C2SAT – Financial Hearings - Fredrik Nygren, CEO February 2010
Today’s agenda C2SAT - In a nutshell 2009 – A year of change Established targets The VSAT market – Promising growth prospects The VSAT market – Service Providers The VSAT market – “Hardware suppliers” C2SATs products - Unique, patented and superior Agenda for 2010
C2SAT – In a nutshell Develops, manufactures and sells stabilized antenna systems, VSAT, for the maritime market. The C2SAT antenna is unique with a patented 4-Axis design and superior tracking performance and pointing accuracy, but also a more robust design. In 2009, the C2SAT product, developed since 2000 and first “show cased” in 2007, moved from development phase to full commercial roll -out. C2SAT, with 19 employees, has it its head office in Solna, Sweden, and production in Söderhamn, Sweden, and Singapore. C2SAT also has a sales-office in Singapore and both representationoffice and a license manufacturer in Shanghai, China. Since October 2001 C2SAT is listed on the NGM Equity Exchange with approx 5 000 shareholders.
2009 – A year of change New management team in place Restructing and reorganisation of ongoing operations New and transparant targets established Sales team in place Strengthened capital base New distributor-, service and installation partners New production sources Industrialisation of the products and quality assurance Important new reference clients - Orange Business Service and Thales
Established Targets To reach a 15 % market share. To be one of the three leading global VSAT suppliers. To post at least 50 % sales growth, quarter on quarter. To achieve a sustainable gross margin in excess of 30 %. To be cash flow positive.
The VSAT Market – Promising growth prospects In the current year the number of VSAT installations is forecast to be 4 000 Total Demand about 3 000 units, bringing the total 3 500 New Installments number of VSAT installation up to 3 000 Replacements about 10 000 units. 2 500 2 000 The maritime VSAT market is 1 500 expected to grow by 25 – 30 % per 1 000 annum over the next 3 years. 500 Thereafter, further strong growth - can be expected since market 2004 2005 2006 2007 2008 2009 2010 2011 2012 penetration will by 2012 only have reached therefore 40 %. Källa: Comsys
The VSAT Market – Promising growth prospects Increasing demand for maritime communication services favours VSAT, since user expectations are increasingly to have the same connectivity at sea as on land. Furthermore, new applications are developed on the basic assumption of full broadband connectivity. A prominent growth driver is also the ongoing shift away from Inmarsat, still the industry standard, in favour of VSAT. Inmarsat, currently has close to 200 000 installations, but limited capacity and costly pricing model, priced on volume compared to VSAT’s flat fee model. There is also an expanding VSAT replacement market, based on a life span of 5 years for a typical VSAT, with 2011 being the first year the replacement market has a significant impact on overall demand, with replacements representing close to 20 % of the total demand for VSAT.
The VSAT Market – Promising growth prospects C2AT will grow its market share together with its distributors. In 2009, C2SAT has added a number of strategically important distribution agreements. The agreement with Orange, key brand of France Telecom, is by far the most important for C2SAT’s future growth. Orange has formed a dedicated business area for maritime communication and appointed C2SAT as preferred supplier. Orange aims to be a leading player in maritime VSAT communications. Orange has the resources and a unique offering compared to established maritime operators. Orange can offer integrated terrestrial and satellite services.
The VSAT Market – The Service providers Typically, the shipowner will buy a bundled communication service package from a system integrator/telecom operator in which the VSAT antenna is included. Pricing will be based on a fixed monthly fee for a period of typically 3-5 years. At current there are about 80 system integrator/telecom operators which offer maritime communication based on VSAT solution. The 10 largest control about 70% of the market. The most important, to date, are Vizada (10%), ShipEquip (8%) and Schlumberger (6%). Up until 2008, underlying growth for VSAT solutions was driven by users within ”Cruise & Ferry” and ”Oil & Gas”, ”robust” was then not a key issue. Growth is now being driven by users in ”Commercial shipping” and ”Offshore supply ”, where robust is a key issue.
The VSAT Market – The hardware suppliers The VSAT ” hard ware market”, i.e. antennas is currently dominated by two suppliers, SeaTel Inc, with a market share of about 70% and Orbit Technology Group Ltd, with a market share of 15%. C2SAT, is one of about ten smaller VSAT antenna suppliers. C2SAT market share in 2009 was about 1%. Most of the smaller suppliers are South East Asian based and offer 3-Axis antennas , ” SeaTel look-a-likes ”, at competitive prices. Alternatively, they are highly niched players, such as Schlumberger (offshore), with 4% market share, or choose to offer other bundled services, including airtime, such as KVH.
C2SATs product – unique, patented and superior TM Four Axes Enables Accuracy and High Speed TM
C2SATs product – unique, patented and superior The C2SAT product range (C- to Ku-band) is based on a modular design, with the same software and user interface, which simplifies service and maintenance. The robust design in itself reduces the need for maintenance, expands the life-cycle and reduces cost of ownership. The 4-Axis design solves high elevation problems (the Zenith paradox), a truly unique quality. C2SAT patented solution gives superior tracking and pointing accuracy which ensures optimal use of bandwidth and higher average transmission speed.
C2SATs product portfolio 2.4m C-band 1.2m Ku-band 1.2m Ku-band - 4M
Agenda for 2010 Reach set sales targets Continue to build C2SATs organisation Continue to expand the service- and installation network To add future distributors Continued focus on quality assurance, ability to deliver and cost cutting
Q & A
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