The following proposal will be a strategic plan for Boeing to purchase a block buy of satellites that addresses the anticipated current and future conditions the company will face in the satellite communications market. This high level business strategy will also ensure the company remains the premier leader in the satellite industry. 

1. “Making a difference, one transponder
at a time”
- Titan Consulting
2013 Boeing Case Study Competition
SAGAR PATEL - GARY AU - TRINH PHAM - BAO LUONG
ROHULLAH LATIF

2. SataLink Proposal
Table of Content
I.
Market Research Report:…………………………………………Page 4
1.
2.
3.
4.
5.
6.
7.
8.
II.
Satellite Regulation
The Satellite Industry In Context
2012 Satellite Industry Revenue
Satellite Industry Segments Surveyed
Swot Analysis
Competitors
Current/ State of SataLink
Demand Factors
Possible Strategies:.................................................Page 10
1. Business Strategies:
a. Option 1: Short-term (2013-2022)
b. Option 2: Mid-term
(2013-2025)
c. Option 3: Long-term (2013-2030)
2. Long-Term Debt Financing
3. Comparing The Options
4. Solution ( Option 3: Long-term )
5. Block Buy Schedule
6. Old Debt and New Debt
7. Insurance Satellite
8. The Net Present Value
III.
Risk Management:...................................................Page 17
1.
2.
3.
4.
IV.
Operation
Insurance
Technology
Space Debris and Solar Storm
Merger Proposal:…………………………….……………………..Page 19
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3. SataLink Proposal
Objective:
The following proposal will be a strategic plan for SataLink to
purchase a block buy of satellites that addresses the anticipated
current and future conditions the company will face in the satellite
communications market. This high level business strategy will also
ensure SataLink remains the premier leader in the satellite
industry.
3

4. SataLink Proposal
I. Market Research Report
1. Satellite Regulation
The Satellite Industry Association (SIA) was formed in 1995 by
several major US satellite companies as a forum to discuss issues
and
develop
industry-wide
positions
on
shared
business,
regulatory and policy interests SIA has established active working
groups involved with a host of policy issues including:

Regulatory issues (satellite
and regulatory policy);

Government services, public safety, export control policy,
International Trade issues.
licensing,
spectrum
allocation
SIA is now a recognized focal point for the U.S. satellite industry
in Washington, D.C., representing and advocating industry
positions with key policy makers on Capitol Hill and with the
White House, Federal Communication Commission and most
Executive Branch departments and agencies.
2. The Satellite Industry in Context:
The satellite industry is a subset of both the telecommunications
and space industries. Satellite industry revenues represent 61% of
space industry revenues.
Satellite
Industry
$177.3
Billion
Space
Industry
$289.8
Billion
Overall Global
T l e c o mm u n ic a t i on s
e
I nd u s t r y
$4. 23 Tr i lli o n
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5. SataLink Proposal
3. 2012 Satellite Industry Trend Summary
4. Satellite Industry Segments Surveyed
Satellite Services
Satellite Television
Satellite Radio
Satellite Broadband
Fixed Satellite Services
• Transponder agreements
• Managed Network services
Mobile Satellite Services
• Mobile Data
• Mobile Voice
Remote Sensing/Imaging Services
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6. SataLink Proposal
Spaceflight Management Services
Satellite Manufacturing
• Satellite Manufacturing
• Parts, Components, and
Subsystems
Launch Industry
• Launch Services
• Launch Vehicles
Ground Equipment
• Network Equipment
Gateways
Control Stations Very Small Aperture Terminals (VSATs)
• Consumer Equipment
Direct Broadcast
Satellite (DBS) Dishes Mobile satellite terminals (including
satellite phones) Digital Audio Radio
Service (DARS) Equipment
Global Positioning
System (GPS)
Stand-alone Hardware
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7. SataLink Proposal
5. Swot Analysis
Strength
•Trustful and Superior
Partner with Boeing
•Positive cash flow
•Rapidly decreasing
financial risks
•Top 5 company in the
satellites services
Weakness
•Segment limited
( fix satellites services)
•Can not issue a new stock
•$3.25B debt
•Huge capital investment
Opportunities
•Extra orbital slots that lead
to us have more room to
grow
•Renting satellites
•Strategic alliance,
partnership
•Increase market demand
•Innovation in technology
Threats
•Competitive Market
•Need of a Global Network
for Customer Attraction
•Volatility in long-term
Demand
6. Competitors
Europe:
Intelsat S.A. (Luxembourg)
Eutelsat (France)
GlobeCast (France)
Hispasat (Spain)
Arqiva Broadcast & Media (UK)
Americas:
Telesat (Canada)
Harris CapRock (USA)
EchoStar Satellite Services (USA)
Asia
SingTel Satellite (Singapore)
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8. SataLink Proposal
7. Current/ Future of Satalink
8. Demand Factors:
Worldwide Satellite Services revenue expanded at 6% in 2011,
slightly slower than the 9% growth experienced in 2010 .
Consumer Satellite Television services (DBS/DTH), are
comprised of more than 80% of all Satellite Services revenues with
a posted growth of 7%. Globally, 7.3 million satellite paying TV
subscribers were added in 2010—mainly in emerging Asian
markets—bringing the world total to about 154 million. The
number of U.S. satellite paying TV subscribers grew 5%,(37
million) maintaining their one-quarter share of the global
subscriber base.
Satellite Radio (DARS) revenues also grew by 7% in 2011,
exceeding 3 billion for the first time. Nearly 1.7 million
subscribers were added, an 8% increase. Satellite Radio remains
primarily a North American market.
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9. SataLink Proposal
Satellite Broadband service revenues increased from $1.1 billion
in 2010 to$1.2 billion in 2011.
The U.S. continues to account for about 70% of global
satellite broadband revenues
Global Transponder Agreement revenues increased from $11.1
billion in 2010 to $11.3 billion in 2011, a 2% growth rate. Revenue
growth was evident across companies serving different regions .
Managed Services revenues grew 9%, from $3.9 billion to $4.3
billion. Between 2006 and 2011, Managed Services revenues nearly
doubled.
Mobile Satellite Services revenues grew by 4%, from $2.3 billion
in 2010 to $2.4 billion in 2011
Revenues from remote sensing imagery products and services
grew about 10%, from $1 billion in 2010 to $1.1 billion in 2011
Demand Reference
Source: Futron
Product Cycle
•
America, Europe, Asia: Developed Market
•
Africa/Middle East: Developing Market
•
Africa/Middle East Growth: 6 -7 %
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10. SataLink Proposal
II. Business Strategies:
1. Three proposed plans
 Short-Term (2013-2022)
 Medium-Term (2013-2025)
 Long-Term (2013-2030)
• How we analyzed:
 Region 1, Region 2, Region 3
Option 1: Short Term (2013-2022)
•
7 Satellites – Replacing 10 Satellites
 800M: 5
 1000L: 2
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11. SataLink Proposal
•
•
•
•
 3 Spare Orbit Slots
Average Transponder Fill Rate: 87.32%
 71.54%-100.00%
NPV: $2345.3 M
Pays off Old Debt in 10 years (2013 -2022)
 $325M/year
Positive Cash Flow after Debt Retirement
Option 2: Medium Term (2013-2025)
•
•
•
•
•
6 Satellites – Replacing 10 Satellites
 800M: 2
 1000L: 4
 +1 1000L – Spare satellite
 4 Spare Orbital Slots
Average Transponder Fill Rate: 85.39%
 64.97%-100.00%
 NPV: $3963 M
Pays off old debt in 10 years (2013 -2022)
 New Debt: $680 M
 40%from 2014-2017 – paid off during 2019-2022
Positive Cash Flow after Debt Retirement
Additional Expense: Spare satellite + storage
Option 3: Long Term (2013-2030)
• 11 Satellites – Replacing 15 Satellites
 800M: 4
 1000L: 7
 +1 1000L – Spare satellite
 4 Spare Orbital Slots
• Average Transponder Fill Rate: 81.65%
 51.67%-99.80%
 NPV: $6323 M
• Pays off debt in 10 years (2013 -2022)
 New Debt: $575 M
 40% from 2014-2017 – paid off during 2019-2022
• Positive Cash Flow after Debt Retirement
• Additional Expense: Spare satellite + storage
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12. SataLink Proposal
2. Long-term Debt Financing
Debt-to-Interest
14.00%
12.00%
$3,000,000,000.00
10.00%
Interest Rate
$3,500,000,000.00
$2,500,000,000.00
8.00%
$2,000,000,000.00
6.00%
$1,500,000,000.00
4.00%
$1,000,000,000.00
2.00%
$500,000,000.00
0.00%
$Debt Value
Year
US Prime Rate
Total Interest
Total Debt Outstanding
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13. SataLink Proposal
2. Comparing the Options
Net Present Value Comparison
$7,000.0
$6,323.0
Dollars ( Millions)
$6,000.0
$5,000.0
$3,965.0
$4,000.0
$3,000.0
$2,345.3
$2,000.0
$1,000.0
$234.5
$304.8
$351.3
Option 1 (2013-2022)
Option 2 (2013-2025)
Option 3 (2013-2030)
$Options
Options Fill Rate
120.00%
100.00%
80.00%
Fill Rate 60.00%
Average
40.00%
20.00%
0.00%
Option 1
Option 2
Option 3
Options Available
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14. SataLink Proposal
4. Solution: Option 3 (2013-2030)
•
•
•
•
•
11 Satellites – Replacing 15 Satellites
 800M: 4
 1000L: 7
 +1 1000L – Spare satellite
 4 Spare Orbital Slots
Average Transponder Fill Rate: 81.65%
 51.67%-99.80%
 NPV: $6323 M
Pays off debt in 10 years (2013-2022)
 New Debt: $575 M
 40% from 2014-2017 – paid off during 2019-2022
Positive Cash Flow after Debt Retirement
Additional Expense: Spare satellite + storage
5.Block Buy Schedule
Fill Rate Overview
14

15. SataLink Proposal
6. Old and New Debt
•
•
•
Old Debt: $3.25 Billion
 10 year payment plan: $325 M/Y
Problem
 2014-2017: Negative Cash Flow after Debt Retirement
Solution: New Debt - $575 M
 Financing 40% of SC/LV
 Creates positive flow after debt retirement
 Can be paid off in 4 years (2019-2022)
 $143.75 M/Y
7. Insurance Satellite
10% Launch Failure Risk and Operational Risk
 1000L in Europe ($2.2M/TS) = Decrease of $201.2 M
Operating Cash Flow per year
 Fail without Insurance Satellite: $603.6 + $120 =
$723.6 M
 Fail with Insurance Satellite: $201.2 +$120 =
$321.2M
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16. SataLink Proposal
Additional In-Orbit Insurance

18-22% of satellite costs (Source: Satellite Evolution
Group)
 1st Bulk Buy= $1,850 M
 Insurance cost: $370 M per year
8. Net Present Value
III. RISKS MANAGEMENT
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17. SataLink Proposal
4 Risks:




Operation
Technology
Insurance
Space debris and solar storms
1. Operation risks:
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18. SataLink Proposal
2. Insurance:
Issue
• Costs of insurance is more than benefits
Solution
• Purchase extra satellites instead of insurance
 Shorten the lead time to 1 year
 Decrease customer dissatisfaction
 Cost
 Resell Opportunity
 In house > Outsourcing
3. Technology
•
Technological homogeny of satellites.
• Rapid development
 Longer development cycles, total systems costs increase.
 When the technological advances take place, they can not be
pursued because design is completed long before mission is
scheduled for launch.
4. Space debris and solar storms
•
Increase in heavy satellites ( 3.4 tons ) , lightsats, minisats
that weight few hundred kilograms on the other
=> They cause danger with respects
debris.
 Increase in transmission capacity
.
• Impact probabilities for satellites
to
problem
of
space
• Assessment of damage cause by impact from space debris.
 ( 8 Impacts from LEO since 1991)
•
Average risk of collision at GEO is 1 in every 135 years.
•
Active satellites risk is reported is 1 in every 155 years.
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19. SataLink Proposal
MERGER PROPOSAL
Several Space firms have merged in order to gain a competitive
advantage and provide not just communication services but also
satellite hardware, launch services, and financial services.
(E.G. Intelsat and Eutelsat)
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20. SataLink Proposal
REFERENCES
1. Satellite Industry Association, State of the
Industry
Report(prepared
by
Corporation)(Washington, D.C., June 2011).
Satellite
Futron
2. GAO, Telecommunication : Market Development in the
Global
Satellite
Services
Industry
and
the
Implementation
of
the
ORBIT
Act,
GAO -05-550T(
Washington, D.C. Apr.14,2005).
3. FCC, Second Annual Report & Analysis of Competitive
Market
Conditions
with
respect
to
Domestic
and
International
Satellites
Communication
Services
(Washington, D.C. October 2008).
4. Federal Aviation Administration,
2011 Commercial
Space Transportation Forecast (Washington, D.C. May
2011).
5. Chartrand, Mark R (2003) Satellite Communications for
nonspecialist. Bellingham, WA: SPIERress.p.31.ISBN978 0-8194-7185-9.
6. Corporation,
F..
N.p..
Web.
2
Oct
2013.<http://www.sia.org>.
7. "SATELLITE SENTINEL PROJECT" Harvard University .
5
Oct
2013
<http://hhi.harvard.edu/programs-andresearch/crisis-mapping-and-early-warning/satellitesentinel-project>.
8.
Magan, Veronica . "Newsat to Sign $5 M of New
Teleport Contracts in Early 2014" (October 16, 2013)
October
,
16
2013
<http://www.satellitetoday.com/telecom/2013/07/29/airforce-report-outlines-threats-to-satellite-and-aerospaceindustries/>.
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21. SataLink Proposal
9. "Covering Satellite Risks" Allianz Global Corporate .
<http://www.agcs.allianz.com/insights/expert -riskarticles/covering-space-risks/>.
10.STEPHEN
CLARK.
"Covering
Satellite
Risks"
<http://www.spaceflightnow.com/news/n1109/09uarsentry/>.
11. "Space Environment and Satellite Systems " Standford
Univeristy. http://sess.stanford.edu
21

22. SataLink Proposal
If there are an y questions ,please contact
the Titan Consulting Team:
Rohullah Latif
Rohullahlatif@gmail.com
Gary Au
Garyau@csu.fullerton.edu
Trinh pham
Spham0168@csu.fullerton.edu
Bao Luong
Baoluong2011@csu.fullerton.edu
Sagar Patel
Sagarcpatel@cs u.fullerton.edu
Thank You!
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