SKY Perfect JSAT Holdings Inc. Annual Report 2013 SKY Perfect JSAT Holdings Inc. SKY Perfect JSAT For the year ended March 31, 2013 Annual Report 2013 Better Value for a Better Tomorrow Who we are Multichannel Pay TV Business Broadcasting Please refer to the glossary at the end. Forward-Looking Statements Statements about the SKY Perfect JSAT Group’s forecasts, strategies, management policies and objectives contained in this report that are not based on historical facts constitute forward-looking statements. These statements are strictly based on management’s assumptions, plans, expectations and judgments in light of information currently available. These forward-looking statements, facts and assumptions are subject to a variety of risks and uncertainties. Therefore, actual results may differ materially from forecasts. Space and Satellite Business Communications Annual Report 2013 WhoMultichannel wePay are TV Business Japan’s Largest Multichannel Pay TV Platform We provide a wide variety of content ranging from sports, mov- ies, and music to TV dramas and anime transmitted via satellites and optical fi ber networks. Dedicated SKY PerfecTV! tuners built into digital TVs in Japan enable quick and easy access to our en- tertainment broadcasts. As a pioneering developer of numerous digital channels in Japan, we continue to create value by provid- ing a better, more enriching TV viewing experience. Broadcasting Space & Satellite Business Asia’s No.1 and Japan’s Only Satellite Operator We own and operate 16 satellites, making us the largest sat- ellite communications company in Asia. Our business centers on providing satellite communication services for corporations and government agencies in Japan, while also actively develop- ing our global operations including satellite connection sales in Asia and joint venture businesses in North America and Russia through our partnership with Intelsat. Aware of the strong public interest nature of satellite communication services, we contin- ue to enhance value by providing safety and security for society. Communications 01 01 MARKET & POSITION Multichannel Pay TV Business Largest subscriber base in the Japanese pay TV market The Japanese multichannel pay TV market is slowly but steadily growing as a strong offering of a wide variety of specialty channel needs is appealing to diverse viewer interests and preferences. SKY PerfecTV! boasts the largest subscriber base in the expanding pay TV market. Penetration Rate of Multichanel Pay TV Major Pay TV Services in Japan (As of March 31, 2013) Multichannel Pay TV Market in Japan 3.8 million (%) 100 J:COM TV (Unit: Thousands of subscribers) subscribers 90 15,000 Type DTH DTH Cable TV IPTV CATV IPTVs 80 (and FTTH) (and FTTH) (FTTH) 12,000 1,090 980 1.96 1.76 3.11 695 900 Subscribers n/a 462 60 millions millions millions 3,814 3,829 50 (HD:1.03millions) 9,000 3,666 3,688 3,725 channels 270ch * 50ch 40 70ch (HD:120) 75ch (Basic) 24* 68.7% 6,000 STB Not 20 required Required Required Required 7,142 7,243 7,429 7,940 7,950 3,000 0 VOD SKY PerfecTV! J:COM Video JAPAN UK USA Service On-Demand On-Demand Service 0 * Multichannel pay TV subscribers for Japan as above refers to the sum total of 2009 2010 2011 2012 2013 multichannel cable TV subscribers, SKY PerfecTV! subscribers, IPTV subscribers Years ended as of March 31 (except for NHK BS subscribers). * Applicable to “OTOKU PLAN,” which includes terrestrial and BS broadcasting. Fiscal 2012 Sources: Materials from the Ministry of Internal Affairs and Communications,HOSO JOURNAL, See a November 2011 report from Goldman Sachs on household penetration rates for pay TV in the UK and US. Revenues Total and our own research. ¥159,610 million *The percentages are calculated on Space & Satellite Business the basis of the figures of sales to external customers (excluding internal transactions) The No. 1 satellite operator in Asia, No. 5 in the world Our 16 satellites make us the largest satellite operator in Asia and fifth in the world. Satellite Operators Ranking*1 in the Global Satellite Market 31.3% 16 satellites Demand Forecast in Global Satellite Market (2012–2019E) ■ Satellite Transponders Demand Forecast in the world: Ku/C-band in TPEs* Luxembourg Luxembourg France Canada Western Europe Russia CIS North America 2,610 2,410 1,663 846 *3 675 to 664 393 to 647 905 to 866 Fiscal 2012 603 Revenues*2 CAGR:(0.2)% Eastern Europe CAGR:7.4% CAGR:(0.6)% (US$ in millions) 5th 334 to 420 CAGR:3.3% Satellites in orbit 54 53 31 14 16 South East Asia ME & North Africa 419 to 618 545 to 585 CAGR:5.7% Sub Saharan Africa Australia & Pacific Latin America *1 Companies listed here are fixed satellite services (FSS) operators (exluding MSS operators) CAGR:1.0% *2 The above revenues are in millions of U.S. dollars for the year ended Dec.31, 2012, exluding SKY Perfect 696 to 857 225 to 250 838 to 1,176 JSAT. Figure for the company is only for the year ended Mar 31, 2013. CAGR:3.0% *3 The revenue figure for SKY Perfect JSAT represents sales of its Space and Satellite Business only. CAGR:1.5% CAGR:5.0% The translations of yen amounts into U.S. dollar amounts are for the convenience of readers outside Japan and have been made at the rate of JPY93.99 to $1, the approximate rate of exchange at March 31, 2013. * Equivalent to 36MHz Transponder Sources: Euroconsult – Satellite Communications and Broadcasting Market Source: Spacenews dated July 8th, 2013 * : Service areas of SKY Perfect JSAT Corporation. Survey by way of Goldman Sachs’s discussion materials 02 SKY Perfect JSAT Holdings Inc. A Market with substantially more room to grow The Japanese Pay TV market still has substantial room to grow as the household penetration rate for multichannel pay TV broadcasts is still lower in Japan than in Europe and the United States. Penetration Rate of Multichanel Pay TV Major Pay TV Services in Japan (As of March 31, 2013) Multichannel Pay TV Market in Japan 3.8 million (%) 100 J:COM TV (Unit: Thousands of subscribers) subscribers 90 15,000 Type DTH DTH Cable TV IPTV CATV IPTVs 80 (and FTTH) (and FTTH) (FTTH) 12,000 1,090 980 1.96 1.76 3.11 695 900 Subscribers n/a 462 60 millions millions millions 3,814 3,829 50 (HD:1.03millions) 9,000 3,666 3,688 3,725 channels 270ch * 50ch 40 70ch (HD:120) 75ch (Basic) 24* 68.7% 6,000 STB Not 20 required Required Required Required 7,142 7,243 7,429 7,940 7,950 3,000 0 VOD SKY PerfecTV! J:COM Video JAPAN UK USA Service On-Demand On-Demand Service 0 * Multichannel pay TV subscribers for Japan as above refers to the sum total of 2009 2010 2011 2012 2013 multichannel cable TV subscribers, SKY PerfecTV! subscribers, IPTV subscribers Years ended as of March 31 (except for NHK BS subscribers). * Applicable to “OTOKU PLAN,” which includes terrestrial and BS broadcasting. Fiscal 2012 Sources: Materials from the Ministry of Internal Affairs and Communications,HOSO JOURNAL, See a November 2011 report from Goldman Sachs on household penetration rates for pay TV in the UK and US. Revenues Total and our own research. ¥159,610 million *The percentages are calculated on the basis of the figures of sales to external customers (excluding internal transactions) Global market growth led by Asia and Oceania Satellite communications business is expected to continue growing, with Asia at the forefront of the growth. We will expand operations by leveraging our strong position as the largest satellite operator in Asia and enter into collaborations and partnerships with other operators to promote our global development. Satellite Operators Ranking*1 in the Global Satellite Market 31.3% 16 satellites Demand Forecast in Global Satellite Market (2012–2019E) ■ Satellite Transponders Demand Forecast in the world: Ku/C-band in TPEs* Luxembourg Luxembourg France Canada Western Europe Russia CIS North America 2,610 2,410 1,663 846 *3 675 to 664 393 to 647 905 to 866 Fiscal 2012 603 Revenues*2 CAGR:(0.2)% Eastern Europe CAGR:7.4% CAGR:(0.6)% (US$ in millions) 5th 334 to 420 CAGR:3.3% Satellites in orbit 54 53 31 14 16 South East Asia ME & North Africa 419 to 618 545 to 585 CAGR:5.7% Sub Saharan Africa Australia & Pacific Latin America CAGR:1.0% 696 to 857 225 to 250 838 to 1,176 CAGR:3.0% CAGR:1.5% CAGR:5.0% * Equivalent to 36MHz Transponder Sources: Euroconsult – Satellite Communications and Broadcasting Market * : Service areas of SKY Perfect JSAT Corporation. Survey by way of Goldman Sachs’s discussion materials Annual Report 2013 03 BUSINESS MODEL & STRENGTHS Multichannel Pay TV Business SKY PerfecTV! is a multichannel pay TV platform linking broadcasters and subscribers and with comprehensive operations in the multichannel pay TV business, from TV channel broadcasting to customer management and sales promotion operations. Business Framework Broadcasters/Program Providers Subscribers Program/ Program/ Platform Service Packages Packages Offering various content from • Transmission/delivery of programs Programs/packages that fit their entertainment such as music, movies, • Management of subscribers lifestyle and tastes. sports and documentaries to • Provision of program information information, shopping and education • Promotions to attract subscribers Service Portfolio SKY PerfecTV! offers three service menus based on reception environment and channel lineups and differentiates its products from cable TV and other providers by specially priced basic subscription packages as well as subscription contracts for as few as a single channel. Number of Subscribers*1 (Thousands) 1,963 1,762 104 Channels (HD) 70 (35) 270 (120) 250 (88) STB Not Required Required Required *1.