA
Investor Day 2016 37 Case study: Delivering Hybrid Broadband in Asia
Allowing telcos/MNOs and ISPs to deliver broadband services to underserved areas, while leveraging their core network investment
Enterprise+ Hybrid Broadband enables enhanced broadband connectivity:
• Superior end-user experience for underserved areas (20Mbps download speeds, return carrier via 2G/3G)
• Carrier grade infrastructure (total management system)
• A self-installed terminal with automatic service activation
On-going customer testing:
Investor Day 2016 38 SES’s growth markets: Mobility
Elias Zaccack, SVP & MSC Leader for Mobility
Investor Day 2016 Substantial growth outlook in Mobility
Number of connected planes(1) Growth driven by explosion in passengers carrying Number of in-service terminals smartphones, tablets and laptops 25,929 Dramatic rise in airlines deploying IFC, and resulting surge in connected aircraft over next decade in all regions, led by North America
Maritime segment driven by cruise requirements, 2,695 which accommodate BYOD for up to 5,000 passengers per ship 2015 2017 2019 2021 2023 2025 Office-at-sea, cargo processing, ship diagnostics and crew welfare driving the maritime space Number of connected ships(1) Number of broadband maritime vessels 32,659 SES has cemented solid, long-term contracts and with virtually global providers, and is establishing recognition and ‘brand’ with end-users (fleet owner/operators) 13,218
• Already serving up to 2,000 aircraft today
• 5% of group revenue (revenue +25% in 2015 at constant FX) 2015 2017 2019 2021 2023 2025
Merchant Maritime Passenger Vessels Offshore Fishing • 20%-30% of SES HTS already pre-committed, two years ahead of OSD
1) Source: NSR (FSS only)
Investor Day 2016 40 Passengers expecting a home-equivalent quality of service
Importance of moving with changing consumer demand patterns supports SES’s technology approach
Yesterday Today Tomorrow
Ku wide beam and HTS Satellite L-band GEO Ku/Ka HTS, MEO Ka spot beams Metamaterial & conductive Antenna Flat aperture Phased Array coverings Modem speed (FWD / RET) 6 Mbit/s / 4 Mbit/s 150 Mbit/s / 18 Mbit/s 200 Mbit/s / 30 Mbit/s
Throughput per plane 1 Mbps 2-10 Mbps >200 Mbps Email, Browsing, Social At home-type experience Typical app Email Media and Video Streaming (including HD video) Take up rate 3% 6% >50%
Date rate per seat(1) 166 kbps 0.5 Mbps >2 Mbps
1) Assuming an average of 200 passengers per aircraft
Investor Day 2016 41 Providing a scalable and optimised global solution
Supporting global service providers/companies SES HTS Coverage, projected by 2018
Investor Day 2016 42 Delivering differentiated, holistic solutions using SES’ GEO and O3b
SES already delivering end-to-end solutions for major customers
AERO MARITIME Infrastructure Provider
Network Platform
Service Provider
For clients on a selected basis
Investor Day 2016 43 Case study: SES’s differentiated global in-flight solution
SES’s global aero capabilities well placed to deliver optimal IFE/IFC solutions
In-flight connectivity Safety/operational and In-flight entertainment emergency services
HD video streaming Electronic flight bags Live TV Browsing Advanced weather On-demand TV reporting E-mail Tailored sports packages Dynamic routing advice VPN access Regionalised news feeds Cabin crew assistance Social networking HD+ Aero Flight tracking Video conferencing Collection and storage of
sensitive flight data
Investor Day 2016 44 Case study: Delivering seamless connectivity with SES Maritime+
Leisure Merchant Cruise
Gilat 60cm Intellian 1m Seatel 2.4m • Lower throughput requirements • Medium throughput requirements • High throughput requirements • Integrated ACU, GPS, LNB, BUC, • GPS, ABS, Fast switching • GPS, Auto Polarization, C and Ku- Modem • iDirect Velocity Band LNB • Gilat Skyedge • Comtech Heights
Customised connectivity solutions using best mix of technologies for specific users Multi platform offerings including iDirect, Gilat, Comtech Cooperation with manufacturers on new antenna development (flat panel, tri-band, GEO/MEO)
Investor Day 2016 45 Shaping the future by innovating at all levels
global GEO HTS platform (equivalent to 250 TPEs) unique MEO-based network Space Unmatched combined infrastructure
Open architecture and centralised NMS for global network Platform roaming Ability to support multiple sub-networks, and SLAs
High throughput, global connectivity to air and sea platforms Application Hybrid connectivity/broadcast solutions can enable best-in- class IFC/IFE solutions and passenger experience
Global teleport and IP network Ground Investment in high performance multi-band, multi-orbit antennas and modems to shape the eco-system
Investor Day 2016 46 Accelerating SES’s future-proof differentiation
Three key principles:
Combining wide-beam infrastructure, with new GEO-HTS and O3b to Distinct infrastructure create a unique value proposition to holistic solution Targeting cruise sector with hybrid offering support high user-demand, while ensuring network resiliency and seasonality
Creating a unified platform to deliver value Yield management to Driving higher value per vessel/aircraft and simultaneously allowing SES to optimise network efficiency value management 20-30% of SES HTS already pre-committed, two years ahead of OSD
Customisation of infrastructure to best meet client needs in terms of coverage and power-density Relevance to resilience Ownership of the network/platform and having a direct relationship with ship-owners and airlines ensures de-commoditisation
Investor Day 2016 47 SES’s growth markets: Global government
Nicole Robinson, VP & MSC Leader for Government
Investor Day 2016 Global government market perspective
(1) Global government/military capacity growth Diversifying SES’s global government portfolio to 2014 2024 support growth
FSS capacity 470 TPE 615 TPE Adapting channel strategy to varying procurement systems FSS revenue USD 0.8 billion USD 1.2 billion • Provision of end-to-end solutions increasingly HTS capacity 2.0 Gbps 82.3 Gbps important for global governments HTS revenue USD 49 million USD 550 million • Potential for full or partial outsourcing opportunities of national satellite programs Demand for UAV solutions diversifying(2) • Establishing a framework for invigorating products 2% 4% and solutions development and market-facing resources within SES to share expertise and 11% 23% maximise results 8% 2015 49% 10% 2010 UAV-ISR requirements a key driver of global 13% 69% government bandwidth demand, fueled by multi- 11% sensor and higher resolution payloads U.S. Europe Middle East Middle/Western Pacific Rest of World 1) Source: NSR 2) Source: Teal Group
Investor Day 2016 49 SES’s Global government reach
Serving 57 government entities today in 28 countries (including 13 U.S. government agencies)
International government portfolio Growth doubled from 2014 to 2015 markets Strategic focus on growing in new Existing government government markets business
Investor Day 2016 50 Developing a complete ISR catalog
Satellite bandwidth required for UAV platforms ISR a key growth driver Mbit/s SES building a catalog of offerings and expertise >100 globally 10-50 3-5 5-10
Predator Reaper Global Next-Gen Hawk UAVs
Tier II+ (Group 5) High Altitude Tier II (Group 4) Long Endurance Medium Altitude (HALE) Long Endurance (MALE) Tier II (Group 4) Medium Altitude NATO Global Hawk: SES Predator XP: SES is Optionally Piloted Long Endurance is supporting the working with the one of the SATCOM-enabled Persistent implementation phase of - NEW - first countries to receive ISR aircraft Surveillance the Global Hawk program the XP in the Middle East New European UAV: Aerostat-based for NATO as well as in the SES is working to MASI: SES is working to HTS SATCOM Suite: SES sensing design and development of demonstrate the develop an institutional is collaborating on the next the system along side capability of a new type service in conjunction Tactical Persistent generation SATCOM suite Northrop Grumman of Ku/Ka antenna on a with industrial partners Surveillance (TPS): SES on board select UAVs to brand new UAV platform to SATCOM-enable has developed a U.S. Global Hawk: SES ensure HTS capability developed in Europe and capabilities such as sea SATCOM-enabled GS supports U.S. Global recently exported to border surveillance, surveillance and Hawk training and Predator/MQ-9 Reaper: governments in the traffic monitoring and communications capability research missions in the SES supports the region and in the Middle piracy from these via aerostat - portable in Americas Netherlands Reaper program as well as the US East. New capability will optionally-piloted aircraft tow with 1,000 ft. tether. Government separately open up additional Ideal for security and first through SES GS pipeline for SES responders Investor Day 2016 51 Delivering differentiated, holistic solutions
Delivering scalable solutions from space segment to end- to-end secure network solutions to dedicated satellite Infrastructure design Provider • Critical infrastructure Kativik Government: delivering 12 txps of SES capacity to enable critical connectivity for hospitals, government facilities, schools and internet services in the northern Quebec region • End-to-end Network Burkina Faso: enabling secure elections with a network Platform powering biometric voter validation and connectivity to 45 districts • Custom satellite and ground solutions EGNOS Hosted Payload: providing European navigation services with two hosted payloads, ground segment and fully redundant ground network GovSat1: delivering a military frequency satellite, dedicated for Service government applications in partnership with the Luxembourg Provider government
Investor Day 2016 52 Case study: enhancing connectivity for the Kativik government
Kativik Regional government in Canada awarded SES a contract for the delivery of new satellite services across the northern Quebec region Displacing long-time incumbent, to deliver critical C-band communications capability to more than 14 remote communities Tripling the amount of bandwidth currently available across the Nunavik region Along with providing faster internet and other services to the region, the capability enables essential connectivity for schools, hospitals, government buildings and other important facilities
Investor Day 2016 53 Shaping the future by innovating at all levels
Global GEO HTS platform (equivalent to 250 TPEs) O3b unique MEO HTS constellation Space Military frequency satellite GovSat-1 for government missions Five hosted payloads for four government agencies
Protecting live networks to deliver high quality, uninterrupted service for critical communications Platform Developing levels of security that go beyond encryption, masking traffic fluctuations and authenticating terminals
Ensuring telemetry, secure data links and ground systems Ground security for government customers Custom development and delivery of secure ground infrastructure and gateways (i.e. WGS) for government networks
Suite of solutions to expand services on UAVs and ISR ground Application products Health+ and Education+ capabilities to enable first responders and institutional customers in remote regions Secure, end-to-end networks for defence and diplomatic users
Investor Day 2016 54 Accelerating SES’s future-proof differentiation
Three key principles:
Sharply informing fleet development plans to meet growing needs of Distinct infrastructure global government customers (frequency, coverage and throughput) to holistic solution Building products and catalogues of requirements-driven capabilities to deliver complete solutions
Building each solution with the customer requirement first – mission Yield management to tailored revealing scalability and flexibility value management Beyond bandwidth – bundling equipment, services and expertise to add value with more complete solutions
Providing global governments with the most resilient network
Relevance to resilience SES’s frequent launch pipeline and distributed architecture of hosted payload offerings at GEO and MEO are compelling value propositions to the important mission of resilience for national satellite programs
Investor Day 2016 55 SES’s growth markets: U.S. government
Pete Hoene, CEO of SES Government Solutions
Investor Day 2016 U.S. government defense spending and SES GS performance
U.S. Defense budget(1) U.S. government budget stabilising USD billion • Most of cuts occurred in 2012-2015, but Budget will remain tight through to 2017 687 • Overseas Contingency Operations Funding augments DoD base funding; future value to be determined
• Some relief in 2016-17 from sequestration threat 585 • While Presidential election introduces some 560 uncertainty, overall outlook is favorable SES GS delivered robust performance in a competitive, budget constrained environment
• Gained market share and increasing sales over last five years
• Expanding and diversifying SES GS’s portfolio
2011 2013 2015 2017 2019 2021 - Hosted payloads
Base Overseas Continguency Operations - End-to-end solutions (funded annually) - Managed services
1) Source: US DoD
Investor Day 2016 57 Scalable strategy serving USG SATCOM requirements
Distribution of U.S. government SATCOM pipeline/demand
Supporting U.S. government missions worldwide • Securing significant new business and have a robust pipeline of opportunities Underlying demand is strong globally Core business remains stable with benefit of diversified portfolio
Investor Day 2016 58 Delivering differentiated, holistic solutions
Multi-band Worldwide End- to-End SATCOM Infrastructure Services Provider
Teleport Teleport Teleport Teleport Teleport Teleport
SES PoP SES PoP SES PoP SES PoP SES PoP SES PoP Network GLOBAL Enterprise MPLS NETWORK Platform Gov’t PoP Gov’t PoP ▲ SES GS delivered Trojan solution to address US Army Intelligence & Security Command (INSCOM) requirements ▲ Key elements of Trojan solution include: Service • Worldwide, multi-band end-to-end managed services Provider • Self-healing terrestrial network provides end users with access to SES global fleet and teleport infrastructure • Centralised network management in SES GS’s NOC • Customised network and bandwidth management tools
Investor Day 2016 59 Delivering differentiated, holistic solutions
O3b Installation NWSO Pago Pago, American Samoa
Infrastructure Hawaii Provider
American Samoa Network Platform
▲ NWS Office Pago Pago requested SES GS deliver O3b solution to American Samoa to support tropical weather alerts and warnings ▲ Key requirement: replace unreliable terrestrial link Service ▲ Delivered solution Provider • Managed O3b service providing high-speed data connection between NWSO Pago Pago and primary Pacific NWS center in Hawaii • 5 x 5 Mbps using 2.4M GD antennas with room to grow • Radomes rated to 200 mph to protect antennas
Investor Day 2016 60 Shaping the future by innovating at all levels
Improving SATCOM performance, maximising operational availability and delivering world-class solutions Global GEO fleet and future HTS services (SES-12/SES- 14/SES-15) provide USG with resilient SATCOM Space Adds ‘game-changing’ capabilities to SES’s GEO product line
Developing and delivering network management tools Platform Customising managed service applications (e.g. Bandwidth Manager) to optimise service delivery
Improving customer access to SES Fleet through world-wide, highly reliable, self-healing terrestrial networks Ground Building out key infrastructure with ‘state-of-the-art’, sustainable hubs for dynamic bandwidth allocation
Enabling time-critical delivery of ISR information to meet National-level USG mission requirements Application Delivering innovative SATCOM solutions and applications to USG end-users operating in demanding locations
Investor Day 2016 61 Accelerating SES’s future-proof differentiation
Three key principles:
Evolution of stand-alone, highly customised networks to Distinct infrastructure enterprise, end-to-end solutions addressing multiple customer requirements (e.g. transition of US Army’s Trojan network) to holistic solution Shaping acquisition strategy to use procurement dollars for COMSATCOM - buy as critical infrastructure vs. commodity
Diversifying and expanding SES’s portfolio to include hosted Yield management to payloads, complex end-to-end solutions and managed services value management Leveraging deep understanding of USG customers and missions to provide leading edge solutions
Government Affairs efforts are shaping Congressional language and future USG architectures to enable USG resilience and Relevance to resilience ensure operations in a contested/congested space environment Evolving from single threaded, unreliable customised ground infrastructure to highly reliable self-healing networks
Investor Day 2016 62 SES’s growth accelerators: O3b Networks
Steve Collar, CEO of O3b Networks
Investor Day 2016 O3b – The Fastest Growing Satellite Operator in History
More than 23 Gbps of Achieved EBITDA capacity under contract O3b is the largest break-even in 1H 2016 operator in the Pacific
Half of O3b’s Fiber in 43 customers in the sky Early Pre customers have service on O3b Sales upgraded bandwidth in their first year Launch Concept & Service Serving 10 RCCL ships O3b enables 16 MNO including the largest cruise customers to provide ships on the ocean Enabler Today 3G or 4G/LTE service
In PNG, O3b is powering Provider of turnkey managed Digicel’s largest market with service to Airtel, Millicom and RCCL more than 3 Gbps delivered Investor Day 2016 64 O3b Networks Proprietary No.1 in The Pacific – 5 Gbps under contract, 50% islands connected
Timor Telecom, East Timor Digicel, PNG Telecom Cook Islands, Cook Islands
Telecom Cook Islands, Cook Islands PNCC, Palau Norfolk Telecom, Norfolk Island
Improved QoE Increased ARPU Reduced churn Improved reliability
Investor Day 2016 65 O3b Networks Proprietary No.1 in Cruise – Changed the Maritime and Cruise Industry
Investor Day 2016 66 O3b Networks Proprietary 43 Customers worldwide are live across the O3b Network..
Investor Day 2016 67 O3b Networks Proprietary Delivering customers an integrated, fully managed solution
O3b Space Segment
PoP Carrier WAN Customer WAN
Dermarc-A Remote Terminal Dermarc-Z O3b Gateway
One $/Mbps Price, One SLA across the network
Technical support
Field Level Maintenance
Preventive Maintenance
Site Survey Advanced Replacement Colocation Services Consulting Engineer
Installation & Commissioning Extended HW Warranty Customer Terminal Mgt Learning Solutions
Project Management Program Management
Implement Maintain Manage Consult
Investor Day 2016 68 O3b Networks Proprietary Telco - The Pacific’s largest Telco encouraging O3b to add value
Digicel Pacific has increased capacity by Rapid growth in 550% in 15 months number of sites
• More than 3 Gbps under contract • 6 sites across the Pacific • Optimising Digicel’s network • Driving predictive metrics • Implementing new products - diversity • Fast activation of services • Recently resulted in 800 Mbps upgrade
Investor Day 2016 69 O3b Networks Proprietary Maritime - RCCL and O3b since 2011
August 2013 – First Live Demo to RCCL Executive Board January 2014
December 2014 * April 2015 O3b branded Service for RCCL
Investor Day 2016 70 O3b Networks Proprietary Direct relationships with end users drives rapid service evolution, in-house innovation and delivers high value
10 Ships Oasis of the Seas Caribbean, Med Caribbean only and Asia
Dynamic Shared Follow the Ship Capacity
Fully Managed Bandwidth Only Solution
Investor Day 2016 71 O3b Networks Proprietary Energy - Following successful deployment onshore with Shell and Chevron, O3b now offshore in Gulf of Mexico
First offshore Onshore deployments High expectations from deployment on the BHP went live in 2015 FPSO offshore markets Shenzi platform in GoM
Investor Day 2016 72 O3b Networks Proprietary Government - O3b is changing the government landscape
Providing Unprecedented Speed and Performance on Land and at Sea
Better Situational Network Centric Humanitarian Improving Troop Awareness Operations Mission Support Morale
Investor Day 2016 73 O3b Networks Proprietary What’s Next? - An expanding use case for “fiber like” satellite
Connect people in need Entertainment = internet Intelligence
1 Gbps Recovery 200 Mbps Airplane 100 Mbps UAV
2016 500 Mbps Event 100 Mbps Public Safety 1 Gbps Next Big Thing
Rich media experience Situational Awareness Next generation…
Investor Day 2016 74 O3b Networks Proprietary O3b has quickly established unique capabilities and developed core building blocks to leverage for future growth
Trunk Oil & Gas Gov
Cell Maritime
O3b Capabilities & Skills
1 2 3 4 5
Efficient, Scalable Vertical Managed Service Perfected Operational Constellation Focus Capability Spectrum System
With spectrum secured in the most efficient arc, O3b’s follow- on architectures will deliver global, high-performance networks more affordably than any other system
Investor Day 2016 75 O3b Networks Proprietary Building Scale and Leveraging Time to Market Advantage
Investor Day 2016 76 O3b Networks Proprietary Strong financial development at O3b - $1.3bn financed over the last 18 months - but benefits of consolidation obvious
(1)
Full acquisition by SES will halve cost of debt and substantially reduce operational complexity
1) Gross debt Investor Day 2016 77 O3b Networks Proprietary Strong Execution and Revenue Delivery
$55M in revenue in 2015 in first full year of operation and on course to more than double in 2016
400 385
350 315 300 255 250 232
200 192
150 130 115 Growing at revenue CAGR of 43% over next 5 years 100 54 50 28 16 0 0
-50 -30 -65 -67 -100
EBITDA break-even achieved in May 2016
Additional 8 satellites on order that will almost double capacity in orbit through late 2017 / early 2018
Investor Day 2016 78 O3b Networks Proprietary SES’s growth accelerators: HTS+
Christophe de Hauwer, CDO
Investor Day 2016 HTS is a cornerstone of SES’s Data strategy
Lower cost per bit pricing poised to Leveraging the ability of HTS infrastructure to offer unlock growth lower prices per bit
Unlocking new markets, applications and customers
Creating differentiation relevance by having a deep Majority of infrastructure growth in Data (global) and wide (MEO/GEO) portfolio of is predicated on HTS capacity(1) infrastructure that can efficiently provide differentiated 10 USD billion connectivity solutions to Data clients across all HTS regions 5 Wide Providing wider parts of the value chain to help 0 beam 2015 2024 customers to cope with the complexity of HTS based solution
Increased network complexity stimulates deeper value-chain positioning Capturing large parts of the predicted connectivity demand increase
1) Source: NSR
Investor Day 2016 80 HTS serves clients in all Data verticals and all regions
GEO-w GEO-HTS MEO-HTS GEO GEO MEO Application wide HTS HTS beam
Corporate Low High networks density density
Enterprise Low speed High Max & density speed speed Enterprise Mobility Government broadband Products/Solutions Products/Solutions Products/Solutions Global Max speed, Energy coverage low latency E Mobile High Max speed, backhaul speed low latency
Consumer High Max broadband speed speed
Max speed, Trunking low latency Broadcast High speed Aeronautical overlay & density M Broadcast Global Max Maritime overlay coverage speed Defense & G Global coverage Civilian
Investor Day 2016 81 Not all HTS systems are created equal
SES adopting a differentiated approach to HTS Backward • Locking in anchor customers and backlog to de-risk investments compatibility • Differentiating using O3b's low-latency/high throughput capabilities
• Future-proofing SES’s investments by incorporating the latest Open system technologies into payload and ground systems
SES HTS offers unique capabilities
Wide beam • Backward compatibility of SES Ku HTS allows customers to use overlay existing Ku-band ground technology • SES open system enables customer’s choice of their network system
DTP capability • Wide beam overlay drives the best of both worlds – wide beam and spot beams – for applications in all verticals
• Digital Transparent Processing allows adjustment and concentration Low latency of throughput to match market demand • Combining GEO/MEO infrastructures offer low latency high throughput solutions
Investor Day 2016 82 Relentlessly pursuing differentiation
Normalised wholesale capacity revenues per Differentiation is the prerequisite to Gbps index(1) serve market segments in a relevant (Broadband = 1) manner, and with commensurate 33 economics
Broadband = 1 HTS enabling new data applications with higher bandwidth capabilities, and generating tiering requirements 18 SES’s approach based on delivering the 13 optimal technology solution to best serve customer requirements 9
Government Backhaul Enterprise Mobility
1) Source: NSR, SES estimates. Wholesale category is based on wholesale revenue derived from HTS
Investor Day 2016 83 HTS Offering the unique combination of GEO and MEO
Infrastructure Network Platform Service Provider Provider Provider Satellite Teleport Hub Network Service End user capacity facility infrastructure operations provider
Today
and Tomorrow Combined infrastructure, network, platform and solution delivery
Investor Day 2016 84 Strong strategic rationale for taking full control
Expanding through[ ] Augmenting through Globalisation Verticalisation O3b is global by design O3b offers managed service O3b accelerates the expansion solutions to serve global of SES’s International revenue requirements across Enterprise, base Mobility and Government verticals
Synergising through Enhancing through Acquisition Shaping the future Delivering transformational financial, O3b offers one-of-a-kind low- operational, technical and latency, high throughput and commercial synergies flexible connectivity solutions Building on SES and O3b strong capabilities
Investor Day 2016 85 Accelerating EUR 106 million of synergies
Consistent delivery of substantial synergies EUR 53 million in 2017 rising to EUR 106 million EUR million in 2021
106 Combinational and transformational synergies • Commercial 86 24 • Product Development 14 5 5 12 • Operational 7 53 • Financial 5 5 3 72 82 Synergies will be delivered 48 60 65 • SES and O3b Tie-up implemented at closing 40 • Building on SES and O3b strong management and operational capabilities 2017 2019 2021 Commercial Product development Does not include impact from improved Operational Financial normalized CapEx Synergies accretion to EPS leading to overall EPS impact: value accretion at 15 P/E ratio(1) EUR 0.12 EUR 0.19 EUR 0.23
Investor Day 2016 86 Financial, operational, product and procurement synergies
EUR 60 million of financial synergies (2019)
• Reducing significantly O3b average cost of debt from 9.5% to SES average cost of debt of 4%
Ground Infrastructure EUR 7 million of operational synergies (2019)
• Operational synergies across the group
EUR 5 million of product development synergies (2019)
Flat Network • Aligning and incorporating key innovations Antenna Management System • Developing seamless GEO/MEO network capabilities
Digital Satellite Procurement synergies (not included in 2019 number) Space Transponder Innovation Processor • EUR 20-25 million reduction in O3b’s normalised CapEx(1)
• Leveraging space innovation (e.g. Digital Transponder Processors)
• Leveraging on SES Normalised CapEx reduction program
1) Excludes economies of scale and design on SES’s GEO fleet
Investor Day 2016 87 Commercial synergies
EUR 14 million of commercial synergies O3b and SES complementary services unlock (2019) new synergies Cross fertilising sales to gain market share
Cross fertilising products – SES and O3b combined network is unmatched in the industry and will provide a differentiated suite of solutions
• Geographic complementarity
• Application complementarity
• Product complementarity
O3b Managed Service capabilities unlock new opportunities • Commercial path to capacity upgrade from GEO to MEO Satellite Network Service Teleport Hub Capacity operations provider Deploying new fully managed services across the relevant data market verticals
• Integrating O3b expertise to expand into the value chain towards a vertically integrated model (matching terrestrial Telco data service standard)
Investor Day 2016 88 HTS demand is growing in line with global IP traffic
Global IP traffic growth(1) EB/month -9/10/12/14/15/16 200 150 EUR 250 - 300 million of potential 100 annualised revenue by 2021(3) 50 (Up to 15% of SES FY 2015 revenue) 0 2015 2016 2017 2018 2019 2020 Fixed Internet Managed IP Mobile data
GEO & non-GEO HTS demand growth(2) GB/year 1,500
1,000 EUR 400 - 450 million of potential annualised revenue by 2021(4) 500 (Up to 22% of SES FY 2015 revenue)
0 2015 2016 2017 2018 2019 2020
1) Source: Cisco ; 2) Source: NSR ; 3) Annualised incremental revenue at average “steady-state” utilisation of around 75% (based on FX rate of EUR 1: U.S. Dollar 1.10) 4) With 17 satellites in operation and at ‘steady-state’ utilisation (based on FX rate of EUR 1: U.S. Dollar 1.10)
Investor Day 2016 89 SES’s growth accelerators: Media Solutions
Wilfried Urner, CEO of SES Platform Services & MSC Leader for Video
Investor Day 2016 How services are complementing our satellite infrastructure
1985
SES incorporation Liberalisation of broadcast environment Europe’s first private SPS acquisition satellite operator
Back-end services Analogue to digital provision in Europe switch-over
2004 Launch of HD+ bouquet RR Media acquisition Consumer experience Back-end capabilities Moving to better improvement in Germany development and quality (SD to HD) geographical expansion
2009
Moving to holistic and hybrid solutions 2016 Replication in other key video markets 2014
Smartcast acquisition Back-end capabilities geographical expansion
Investor Day 2016 91 Providing comprehensive end-to-end media capabilities
SES offers a full range of conventional and online video services to clients
Infrastructure Experience Content Production Back-end Provider Consumption Provider Provider
Content Broadcast Online Video Satellite DTH Pay TV Appliances ingestion platforms Platforms distribution (CPEs) Free-To-View backend support Content post- Content Satellite DTC Operators Apps and production Contribution OVP syndication contribution connectivity
Content Remote/smart Teleport services OTT and smart Management playout TVs
Playout
Live Sport
Mainly regional
Global
Investor Day 2016 92 Globalising SES’s media services and solutions
97% of SES PS revenue from Europe; ~⅔ of RR Media revenue outside of Europe Providing global back-end services, based on local capabilities and innovative virtual solutions
16 Offices
Over 900 media customers globally
Over 1,000 TV channels distributed
Over 440 TV channels played out
Over 120 syndicated VoD platforms
Investor Day 2016 93 Solid differentiation potential from other industry players
SES best positioned to fulfil requirements for comprehensive media service delivery
Satellite Media solution operators providers (A) Distribution Infrastructure Satellite capacity [ owned] [ leased] [ own] Online distribution capabilities [ leased] [ leased]
(B) Service Capability Pure system capabilities [partly] Pure service platform capabilities Full operational services [limited]
(C) Media Service Scope Conventional Video Services Online Video Services
(D) Coverage Regional Scope Depending Depending Global Scope on provider on provider
Investor Day 2016 94 Media toolbox
Media Toolbox offers User Experience a wide range of developed components and workflows for
▲ DTH / DTC
▲ Multiscreen (Sat>IP)
▲ Online Video
Experience of SES industry experts ensures to deliver cutting-edge technology for your content business to realise the best user experience
Media toolbox is a one-stop-shop for DTH and OTT distribution
Investor Day 2016 95 Providing a turnkey solution is the best way to approach SES’s existing and new customers
Back-end services Platform implementation
• SOLID satellite services
• LUCID OTT distribution • HD+
• FLUID content management • West-Africa Platform
• Home:TV Features
• UHD North America Platform • Linear, catch-up, VoD, PVR
• SD, HD, UHD
• SAT>IP
Investor Day 2016 96 Case study: shaping the video market in West Africa
Task Benefit ▲ Foster the satellite neighbourhood with ▲ Professional one-service approach for highly professional ground services: prospects in the region, allowing African local and national TV broadcasters to concentrate • Classic TV broadcasting on content, whilst relying on the professional • Promoting national analogue to digital transitions services of SES at adequate price levels
Implementation ▲ Infrastructural set-up of high-end technical equipment directly in the region ▲ Teaming with proven local and national ground services partners SES reaches ~4 million TV • In Lagos/Nigeria: Computer Warehouse Group households in Nigeria and Ghana • In Accra/Ghana: partnership with K-NET (with a ~300 thousand annual growth in Ghana since the launch of the platform in 2009) ▲ Imposing similar quality levels as in other SES regions SES distributes ~50 channels
Investor Day 2016 97 Case study: complementing satellite with terrestrial
▲ Creating a pan-European TV Broadcast and VoD platform for expatriates in Europe
▲ Providing turnkey solution and allowing HOME:TV to concentrate on its core business
Content Program / Delivery via Processing & Playout / CAS / Marketing & Billing sourcing packaging satellite DRM CDN Sales
1 HOME:TV established relationships to content partners worldwide (with the active support of SES)
2 Putting together attractive packages that match the end customers’ demand is a key competence of HOME:TV
3 Feeding, encryption, multiplexing, up-link and downlink of the TV signal provided by SES
4-5 Playout, Set-Top Boxes, Smartcard Handling, Conditional Access System, App development, DRM, CDN by SES
6 Execute rollout, build the brand and acquire new subscribers by HOME:TV
7 Customer Relationship Management (CRM) and Subscriber Management System (SMS), lettershop, billing by SES
Investor Day 2016 98 Growth potential on all parts of the value chain
▲ SES’s world-leading media services provider well placed as a key growth accelerator
Next generation back-end Infrastructure provision Traditional Back-end provision provision Satellite capacity revenue Playout, MAM and teleport OVP and ancillary services revenue USD billion(1) USD billion(1) USD billion(1) 9.6 17.5 8.3 6.9 6.3
9.6
2015 2020 2015 2020 2015 2020
1) Source: NSR
Investor Day 2016 99 SES technology framework
Martin Halliwell, CTO
Investor Day 2016 Robust foundation of fleet and ground segments
SES’s global satellite fleet and access network
Industry-leading network performance: Unsurpassed technical understanding: >99.99% network availability 8.9/10 rating of SES’s technical excellence in customer service
Investor Day 2016 101 Expanding in a scalable and flexible manner
2016 2017
SES-10 SES-11 SES-12 SES-14 SES-15 SES-16
Fully Payload type Shaped Shaped Shaped Shaped Shaped steerable
HTS payload 14 GHz 12 GHz 10 GHz
Digital processing 2.6 GHz 2.5 GHz
Satellite propulsion Chemical Chemical Electric Electric Electric Chemical
Launch vehicle Falcon 9 Falcon 9 Ariane 5 Falcon 9 Ariane 5 Falcon 9
Combining industry-leading procurement standards with the latest innovations Adopting an incremental approach to SES technology evolution
Investor Day 2016 102 Case study: delivering scalable and flexible satellite coverage
SES-14 (Latin America) delivers flexible, hybrid capacity and capabilities
C-band coverage for video
Ku-band wide-beam and HTS for IFC/IFE
Supporting NASA-funded GOLD hosted-payload
C-band (wide beam) coverage Ku-band (spot beam) coverage Ku-band (wide beam) coverage
Investor Day 2016 103 Driving further efficiencies through innovation
Conventional discrete Fully digitised Fully digitised payload component payload satellite payload
Modular satellites
Satellite life extension
Access to space Replacing >1,000 frequency converters, switches and filters
Eliminating 100’s of metres in waveguide and coaxial cable
Increasing in-orbit efficiency and optimising spectrum utilisation
Investor Day 2016 104 Driving further efficiencies through innovation
Rendezvous Fully digitised Courier courier with satellite payload proceeds to host’s host position
Modular satellites
Satellite life Transfer payload to extension host Courier Launch proceeds to Access to space courier its position with extra Courier on payload position
Creating a more fluid and flexible service format by changing the static nature of satellites
Investor Day 2016 105 Driving further efficiencies through innovation
Fully digitised Method one: satellite payload Re-fueling vehicle meets satellite
Modular satellites
Satellite life extension Method two: Buddy satellite attached to satellite Access to space
Satellites often remain operable well beyond fuel depletion
Investor Day 2016 106 Driving further efficiencies through innovation
Fully digitised satellite payload
Modular satellites
Satellite life extension Source: SpaceX
SpaceX building rockets faster, increasing launch frequency Access to space Re-using rocket’s first stage could reduce cost further
Modular design and more powerful engines improving time to market and flexibility (Ariane 6, MHI H-III)
Investor Day 2016 107 Executing a future-proof approach
Establishing satellite at the heart of the digital ecosystem
Future Exchangeable payloads 2019 in orbit Fully processed Advanced launch Now payloads Programmable Electric propulsion Full digitisation transponders Selective payload Re-usable launch Accelerated GEO/MEO processing vehicles synergies New launch vehicles GEO/MEO synergies 16% reduction in Targeting further 15-20% normalised CapEx reduction in normalised realised (on track for CapEx 2018-2022 20% reduction by 2018)
Investor Day 2016 108 Enabling SES’s market verticals
Diverse, cost-effective and timely Video access to space
Integrating agile, adaptable capacity into the customer’s network Enterprise
Reducing cost per bit and in-orbit price
Mobility Ubiquitous coverage and flexible capacity allocation
Extending the life of SES’s space assets Government
Investor Day 2016 109 SES financial framework
Padraig McCarthy, CFO
Investor Day 2016 Executing SES’s growth strategy within a disciplined and consistent financial framework
Delivering … robust profitability and financial returns
Self-funding … profitable, organic growth
Profitable … execution of selective M&A growth
Optimising … financing decisions and prudent use of cash
Investor Day 2016 111 Delivering robust profitability and financial returns: Globalisation
Group revenue by region (at constant FX and same scope) EUR million
+2.5% (Digital +4.5%) CAGR 2000 ▲ Strong revenue CAGR of +8% in 30% +8% CAGR international region from 2007 to 1500 19% 2015 19% -2% CAGR 28% ▲ Significant margin improvement 1000 from globalisation, supported by
51% +2% CAGR OpEx and CapEx efficiency 500 53% (Digital +6%) ▲ Ongoing revenue growth through
0 globalisation improving profitability 2007 2015 Europe North America International
81.5% 84.0%
Infrastructure EBITDA Margin
Investor Day 2016 112 Delivering robust profitability and financial returns: Verticalisation
Group revenue proportionality by vertical (at constant FX and same scope)
Y-on-y growth -3.2% ▲ Accelerating Mobility growth in 4% 2% 2% 3% +24.5% aeronautical segment and generating 12% 13% +3.3% strong backlog 15% -19.2% 18% ▲ Government business benefits from U.S. government stabilising and non- U.S. government doubling +2.2% 64% 67% ▲ Strategy addressing changing dynamics in Enterprise ▲ Video growth from emerging markets 2014 2015 expansion, HD / UHD transition and
Video Enterprise Government Mobility Other(1) value-added media services expansion
▲ Global Video sustained growth, with leading position in data centric verticals, reinforced by O3b acquisition
1) “Other” includes European transponder sales in 2014 and 2015 as well as development and other related revenue not directly attributable to a vertical
Investor Day 2016 113 Delivering robust profitability and financial returns: Innovation
Normalised CapEx development (at same scope) EUR million ▲ Economies of scale and design reduce 600 Normalised CapEx by 16%(1) 540 535 515 (1) 495 ▲ Scope extension (SES-16 and HTS 475 455 435 capacity) adds EUR 40 million p.a. once satellites launched ▲ All calculations are based on 15 year design life
60 60 60 60 ▲ Additional upside with 12 satellites(2) having additional life extension 2014 2015 2016 2018 Primary satellites Non-satellite
37 -5 32 unch. 32 Primary satellites (no.) 220 +2% 224 -4% 214 Cost per satellite (EUR million)
Well on track to deliver targeted savings of up to 20% by 2018 for Normalised satellite replacement CapEx
1) Savings driven by reduction of number of primary satellites (five satellites) and related cost (-3%); assumed design life 15 years
Investor Day 2016 114 Delivering robust profitability and financial returns: Services
European Services businesses returns(1)
30% Services business % 26% • Represents 26% of total revenue 20% 18% • Procures transponder capacity 10% • Delivers growing returns 5% 3% 0% • Is accretive to SES group returns 2009 2010 2011 2012 2013 2014 2015
Return on Capital Employed Return of Net Assets
“Pull-through” revenue EUR million 239 “Pull through” revenue tripled since 2007, supporting core business, returns and 88 strategy Additional SES transponder capacity to be used by RR Media 2007 2015
Services activities optimise RoIC for the business and the group 1) Including “pull-through” (after charging for transponder capacity)
Investor Day 2016 115 Delivering robust profitability and financial returns: Foundations
Backlog development(1) EUR billion 7.6 7.5
6.8 ▲ Strong backlog supports future revenue ▲ Average contract length of over eight years
2011 2013 Q1 '16
Free Cash Flow development (FCF) 890 EUR million 726 ▲ FCF improvement driven by topline growth 44% 39% and lower CapEx ▲ Strong cash conversion to EBITDA 230
13% 2011 2013 2015 Free Cash Flow (FCF) before financing activities FCF as a % of group revenue
Strong key financials reflected in Net debt / EBITDA ratio (2.5x), RoE (22%) and RoIC (10%)(2)
1) Backlog represents fully-protected or net backlog and does not include backlog from RR Media and O3b 2) At end 2015; RoE = NOPAT / Equity, RoIC = NOPAT / (Equity + Debt)
Investor Day 2016 116 Self-funding profitable, organic growth: GEO - CapEx and capacity
SES’s future capital expenditure profile EUR million 740 Total 2016-2020: EUR 2.8 billion(1) ▲ Average IRR on last 20 satellite 120 570 60 500 130 475 475 programmes of approximately 14% 60 ahead of minimum hurdle rate of 10% 560 365 415 440 380 ▲ Fully funded CapEx profile and global 60 50 60 60 anchor clients underpin growth drivers 2016 2017 2018 2019 2020
Committed CapEx for Committed and uncommitted non-satellite replacement and incremental growth capacity CapEx (infrastructure and services) Uncommitted satellite replacement CapEx and incremental growth capacity
+8 +180 SES’s procurement programme +8 36-MHz-equivalent +16 +68 transponders ▲ Growing emerging market capacity Plus 36 GHztotal HTS capacity (Broadly equivalent to ~250 TPEs, assuming by 21%, total capacity by 12% 4 MHz of SES- 12/ - 14/- 15 HTS capacity = +27 +0 1 MHz of wide beam data capacity)
+53 ▲ Dedicated wide- and spot-beam capacity under procurement to
satisfy customer specific needs SES-9 SES- 10 SES-11 SES-16/ SES-15 SES-12 SES- 14 Total Launched H2 2016 H2 2016 GovSat-1 H1 2017 (2) H2 2017 (2) H2 2017 (2) End- 2017 (2) (OSD: 1 Jun ‘16 ) H1 2017(3) Europe North America (+16 txps) International (+164 txps) 1) Based on FX rate of EUR 1: U.S. Dollar 1.10. Including capitalised interest, and excluding financial or intangible investments; as of closing date 2) SES-12, SES-14 and SES-15 will be positioned using electric orbit raising, with entry into service some four to six months after launch date
Investor Day 2016 117 Self-funding profitable, organic growth: GEO - Revenue
2016 2017 2018
Global Video SES-9(1) and SES-10
EUR 250 - 300 Next Generation million of Enterprise & Mobility SES-12, SES-14, SES-15 potential (wide-beam / HTS) annualised revenue by 2021(2) (Up to 15% of SES Next Generation FY 2015 revenue) Government (Non- SES-16/GovSat-1 US)
▲ All satellite programmes have anchor customers at time of procurement and have initial fill-rate of approximately 30% at OSD(3) ramping up to around 75% ‘steady state’ three years after OSD
1) SES-9 in service as of 1 June 2016 2) Annualised incremental revenue at average “steady-state” utilisation of around 75% (based on FX rate of EUR 1: U.S. Dollar 1.10) 3) Operational Service Date
Investor Day 2016 118 Profitable execution of selective M&A growth: GEO - RR Media
Revenue contribution by region and revenue % / EUR million
SES PS(1) MediaCo(2) ▲ MediaCo pro forma doubles revenue ▲ Pro forma EBITDA margin of MediaCo of 2% 30 approximately 20% % ▲ MediaCo transponder “pull-through” of 120 240 70 EUR 120 million, of which approximately 98 % half procured from SES, leaves upside % potential Europe North America and International
Backlog development EUR million 500
▲ Backlog increases to EUR 0.5 billion 300 ▲ Representing two years of MediaCo
revenue
RR Media complements SES PS and accelerates topline growth, earnings accretive from first year
Generates an IRR in excess of SES’s minimum hurdle rate of 15% for services investments
1) SES Platform Services 2) Merged entity of SPS PS and RR Media
Investor Day 2016 119 Profitable execution of selective M&A growth: MEO - O3b Highlights
Acquisition exemplifies lowest risk possible M&A SES move SES to pay USD 730 million to increase ownership from 49.1% to 100% to 100% Brings cumulative investment to USD 1 billion (EUR 0.9 billion) stake in O3b(1) On completion, SES will consolidate around USD 1.2 billion of O3b net debt IFRS accounting gain of around USD 500 million to be recognised on completion
IRR pre synergies in excess of SES’s minimum hurdle rate of 10% for infrastructure investments Business expected to be free cash flow(2) and EPS accretive to SES in 2018 Delivering based on revenue growth potential and significant financial and other synergies on SES’s Proceeds of EUR 1.65 billion from equity raise and hybrid bond issue will be used financial to finance acquisition price and refinance O3b’s most expensive debt framework Financing instruments and size affirm commitment to investment grade credit rating; Moody’s and S&P affirmed (BBB/Baa2) with ‘Stable’ outlook SES maintaining its commitment to a progressive dividend policy per share
1) Acquisition is subject to regulatory approvals and expected to be completed in H2 2016 2) Free cash flow before financing activities Investor Day 2016 120 Profitable execution of selective M&A growth: MEO - O3b - Revenue
O3b’s satellite fleet targeted to reach a 20-satellite constellation by 2020 Number of O3b satellites in operation and as in-orbit back-up
Revenue per satellite(1): USD 25 - 32 million (1) Revenue per satellite : 20 Constellation growing from 12 to 20 USD 20 - 29 million 3 satellites Revenue per satellite(1): 16 USD 11 - 24 million 2016 revenue to double to USD 100 3 12 million 3 Annualised revenue per satellite 17 increases to USD 32 - 36 million at 13 ‘steady-state’(2) 9 EBITDA margin to ramp up to low 70’s by 2021/2022 2016/2017 2018/2019 2020/2021 Positive EBITDA achieved in May ’16 Satellites in operation Back-up satellites Launch dates Sats 13-16 in Q1 ’18, Sats 17-20 in Q4 ‘19
Modular approach increases constellation efficiency as new satellites are added Further upside from additional satellite procurements
1) Indicative range of revenue per operational satellite 2) Based on constellation of 20 operational satellites at ‘steady-state’ utilisation (which is expected to be achieved around three years after satellite’s launch)
Investor Day 2016 121 Profitable execution of selective M&A growth: GEO + MEO - Synergies
Consistent delivery of substantial synergies EUR 53 million in 2017 rising to EUR 106 million EUR million in 2021
106 Combinational and transformational synergies • Commercial 86 24 • Product Development 14 5 5 12 • Operational 7 53 • Financial 5 5 3 72 82 Synergies will be delivered 60 65 • SES and O3b Tie-up implemented at closing 40 48 • Building on SES and O3b strong management and operational capabilities 2017 2019 2021 Does not include impact from improved Commercial Product development normalized CapEx Operational Financial Synergies accretion to EPS leading to overall EPS impact: value accretion at 15 P/E ratio(1) EUR 0.12 EUR 0.19 EUR 0.23
1) Source: Bloomberg
Investor Day 2016 122 Profitable execution of selective M&A growth: GEO + MEO - Why now?
Benefits / savings of accelerated execution(1) EUR million Cash Flow NPV Impact in 2017 ▲ Executing SES’s data-centric strategy Acceleration of Operational & c.10 15-20(2) and accelerate realisation of synergies Product Development Synergies • Acceleration of operational and product development synergies Acceleration of Financial c.30 32-35 Synergies • Clear financial synergies from earlier refinancing of USD 1.2 billion O3b debt currently at 9.5% interest rate refinanced at SES interest rate (vs. only USD c.300 million Savings on Acquisition in case of 50.5% acquisition only) c.40 35-40 Price ▲ Avoidance of additional interest cost linked to later exercise of call / put-option ▲ Implied return on equity of earlier NPV of Benefits / Savings from 82-95 acquisition date of 13%-15% exceeds Acceleration acquisition hurdle rate Acquisition Price (49.5%) 650
Implied Return on Equity 13%-15%
1) Based on 15-months earlier execution 2) NPV based on 5-year impact of the acceleration of the 100% acquisition
Investor Day 2016 123 Profitable execution of selective M&A growth: GEO + MEO - EPS
EPS accretiveness in 2018 EUR per Share
• Pro forma EPS for • Negative EBITDA in 2015 increase O3b ownership • EBITDA breakeven reached in May 2016 before getting control • Impact of unwinding accelerated D&A
1.34 1.29
(0.05) +0.11
(0.36) (0.11)
EPS immediate impact post 100% acquisition and ABB: (0.46)
EPS 2015 O3b Changed from PF EPS 2015 for Consolidation of Dilution @ ABB Financial O3b EBIT Growth Operational, EPS 2018 PF 42.7% to 49.1% 49.1% of O3b losses from 50.9% Synergies 2015-2018 Product Dev't & of O3b Commercial Synergies
▲ IRR pre-synergies valuation exceeds SES’s minimum hurdle rate of 10% ▲ Equity value on USD 1.4 billion (SES paid USD 1.0 billion) ▲ One-off positive impact of IFRS accounting gain(1) would result in EPS accretion in 2016
1) IFRS accounting gain of around USD 500 million to be recognised on completion
Investor Day 2016 124 Profitable execution of organic and selective M&A growth: CapEx
O3b’s CapEx profile for next eight satellites SES’s future consolidated CapEx profile EUR million
Total 2016-2020: EUR 0.4 billion(1) (1) 820 Total 2016-2020: EUR 3.1 billion 200 80(2) 170 680 120 20 110 565 150 60 535 510 110 130 90 60 10 90 10 60 100 10 560 365 440 150 60 415 55 380 50 90 45 60 10 10 50 60 60 25 10 0 5 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 O3b - committed and uncommitted CapEx (satellite and ground)
Committed CapEx Ground CapEx Launch & Insurance 17-20 (uncommitted) Uncommitted satellite replacement CapEx and incremental growth capacity ▲ After initial 8 satellites, cost per satellite of approximately USD 80 million(3) Committed and uncommitted non-satellite ▲ Expected satellite design life of 12 years CapEx (infrastructure and services) Committed CapEx for ▲ First four satellites with favourable impact on depreciation from 2017 replacement and incremental growth capacity
Fully funded O3b CapEx programme for next eight satellites with 12 years expected design life Approximately 50% of 2016-2020 consolidated expenditure of EUR 3.1 billion yet uncommitted
1) Based on FX rate of EUR 1: U.S. Dollar 1.10. Including capitalised interest, and excluding financial or intangible investments; as of closing date 2) CapEx as of closing (assumed 1 Oct 2016) 3) Including payload, launch, insurance, ground equipment and capitalised interest
Investor Day 2016 125 Profitable execution of organic and selective M&A growth: Normalised CapEx
Normalised CapEx p.a. – SES + O3b in 2018 / 2022 EUR million 655 ▲ Current scope Normalised 2018 CapEx 120 -100 555 495 535 40 projected at EUR 535 million 595 ▲ O3b adds approximately EUR 120 million(1) 435 475 495 ▲ Target of 15%-20% reduction in consolidated Normalised CapEx from 2018 60 60 60 60 SES - Scope SES - incl. O3b SES + O3b Target SES + O3b to 2022 due to fleet scale, design and scope same change scope (2018) savings (2022) scope (SES-16 / change mid-point synergies HTS) Non-satellite Satellite
CapEx / Sales development
% based on averages (2) 40% ▲ Economies of scale and design, as well as revenue growth continuously reduce CapEx 25% 22% / Sales ratio for SES stand-alone ▲ O3b’s MEO satellite constellation further reduces capital intensity SES average SES average SES + O3b 2005-2012 2013-2020 2017-2020
1) Based on EUR 73 million (USD 80 million) cost per satellite and assumed design life of 12 years (Based on FX rate of EUR 1: U.S. Dollar 1.10)
Investor Day 2016 126 Profitable execution of organic and selective M&A growth: Revenue
2016 2017 2018 2019 2020
Video SES-9, SES-10, SES-12, SES-14, SES-15 EUR 250 - 300 (wide beam) million of potential annualised revenue by 2021(1) Enterprise SES-12, SES-14, SES-15 (HTS) (Up to 15% of SES FY 2015 revenue)
O3b Networks
Mobility SES-12, SES-14, SES-15 (HTS)
O3b Networks EUR 400 - 450 million of potential Government SES-16/GovSat-1 annualised revenue by 2021(2) (Up to 22% of SES FY O3b Networks 2015 revenue)
1) Annualised incremental revenue at average “steady-state” utilisation of around 75% (based on FX rate of EUR 1: U.S. Dollar 1.10) 2) With 17 satellites in operation and at ‘steady-state’ utilisation (based on FX rate of EUR 1: U.S. Dollar 1.10)
Investor Day 2016 127 Optimising financing decisions and prudent use of cash: Framework
Current / Target
IRR hurdle rates(1) Over 10% for Infrastructure 1 (organic & inorganic) Over 15% for Services
Over 82% for Infrastructure EBITDA margins 2 14-18% for Services
Long average maturity at around 8 years Average interest rate of below 4%(2) Debt and Interest 3 Balance of EUR/USD debt around 55%/45% Ratio of fixed/floating rate debt around 90%/10%
Net Debt/EBITDA ratio below 3.3x Financing decisions 4 Progressive dividend policy per share
Providing the basis for solid financial ratios and strong balance sheet metrics Targets reiterated after consideration of ABB / hybrid issue and full consolidation of RR Media and O3b
1) On an unlevered, post-tax basis 2) Weighted average interest rate, excluding loan origination costs and commitment fees
Investor Day 2016 128
Focusing on shareholder value and returns
Executing SES’s growth strategy within a disciplined and consistent financial framework • Delivering robust profitability and financial returns • Self-funding profitable organic growth • Profitable execution of selective M&A growth • Optimising financing decisions and prudent use of cash
Investor Day 2016 129 Disclaimer
This presentation does not, in any jurisdiction, including without limitation in the U.S., constitute or form part of, and should not be construed as, any offer for sale of, or solicitation of any offer to buy, or any investment advice in connection with, any securities of SES, nor should it or any part of it form the basis of, or be relied on in connection with, any contract or commitment whatsoever.
No representation or warranty, express or implied, is or will be made by SES, its directors, officers or advisors, or any other person, as to the accuracy, completeness or fairness of the information or opinions contained in this presentation, and any reliance you place on them will be at your sole risk. Without prejudice to the foregoing, none of SES, or its directors, officers or advisors accept any liability whatsoever for any loss however arising, directly or indirectly, from use of this presentation or its contents or otherwise arising in connection therewith.
This presentation includes “forward-looking statements”. All statements other than statements of historical fact included in this presentation, including without limitation those regarding SES’s financial position, business strategy, plans and objectives of management for future operations (including development plans and objectives relating to SES products and services), are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of SES to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding SES and its subsidiaries and affiliates, present and future business strategies, and the environment in which SES will operate in the future, and such assumptions may or may not prove to be correct. These forward-looking statements speak only as at the date of this presentation. Forward-looking statements contained in this presentation regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. SES, and its directors, officers and advisors do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Investor Day 2016