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ISCe 2005

ISCe 2005. John Stone, Jr. Director. May 31, 2005. Runup to takeouts – or, how we got here. FSS has always had high EBITDA margins and revenue visibility to support debt. Telecom boom produced significant infrastructure overcapacity in FSS too.

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ISCe 2005

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  1. ISCe 2005 John Stone, Jr. Director May 31, 2005

  2. Runup to takeouts – or, how we got here • FSS has always had high EBITDA margins and revenue visibility to support debt. • Telecom boom produced significant infrastructure overcapacity in FSS too. • Fed intervention in the credit markets produced low rates and economic recovery that collapsed credit spreads, making debt capital cheap. • Low cost of debt and reduced need for CapEx begged for recapitalization. • Bush tax policies made dividends more attractive.

  3. FSS – Where we are today • PanAmSat – Model for success or crash test dummy? • Move to internally rationalize capacity supercharges cash flow • Restructuring leaves company highly levered • Increases equity returns • Floating rate debt => interest rate risk • Reduced liquidity => reduced flexibility • First out of the gate - up 9% since IPO • 7.8% dividend yield makes stock trade like a bond (sensitive to rates)

  4. FSS – Where we are today • SES Global – the road less taken… • Substantial cash reserves and liquidity • Aggressive fleet expansion continues • Stated appetite for acquisitions • Projecting double digit growth in 2005 and 2006 • Dividend yield of 3.1% - for now • Less financial risk, but more operational risk – plenty of rope

  5. What lies ahead? • Return of financial discipline • Tight capex budgets drive demand for “small” satellites • Capacity rationalization gradually eases transponder glut and drives increasing lease rates – growing EBITDA margins for all • Interest rate fluctuations affect the industry more than ever before • New Skies: eat or be eaten • Inmarsat: a different kind of bird

  6. Paradigm shifts – or did someone get the license on that truck? • IPTV- based services • High Definition TV • Broadband to homes, aircraft, cars? • Ancillary Terrestrial Components • WiMax • Insurance – Do It Yourself • Satellites – one bird, many slots • SpaceX

  7. Near Earth LLC • What we are: A boutique investment bank focused on satellite communications and related industries, member NASD • What we do:financings and advisory services to large and small companies • How we are different: Our industry focus allows us to be more more creative than larger Wall Street firms. Our small size allows us to be more flexible. • www.nearearthllc.com

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