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FROM THE GROUND UP

March 2011
Inside this Issue: Near Earth Indices - Last Twelve Months
Satellite Telecom NASDAQ New Media
Page 1: The Way We See It… 150
Satellite, Telecom and Aerospace News
140
Page 2: Guest Column: Satellite 2011, a Celebration in Halcyon 130
Times
120
Page 5: AT&T swings for the fences – winners and losers 110

Page 8: 2020 Foresight 100

Page 12: Building Blocks of the Future 90

80
Page 17: Near Earth Analysis: Market Comparables
70
Page 18: Near Earth Analysis: M&A Transactions Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar-
10 10 10 10 10 10 10 10 10 10 11 11 11

See page 17 for details on index components

THE WAY WE SEE IT…
Satellite:
Following a competitive process, EchoStar won the bidding for Hughes Communications and agreed to acquire the firm for a total
value of $2 billion. We think combining DBS and satellite broadband addresses the principal weakness of DBS (i.e. one way data)
and that international expansion of HughesNet offers EchoStar a platform to accelerate global ambitions. By vertically integrating,
the combined firm may also get a potential leg up on ViaSat/WildBlue in the United States. Charlie Ergen’s other entity, DISH
Network, bid $1.4 billion for bankrupt S-band satellite company DBSD, beating a joint bid from Harbinger and Solus Alternative
Asset Management. Orbital Sciences inked a contract to reserve hosted payloads with 20% of the data capacity on Iridium’s
planned replacement constellation, currently in development. The contract includes $10 million in non refundable payments in 2011
with a total value estimated at over $100 million by Iridium. Coming on the heels of The Boeing Company’s hosted payload
initiative and prior success on Intelsat’s UHF payload, we see hosted payloads remaining a hot topic for the foreseeable future.

Telecom:
AT&T shocked many industry observers with a stunning $39 billion offer for Deutsche Telekom’s T-Mobile USA unit. For our
commentary and much more on this, see “AT&T swings for the fences – winners and losers” in this issue. LightSquared announced
deals with Leap Wireless and Best Buy and is quoted as being in discussions with 60 parties and contract negotiations with 15
potential customers. While this is welcome news following on the huge ATC waiver from the FCC, the apparent loss of T-Mobile as
a customer, or strategic partner, due to the AT&T merger may represent an offsetting challenge. All eyes are on Sprint now.
Meanwhile, accusations of GPS signal interference continue to dog LightSquared’s planned use of its L-band spectrum, raising
speculation that Harbinger/LightSquared will re-enter the bidding for Terrestar and its S-band spectrum allocations. Telit bought
Motorola’s M2M module business for $26 million, adding additional scale and reach to the already hefty (by M2M standards) Telit.
The combined firm is expected to have over $180 million in revenue. Orbcomm agreed to acquire Alanco’s Startrak subsidiary for
$18.5 million, mostly for Orbcomm stock and forgiven debt. While vertically integrating may raise some eyebrows with some of
Orbcomm’s other customers and prospects, we think the transaction makes sense given Alanco’s importance as an Orbcomm
reseller.

Aerospace:
SpaceX scores a launch contract with SES, achieving important market validation from the conservative, risk adverse FSS
industry. Similarly, MacDonald Dettwiler and Associates (MDA) announced a first of its kind on-orbit serving contract with Intelsat
for the refueling of up to five satellites for up to $280 million. Both Virgin Galactic and XCOR Aerospace sold seats on their
suborbital vehicles to Southwest Research Institute, a major breakthrough for this nascent industry. Serial acquirer Kratos
Defense & Security Solutions Inc. picks up defense RF and microwave supplier Herley Industries for $270 million, adding
extensive capabilities to its portfolio of C4ISR products.

Hoyt Davidson John Stone Ian Fichtenbaum Rich Pournelle

hoyt@nearearthllc.com john@nearearthllc.com ian@nearearthllc.com rich@nearearthllc.com
(212) 551-7960 (646) 290-7796 (646) 290-7794 (646) 290-7794
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From The Ground Up Volume 7, Issue 2
 Guest Column: Satellite 2011, a Celebration in Halcyon Times

Business has been booming for the communication satellite industry over
the past year as the global economy recovers from recession. An
estimated 10,000 people gathered in Washington, DC from March 14 to
17 for the Satellite 2011 Conference and Exhibition.

The event provided a good opportunity to evaluate hot topics in the

Established FSS industry. In addition to the main Satellite 2011 conference the associated
companies are events included: Satellite Finance Forum 2011, Global VSAT Forum
replacing older (GVF), Engineering 2011, Mobile Satellite Users Association (MSUA-8),
satellites and and The Global Interference Mitigation Initiative.
expanding their
fleets for emerging Positive developments
markets. During 2010, service growth provided substantial increases in revenues.

Established FSS companies are replacing older satellites and expanding

their fleets for emerging markets. All of the failed and bankrupt MSS LEO
constellations are being replaced by a new generation of larger and more
capable satellites. Several new MSS services are being built for North
America and others are being bought out of bankruptcy. Multiple Ka-band
broadband satellites are being launched for broadband services
throughout the world. Satellite manufactures are building 60 to 70
commercial GEO satellites and more than 100 LEO communication
satellites.

Satellite technology has been revolutionary over the past 30 years.

Electrical power has grown to over 20,000 Watts. At the same time the
electrical efficiency has improved substantially. Traveling Wave Tube
Amplifier efficiency has leaped from less than 20% to over 66%. Payloads
Overall, the are much lighter. Propulsion system efficiency has increased by more than
capability of a factor of 10. Huge launch vehicles are now boosting communication
satellites has satellites with masses greater than 6000 kg. Overall, the capability of
increased by a satellites has increased by a factor of 10,000 since 1980.
factor of 10,000
since 1980 The industry is superheated by Export Credit Agency – ECA -- guarantees
(effectively stimulus funds) have provided low cost funds for both
established operators and new entrants.

McDonald Dettwiler (MDA) announced a satellite servicing agreement to

refuel Intelsat satellites within 3.5 years. The prospective revenue to MDA
would be $280 Million. Satellite manufacturing companies expressed the
view that the satellites are not designed for servicing and that they would
expect full payment of orbital incentives if serving were attempted. The
manufacturing companies did not believe this could be a cost effective
solution.

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From The Ground Up Volume 7, Issue 2
 Guest Column: Satellite 2011 (cont.)
DISH Networks, i.e., Charlie Ergen, has bought DBSD (formerly the ICO
GEO) satellite system out of bankruptcy.

Ka-band services have definitely become mainstream. There is wide

acceptance that the use of these frequency bands greatly expands
satellite throughput and substantially cuts the cost of transmission. Most of
The Falcon 9 the people in the industry embrace the need for better competition with
vehicle … will terrestrial alternatives. There is also an acceptance that adaptive coding
undoubtedly be can deal with rain-fade issues.
used for a number
of other There will soon be a larger number of available launch vehicles. The
commercial Falcon 9 vehicle has been selected for SES-8 and will undoubtedly be
communication used for a number of other commercial communication satellite programs.
satellite programs The Sea Launch program will be returning to service soon with a number
of launches scheduled through 2013.

A few concerns
To some extent the ECA financing is a mixed blessing. Investment is
poring into expanded capacity in all segments. This is laying the
foundation for financial problems over the next five years. We can expect
to re-enter a period of excess satellite communications capacity within the
next three to five years that will tend to reduce profit margins for several
years while the added capacity is absorbed.
• Based on fully accounted returns some FSS operators are not
profitable. Fill rates are presently healthy but utilization will drop
when the new satellite capacity is deployed.
• MSS operators are building next generation systems in L, S, and
Ka-band. The market is probably only big enough for one or two
Ka-band profitable operators. The U.S. MSS business appears to be
broadband terrestrial speculation with “free” satellite spectrum, exactly what
services are the cellular operators expected.
expanding • Ka-band broadband services are expanding capacity at an
capacity at an astronomical rate. They are struggling to keep up with expansion
astronomical on the ground.
rate… • Satellite manufacturers are busy but many are predicting that
orders will drop sharply in the next few years.
• More launch service companies are entering the market. At the
same time new launches may decline. Launch prices will
undoubtedly fall.

Operation of the LightSquared (Skyterra) system is under considerable

doubt due to the anticipated interference issues with GPS. A growing
number of government and industry groups oppose the system. Precision
GPS receivers used by the U.S. Government are wideband and would be
jammed by the system. Nobody seems to understand how this issue got
out of control. Some senior government officials expect the issue to go to

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From The Ground Up Volume 7, Issue 2
 Guest Column: Satellite 2011 (cont.)
the U.S. President. The prevailing view is that LightSquared will be
precluded from operating in certain frequencies.

Introduction of huge amounts of fiber optic capacity to the coastal regions

of Africa is having a profound impact on satellite service transponder
prices. Furthermore, several new regional operators are leasing capacity
Introduction of at lower rates to become established. Intelsat reports that lease rates for
huge amounts of cellular backhaul (which were some of the highest in the world on a $ per
fiber optic capacity MHz basis) have dropped precipitously. This could have a major impact to
to the coastal other types of satellite services.
regions of Africa is
having a profound There was widespread skepticism about the O3B system for providing
impact on satellite low-latency Ka-band bandwidth to tropical regions using a fleet of non-
service geostationary satellites. Part of the doubt arises from massive fiber
transponder prices installations. The O3B CEO has been replaced recently with the prior CEO
returning to SES.

Conclusion
The industry should enjoy prosperous times over the next two to three
years.

By Roger Rusch
TelAstra Inc.
Roger Rusch is an expert on the satellite telecommunications industry and is President of space consulting firm
TelAstra Inc. For a full set of notes from the conference contact: RogerRusch@telastra.com

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From The Ground Up Volume 7, Issue 2
 AT&T swings for the fences – winners and losers

I was working out on the treadmill. Where were you? Like a President
getting shot or 9/11, you will always remember where you were when you
first heard the news. In this case, I’m of course referring to the move AT&T
made by agreeing to buy T-Mobile for $39 billion.

Given that a company as big as AT&T has tentacles that reach throughout
the telecommunications ecosystem, and since today is a very different day
We expect from when Ma Bell was first broken up (and then partially recombined like
withering scrutiny the liquid metal robot from Terminator 2), we wanted to join the chorus of
from the analysts weighing in on this monumental transaction.
Department of
Justice … and First, let’s consider AT&T. We have always considered an AT&T/T-Mobile
from the Federal transaction as very unlikely - as we penned in our January 2010
Communications newsletter article, “While it [AT&T] would make a good fit with T-Mobile,
Commission the sheer scale of the transaction would make it very likely to attract
regulatory attention.” (See our January 2010 article “Next Moves in the
Wireless Endgame” for much more on this and other potential
transactions.) On a pro forma, post transaction basis, AT&T and Verizon
would control 80% of the subscribers in the United States. The combined
AT&T/T-Mobile would likewise control a vast spectrum portfolio of nearly
50 billion MHz-POPs – about twice as much as Verizon! We expect
withering scrutiny from the Department of Justice on the market power
effects of the former, and from the Federal Communications Commission
on the latter. In the case of the FCC, consider that in the Skyterra take
private transaction rulemaking they specifically called out AT&T and
Verizon for limits on the amount of traffic they were allowed on the system,
all in the name of preserving competition. No wonder AT&T expects the
the Federal process to take a year, or perhaps more.
government’s
desire to But, as we said above this is a different day and the Federal government’s
accelerate mobile desire to accelerate mobile broadband penetration and the tens of billions
broadband of dollars of required investment may make some previously “impossible”
penetration … may transactions quite conceivable. So, at least for the sake of discussion,
make some what if they do get it approved? Then what?
previously
“impossible” For AT&T, as they outlined so well in their release, the combination makes
transactions quite a lot of sense. AT&T and T-Mobile use the same basic technology for their
conceivable 3G networks, which will help ease integration issues. In contrast, all the
other independent cellular carriers use the same CDMA standard that
Verizon and Sprint use – making them difficult for AT&T to digest. In
addition, T-Mobile controls substantial traffic that can be backhauled over
AT&T’s terrestrial network, leading to substantial savings through vertical
integration. Consolidating tower equipment offers additional capex and
opex savings.

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From The Ground Up Volume 7, Issue 2
 AT&T swings for the fences (cont.)
From T-Mobile’s perspective, it’s heads we win and tails we win anyway.
If the deal is approved, T-Mobile gets a rich (7x EBITDA) valuation for its
shareholder – not bad considering that T-Mobile was considered one of
the weaker players heretofore. But, given the regulatory risk, T-Mobile
insisted on some fairly rich breakup provisions ($3 billion plus a measure
of 1.4 GHz spectrum) as a precondition to accepting AT&T’s embrace.
So, even if the deal founders on regulatory shoals, T-Mobile wins anyway
– with a very big pile of cash plus the spectrum it needs to roll out real 4G
…even if the deal services (as opposed to the HSPA service they’re currently pawning off on
founders on subscribers as 4G – but that’s another story…).
regulatory shoals,
T-Mobile wins For the other carriers, a supercharged AT&T/T-Mobile can’t be good
anyway – with a news. With its strong brand, substantial financial heft, the new iPhone and
very big pile of the best spectrum portfolio of the majors, Verizon is perhaps best
cash plus the positioned to receive the onslaught. Sprint is entirely another matter.
spectrum it needs While the carrier has been improving its results of late, it still remains a
to roll out real 4G lower margin outfit with a highly levered balance sheet. With its
services constrained capital structure, Sprint is poorly equipped to compete with
Verizon and AT&T on network upgrades and thus has relied on its majority
owned (though not controlled, due to the voting stock structure) Clearwire
affiliate to do the heavy lifting to build out a 4G network.

Unfortunately, Clearwire itself is rapidly depleting its cash reserves. To

date, Clearwire has supplemented Sprint’s capital with strategic
investments from cable companies looking for a quadruple play (e.g.
Comcast, Time Warner) and hardware companies (i.e. Intel) looking to
bolster the WiMax standard – and even Google. Given the weakening
position of WiMax vs. LTE, we think that Intel is likely to refrain from
further investment, and given the poor take-up of the rebranded Clearwire
service with cable customers, that too seems an unlikely source of
funding. If approved, this deal also effectively eliminates T-Mobile as a
Clearwire customer. Thus, we think (despite their protests to the contrary)
the most likely funding source for Clearwire is Sprint – which is likely to
… if AT&T can get drive a pretty hard bargain. Even so, this is going to constrain Sprint’s
approval for T- ability to do acquisitions of the remaining carriers.
Mobile, then the
relatively smaller And, speaking of the remaining carriers (i.e. MetroPCS, Leap Wireless,
Verizon certainly is U.S. Cellular and Cellular South), how does this affect their fortunes?
going to have a Here the sword has two edges – as noted above AT&T is going to be a
strong case that it tougher competitor for all of them if this deal succeeds. But, if AT&T can
should be get approval for T-Mobile, then the relatively smaller Verizon certainly is
permitted to buy going to have a strong case that it should be permitted to buy up one or
up one or more of more of these independents – all of which use the same CDMA standard
these that Verizon (and Sprint) use. Thus, we were not surprised to see positive
independents responses in the stock prices for these carriers.

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From The Ground Up Volume 7, Issue 2
 AT&T swings for the fences (cont.)
Going a bit deeper into the ecosystem, what about LightSquared? Here
the news is bad all around – combining AT&T and T-Mobile will allow the
respective networks to share spectrum, reducing their overall need. If the
deal fails, T-Mobile (which has the weakest spectrum portfolio of the big
four) gets a pile of spectrum from AT&T which should go far towards
addressing its expansion needs, making LightSquared redundant.
Granted, in this case there is a potential silver lining for LightSquared from
AT&T’s correspondingly reduced spectrum portfolio, but even there the
FCC’s restrictions on the amount of capacity that LightSquared is allowed
Consolidation of to provide to AT&T/Verizon limit the upside. Finally, regardless of what
the networks happens over the next year or so that the deal is in limbo, both AT&T and
reduces demand T-Mobile are going to pretty much be self absorbed and unlikely to do
for their services, anything with LightSquared – just when LightSquared is in the market to
vertically fund their buildout. Thank heavens LightSquared was able to announce
integrating T- their deal with Leap Wireless or it would have been a dark week indeed.
Mobile’s backhaul
into AT&T’s Elsewhere in the ecosystem, the tower companies and other
terrestrial network spectrum/backhaul plays such as Crown Castle, Fibertower, Nextwave
reduces their need and others all appear to be losers, at least for as long as the deal is
for alternative pending. Consolidation of the networks reduces demand for their services,
backhaul solutions vertically integrating T-Mobile’s backhaul into AT&T’s terrestrial network
reduces their need for alternative backhaul solutions and consolidation of
their customer increases its relative market power when approaching them
for services. While the tower companies are well funded and still sport
impressive valuation multiples, some of these smaller players are likely to
feel significant pain as they continue to seek funding.

With the epic Comcast/NBC Universal transaction now in the history

books, it’s exciting to see a deal of similar scale on the docket. As we’ve
discussed above, a lot of people (and smaller deals) are going to be
hanging on what happens next.

By John Stone
Near Earth LLC

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From The Ground Up Volume 7, Issue 2
 2020 Foresight

At Satellite 2011, one of the Audience Response System questions posed

to attendees was what the “Big Four Panel” would look like in 2020.
Possible answers included (i) no change, meaning the big four FSS
companies would still be driving the industry forward, (ii) an entirely new
set of panelists made up of entities like ViaSat, Avanti, O3B, or perhaps
even the new EchoStar/Hughes combination, suggesting a revolutionary
switch from broadcasting to point-to-point service providers, or (iii) a mix of
…our satellite
old and new. The preferred answer, by a good margin, was a mix of old
industry is at the
and new. Now at first this might seem like no big deal, after all this is an
early stages of its
industry of innovation and constant change run by visionaries and space
next evolution in
age entrepreneurs. However, had this question been asked in 2002 about
primary application
2011, the dominant answer would probably have been the big FSS
and growth driver
companies, plus or minus some consolidation, and the audience would
have been correct.

To us, the attendees’ answer is an increasing recognition that our satellite

industry is at the early stages of its next evolution in primary application
and growth driver; the first stage being international trunking for
telecommunications and the second stage being video broadcasting which
has dominated industry economics for the last two decades. The third
stage is no secret. It involves connectivity of various sorts (e.g.
residential/enterprise broadband, cellular backhaul, content delivery for
mobile broadband networks) and has been around for some time,
especially in the form of VSAT networks everywhere and satellite
“broadband” in the more developed markets. What appears to be
triggering the emergence of this secondary set of applications to primary
status is the advent of 100 Gigabit high throughput satellites (HTSs)
employing spot beam technology for frequency reuse. What the world is
beginning to recognize is that HTSs can offer decent broadband quality
services at affordable monthly subscriber rates.
there seems to be Still at an early stage of adoption and market penetration, there seems to
a growing be a growing consensus expectation that these new connectivity
consensus applications could be huge, in the same way that DTH was huge. And
expectation that none of this is lost on the FSS incumbents. Eutelsat has its Ka-Sat, which
these new is said to be doing well enough to create rumors of a second bird in the
connectivity works, SES invested in O3B, and Telesat recently acquired the Canadian
applications could Ka-band payload of ViaSat-1. It will no doubt take many years for satellite
be huge, in the connectivity applications to grow to a point where they pass broadcasting
same way that in industry importance, but the relative growth rates will clearly, in our
DTH was huge minds, favor connectivity over broadcasting going forward.

This by no means suggests that we believe broadcasting is played out,

mature and awaiting an imminent decline. It is not. However, we do
believe growth in global video channels will abate at some point due to

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From The Ground Up Volume 7, Issue 2
 2020 Foresight (cont.)
market saturation and constraints on subscriber ARPU and viewing time.
The same can be said for the forward looking growth rate for new DTH
systems fed by FSS capacity. However for the next decade we do expect
there will be many markets seeking more satellite transported video, DTH
providers interested in increasing their channel offerings and lots of SD to
be converted to HD, or 3D or ultra-HD. Yet these broadcasting growth
drivers are in full force today and generating only single digit growth rates
… once firmly for the major FSS operators. We do not see anything on the broadcasting
established the horizon to suggest that these single digit growth rates will jump. For
satellite broadband double digit growth rates it is probably time to focus more (and invest
companies will be more) on the emerging third stage of FSS.
focused more on
broadband But is this really a new third stage or just a likely future spin-off from FSS
conferences than in the same way that the DBS / DTH industry was incubated by the FSS
satellite industry before becoming its own separate business (e.g. C-band services
conferences to Ku-band dishes)? Today, the DBS/DTH industry has aggregate global
revenues in excess of the non-DTH FSS industry itself. What’s more, the
DBS/DTH guys really don’t see themselves primarily as satellite
companies, but as media companies. Same with satellite radio. Satellite
2011 is, at its core, an infrastructure conference, not a media conference.
In the same way as with DTH, FSS can be seen as incubating the satellite
broadband connectivity industry for a future spin off. And most likely, as
with DBS/DTH, once firmly established the satellite broadband companies
will be focused more on broadband conferences than satellite conferences
and looking to hybrid terrestrial / satellite models to serve their growing
base of customers.

Whether connectivity becomes a stage 3 of the FSS industry or just

another industry spun-off from FSS will ultimately depend on the business
models financed and deployed. If providers mostly follow the DBS model
…stage 3 is about and go direct to end users with company owned capacity then it will be a
more than just new industry versus a 3rd stage of FSS. ViaSat (WildBlue) and EchoStar
broadband (Hughes) are examples of this evolutionary path. If, on the other hand,
connectivity. It is connectivity providers mostly act as infrastructure owners wholesaling
also about other capacity to resellers, then it could usher in a new stage 3 to the satellite
applications like infrastructure industry. Avanti and O3B are examples of this evolution. For
wireless backhaul developing regions, a wholesale model with incumbent Teleco’s providing
and supporting end user services and regulatory clearance (e.g. landing rights in each
mobile broadband country covered) may make more sense and involve less market risk and
markets financial exposure. Our bet would be primarily direct to consumer
business models in the developed world and a mix of initially wholesale
models followed by direct to consumer models for the rest of the world, so
mostly or eventually a new spun-off industry versus a 3rd stage of FSS.

But stage 3 is about more than just broadband connectivity. It is also

about other connectivity applications like wireless backhaul and supporting
mobile broadband markets. These applications may make up the real

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From The Ground Up Volume 7, Issue 2
 2020 Foresight (cont.)
stage 3 for the satellite infrastructure industry, especially as smart phones
and tablet computers continue on their consumer rampage.

In the recent article, “Cisco Visual Networking Index: Global Mobile Data
Traffic Forecast Update, 2010-2015,” Cisco reports that global mobile data
traffic grew by 159% in 2010 and represented three times the entire global
Internet traffic of 2000. How’s that for growth? This growth is being driven
by the proliferation of data hungry devices and applications. For instance,
smart phones, which generate on average 24 times the traffic of a regular
… that global cell phone, doubled in 2010, yet still represent only 13% of global
mobile data traffic handsets. In 2010, 3 million tablet computers were in mobile use, each
grew by 159% in generating roughly 5 times the traffic of a smart phone (122 times a cell
2010 and phone). There are also 94 million laptops on the mobile network
represented three generating roughly 22 times more traffic than a smart phone (515 times a
times the entire cell phone).
global Internet
traffic of 2000. You can see where this is going. Cisco expects 7.1 billion mobile-
How’s that for connected devices by 2015 or almost one device per person on Earth. By
growth? 2015, global mobile data traffic is expected to be 26 times larger than in
2010 or a compound annual growth rate of 92%. How do those single
digit video broadcasting growth rates seem now? Perhaps of more
potential relevance to the satellite industry, the mobile-only universe of
users, is predicted by Cisco to grow 56-fold by 2015 to 788 million people.
It is these users who are most likely to benefit from some form of satellite
connectivity. Cisco also predicts that by 2015, four regions (Southeast
Asia, South Asia, Sub-Sahara Africa and the Middle East) and 40
countries (including India, Indonesia and Nigeria) will break the electricity
barrier, meaning people will have mobile network access but not electricity
in their homes. If there is an evolution to a stage 3 of FSS, supporting
mobile connectivity may be what it is all about.

Wireless backhaul from remote towers is one obvious application, but

delivering broadband content to the wireless network may become an
equally important market for satellite. We may even see “high speed”
satellite broadband delivery and connectivity directly to the mobile
…four regions and
consumer eventually. Already today we have new MSS systems capable
40 countries will
of providing medium bandwidth to handsets and Inmarsat is leading the
break the
way with three new Boeing-made HTSs to support the demand growth of
electricity barrier,
its mobile customers. In fact, MSS and FSS are becoming increasingly
meaning people
overlapping businesses as mobile bandwidth needs exceed what L-band
will have mobile
and S-band systems can generally provide and new smaller, cheaper
network access
tracking antennas bring FSS frequencies into the mobile marketplace. We
but not electricity
also note, for instance, the recent U.S. Department of Defense contract to
in their homes
Hughes Network Systems to study both on-board processing architectures
like that of Spaceway-3 and Ka-band transponded architectures like on
the new Jupiter platform for future military tactical communications-on-the-
move (COTM). Just as with the aeronautical and maritime markets, some

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From The Ground Up Volume 7, Issue 2
 2020 Foresight (cont.)
technologies developed for military applications eventually work their way
into the enterprise and then consumer markets as technologies mature,
unit production volumes increase and price points drop.
Much of this video
traffic will be short- What types of content will drive this growth in mobile bandwidth demand?
form and non- In particular, we note that Cisco believes video will go from roughly half of
linear in nature … all mobile data traffic today to two-thirds of all mobile data traffic by 2015.
It will be Much of this video traffic will be short-form and non-linear in nature
unscheduled, on whether professionally or user-generated. It will be unscheduled, on
demand, mobile, demand, mobile, time shifted and often peer-to-peer or socially networked.
time shifted and Basically, what we see happening to video is the same thing that has
often peer-to-peer already happened to music. If you have a teenager, ask them how many
or socially CDs they intend to buy this year. If they look at you like you are a
networked. dinosaur, you will get what we mean. They may still listen on occasion to a
few radio stations, but generally focus on their own play list or custom
generate Internet radio stations (e.g. Pandora, Slacker). Music is
becoming all-digital, online and a la carte, requiring less and less fixed
distribution, whether radio towers or retail stores (both have single digit or
negative growth). If you like a song, you go online and download it to your
mobile device, often from your mobile device.

Do we really think this generation or the next will treat video any
differently? The days of charging subscribers monthly fees for bundles of
100s of mostly unwatched and unwanted video channels cannot last
The days of forever. HD and DVRs may have delayed the inevitable, but a la carte
charging video, once a dream of customers and regulators a like, may finally be
subscribers getting the technology and infrastructure it needs to thrive. As stated
monthly fees for above, we do not expect this change to be a quick or revolutionary one,
bundles of 100s of but a steady evolution to a world where the standard multi-channel
mostly unwatched television offering grabs a much lower percentage of consumer hours
and unwanted compared to a mix of a la carte video, social networking, other mobile
video channels applications, Internet usage and gaming.
cannot last forever
If this connectivity and mobility driven growth is the brave new stage 3 of
the satellite industry then who will be the major players? Can’t wait to find
out, but as the audience predicted, we probably already know the names
of some of the 2020 Big Four panelists; some of the today’s major FSS
players. This is evolution after all, not revolution. Others may already be
known entities in the satellite industry like Echostar or O3B, while still
others may not even have been formed yet. Some may be terrestrial
carriers like Global Crossing, Level 3 or AT&T to get an overlay capability.
Lastly, some may turn out to have odd names like Google.

By Hoyt Davidson
Near Earth LLC

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From The Ground Up Volume 7, Issue 2
 Building Blocks of the Future

1998 just called, and it wants its technology frenzy back. All of a sudden,
the valuation and growth of the latest wave of digital media startups have
been going through the roof unlike any time since before the dot.com bust.
Multi-billion dollar revenue-run rates, stock appreciation and glamorous
movie portrayals of tech startups means that venture capitalists have gone
back to pouring $41 million into pre-revenue, pre-launch startups, a fact
…valuation and that should delight those who remember the good old days of about a
growth of the latest dozen years ago. This time around, however, a big part of the story is how
wave of digital much of the activity is not just located in Silicon Valley, but located here in
media startups New York, an indicator of how much this latest wave is linked to this city’s
have been going strengths – commerce and media. Nowadays, it’s possible in just a span
through the roof of a few weeks to witness dozens of startup pitches and tech demos in
unlike any time any number and variety of meetups, workshops and conferences
since before the dedicated to the black arts of entrepreneurship and venture investing.
dot.com bust Many of these startups and demos are hopping onto the latest wave of
digital and social media. Being in the midst of it all is certainly a gratifying
and educational experience, as long as it continues to last.

Ask entrepreneurs, VCs and angel investors about what is driving this
frenzy and they will invariably cite a new mode of entrepreneurship
sweeping the digital world. Start-ups have become much cheaper to fund
and they now scale virally through social networks - some even garnering
millions of users in a matter of weeks. Successful start-ups now achieve
relatively quick exits due to the hyperactivity of the M&A departments of
about two dozen or so of the top tech companies. Those in the mood to
opine about the macro trends in technology will cite the emergence and
convergence of a holy trifecta of mobile, social and local. App-enabled
smartphones connected on the Facebook / LinkedIn / Twitter social graph
Without the great enabled by GPS and the craze for “check-ins” is creating a whole new set
advancements in of angles from which to harness commerce and social attention.
storage capacity,
processing power While it’s hard to disagree with any of that, it’s equally noteworthy to point
and bandwidth out the role that hardware has played in all of this. Without the great
over the last advancements in storage capacity, processing power and bandwidth over
decade, many of the last decade, many of these achievements would be unimaginable. The
these largest datacenters of the late 1990s could never have handled anywhere
achievements near the data that YouTube, Facebook, Hulu and other sites now demand,
would be let alone the very many cloud-based applications built along with them.
unimaginable. Modern commodity servers and an enormous datacenter infrastructure
make this happen. Modern smartphones too, depend on the advancement
of technology. Without abundant supplies of affordable high-capacity
memory, high-powered processors, thin capacitive touch-screens, high-
density Lithium-Ion batteries, as well as cheap baseband and GPS
chipsets, mere cell phones could hardly have supported so many new
ground-breaking applications as they would not be “smart” enough.

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From The Ground Up Volume 7, Issue 2
 Building Blocks of the Future (cont.)
Not just technology but economic organization has made powerful new
hardware cheap and available in mass quantities. The rise of Electronic
Manufacturing Service (EMS) providers, enormous confederations of
mostly Asian-based electronics manufacturing facilities, has helped
Western design companies such as Apple, Motorola, Amazon, HP and
many others to turn visions and revisions of new designs intotheir millions
of units of the latest and greatest gadgets delivered to eagerly awaiting
customers latest and greatest gadgets out of mostly commoditized
hardware components. Even bookstores can now offer their own e-reader
…economic and tablet designs and products because of the EMSs. Economic nativists
organization has may object that manufacturing has left America to go overseas, but it’s
made hardware hard to argue with the value proposition. Apple, the industrial design and
cheap and marketing company, is far more profitable than any of its contract
available in mass manufacturers. Add the hundreds of billions of dollars in value added by
quantities… the latest wave of digital media giants (Facebook, Groupon, Zynga,
Foursquare, Twitter, etc…) and one cannot escape the conclusion that
there’s more value in being the designer, brander and app programmer
than it is to be the hardware maker.

Or is it? Perhaps building things shouldn’t just be the domain of enormous

EMSs in far-off lands and perhaps hardware manufacturing should be an
integral part of the digital/social revolution, not just a supporting pillar of it.
We’ve talked a lot about machine-to-machine communications in these
pages in the past, often about how the desire to connect anything,
anywhere is driving more and more traffic onto the world’s wireless
networks. But just as interesting as bandwidth demands are the multiplicity
of devices needed to connect this everything. Large hardware developers
can only meet the needs of only the broadest of markets but the world is
filled with things of every imaginable size, shape, velocity and personality.
If the “Internet of Things” is to really take off, it must leverage the market’s
imagination to enable user-generated hardware just as much as modern
social media leverages user-generated content. We are seeing the
beginning of this, as cheap, programmable and readily available
…“Internet of smartphones, enabled by custom apps are enabling sensing, tracking and
Things” must locating functions, but that is just the beginning.
leverage the
market’s Ever wondered how the U.S. Air Force processes and sorts through the
imagination to torrents of geospatial information coming down from cameras mounted on
enable user- their multitude of unmanned aerial vehicles? Well, we have, at least. A
generated recent article about the Air Force Research lab in Rome, NY discussed
hardware just as how researchers had created one of the world’s largest, fastest and,
much as modern astoundingly, cheapest supercomputers to process all that data. Their
social media secret? Over 1700 Playstation-3 game consoles linked together, the same
leverages user- devices that anyone can buy off a shelf, only strung together with custom
generated content design. It has all the power of a supercomputer at a tenth of the cost. How
about how a father and son in Brooklyn builtding a weather balloon
withcraft to take HD video payload to take pictures of the Earth from

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From The Ground Up Volume 7, Issue 2
 Building Blocks of the Future (cont.)
110,000 thousand feet? This family achievement was eEnabled by high
definition cameras, transmitters and GPS devices found in hobby shops
and put together by athe do-it-yourself ethic.

This isn’t just limited to building cheap supercomputers, homemade

satellites or custom sprinkler systems but is good for tracking devices,
In colleges and home automation equipment, smart grid applications, security devices and
home garages, any number of other machines that only the collective creativity of several
hobbyists and billion human minds can imagine. For more power users, there is
entrepreneurs beginning to emerge a class of Open Source Hardware enabled by cheap,
have been customizable microcontrollers and modules. Here in New York, a young
discovering the venture-backed startup named Bug Labs (www.buglabs.net) is developing
versatility of ready a line of interchangeable modules to allow universal hardware
to use and customization. They are surely not the only part of this movement. In
programmable colleges and home garages, hobbyists and entrepreneurs have been
microcontrollers discovering the versatility of ready to use and programmable
microcontrollers. Arduino (www.arduino.cc) boards, pictured below, were
the creation of a student team in Italy in 2005 in an effort to make
hardware creation easier for all - not just to hobbyist electronics engineers,
but to the millions of software engineers. They have since shipped tens of
thousands of boards and spawned dozens of variants and extensions. For
those who want their projects to have instant connectivity, another New
York-based startup has introduced the Netduino (www.netduino.com), an
Arduino variant with built in .NET extensions ready to be programmed. Not
a programmer and want a piece of the action? We’re sure someone,
somewhere is working on an interface that makes it as easy to make your
own device as it is to grow your own FarmVille.

…rapidly The Arduino board – cheap, simple, powerful and adaptable

decreasing price
and increasing What if users were able to make any item or device exactly how they
capabilities are want, when they want, and in as small a quantity as they want? As far as it
allowing amateurs may seems that we are from achieving thisat goal, note that one of the
to build miniature most interesting devices to come down the line recently are 3D printers,
factories devices built on the same principles as modern ‘2D’ printers, but designed
to build objects upwards from defined digital designs. Originally conceived
as rapid prototyping machines for engineers, architects and other
professions, their rapidly decreasing price and increasing capabilities are
allowing amateurs to build miniature factories. Although there are a

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From The Ground Up Volume 7, Issue 2
 Building Blocks of the Future (cont.)
number of players in the sector offering a wide variety of 3D printing
solutions, how could we resist mentioning (and showing below) yet
another New York-based startup MakerBot (www.makerbot.com), who
offers wood-paneled (!) 3D printers for only a couple thousand dollars?
Decades since it stopped being a center of production and became a
professional services hub, is this a new beginning for manufacturing in the
Big Apple? As both inhabitants and watchers of technology trends, we
certainly hope so.

The MakerBot Thing-O-Matic

Investment and adoption of new forms of media (including this latest wave
of digital/social media) are ultimately a play on the value generated from
optimizing human social and commercial interactions. Although we hardly
believe that the efficiency of human interactions will reach a maximum
anytime soon, advancements have a habit of coming in waves, usually
following the introduction of a disruptive technology. While there should be
enough energy in the current frenzy of digital/social media activity to last
at least another couple of years, the astute and far-seeing venture investor
should ask themselves what comes next. Although they say that
prediction-making is hard, especially about the future, we think there’s an
interesting lesson to be drawn from the last decade and a half.
When the dot.com
asset inflation The dot.com boom of the late 90s was one of the greatest love affairs
edifice collapsed, investors had ever had with virtuality. It wasn’t enough that the securities
investors went in themselves were representations of a future potential for wealth (an
search of inherent unreality) but that the underlying properties were as virtual as the
tangibility … Now investing public had ever seen, often being little more than websites in
virtuality is back in search of a business model. When the dot.com asset inflation edifice
fashion collapsed, investors went in search of tangibility. How better to invest in
tangibility than to buy land, houses and other real estate? We saw where
that “tangible” investing frenzy went. Now virtuality is back in fashion and
digital media startups are the hottest thing on the investing circuit. The
pendulum could swing all the way back, but why should it? The logical end

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From The Ground Up Volume 7, Issue 2
 Building Blocks of the Future (cont.)
of thesis and antithesis is not a return to thesis but to synthesis. Open
source hardware is a means to a new wave of value creation, where the
digital/social media revolution crossed with accessible commodity
hardware is creating a new wave of devices.
the collective
influence of Frequent readers of this newsletter will know that we are big believers in a
commercial-off- collection of sectors that many have long viewed as capital intensive and
the-shelf and open thus underappreciated as private investment opportunities – these include
source hardware, satellite services, emerging wireless, geospatial systems, unmanned
rapid prototyping systems and commercial spaceflight as well as and the intersections
and a lean between them. While there will always be some part of these sectors that
entrepreneurial will be capital intensive, the collective influence of commercial-off-the-shelf
mindset ought to and open source hardware, rapid prototyping and a lean entrepreneurial
drive more capital- mindset ought to drive more capital-efficient, high value solutions in every
efficient, high one of these sectors. We think that investors ought to view the ability to
value solutions leverage these components as a key aspect to success. After all, how can
you win the future if you aren’t using its building blocks?

By Ian Fichtenbaum
Near Earth LLC

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From The Ground Up Volume 7, Issue 2
NEAR EARTH ANALYSIS: MARKET COMPARABLES
Public Market Valuation Analysis of Selected Companies in the NEAR EARTH INDEX
($ in millions, except per share data) Stock Price: Enterprise Value as a Multiple of: Price as a Multiple of:
Market
Value of Enterprise LTM LTM LTM LTM Trailing Forward
3/28/11 Equity Value (a) Sales EBITDA EBIT EPS EPS (b) EPS (b)

Fixed Satellite Services (FSS)

ETL.PA Eutelsat Communications ( c) € 27.77 $8,618.32 $11,928.31 7.6x 9.6x 14.7x 19.2x 26.5x 24.5x
SESG.PA SES Global S.A. ( c) € 18.12 $10,232.89 $15,548.03 6.3x 8.5x 13.8x 13.8x 19.1x 17.7x
LORL Loral Space & Comm. Inc. € 77.49 $2,358.02 $2,192.85 1.9x 19.0x 27.2x 13.7x 17.9x 9.7x
SATS EchoStar Corporation $ 37.03 $5,055.90 $4,337.89 1.8x 11.7x 30.5x 21.8x n/m n/m
Mean 4.4x 12.2x 21.5x 17.1x 21.2x 17.3x

Mobile Satellite Services (MSS)

ISAT.L Inmarsat (f) £ 6.02 $4,440.48 $5,558.28 4.7x 8.0x 12.0x 16.9x 8.4x 8.4x
IRDM Iridium Communications Inc. $ 8.85 $621.71 $524.00 1.5x 4.1x 14.0x n/m 12.6x 11.3x
ORBC ORBCOMM Inc. $ 3.20 $136.38 $52.28 1.4x 5.6x 10.3x n/m n/m n/m
GSAT Globalstar Inc. $ 1.29 $396.47 $964.52 14.3x n/m n/m n/m n/m n/m
Mean 5.5x 5.9x 12.1x 16.9x 10.5x 9.9x

Satellite Ground Segment

CMTL Comtech Telecommunications $ 26.72 $715.83 $322.49 0.4x 2.2x 2.5x 9.3x 13.0x 24.3x
GCOM Globecomm Systems Inc. $ 11.70 $260.33 $230.88 0.9x 9.7x 15.0x 27.0x 21.7x 16.0x
GILT Gilat Satellite Networks $ 5.17 $210.11 $216.77 0.9x 15.3x n/m n/m n/m 32.3x
HUGH Hughes Communications, Inc. $ 59.77 $1,304.78 $1,879.95 1.8x 9.4x 22.0x n/m 24.6x 18.4x
ISYS Integral Systems Inc. $ 11.92 $210.51 $241.07 1.3x n/m n/m n/m n/m n/a
VSAT ViaSat Inc. $ 39.55 $1,642.91 $1,922.47 2.4x 13.7x n/m n/m 28.5x 33.0x
Mean 1.3x 10.1x 13.2x 18.2x 21.9x 24.8x

Satellite Space Segment

ORB Orbital Sciences $ 18.41 $1,072.20 $945.32 0.7x 9.4x 12.7x 22.0x 20.5x 16.1x
CDV.TO COM DEV International (d) $ 2.15 $167.92 $175.66 0.8x 10.0x 28.8x n/m 12.6x 8.0x
MDA.TO McDonald Dettwiler and Associates (d) $ 51.36 $2,155.93 $1,348.03 1.9x 7.7x 13.5x 33.4x 20.6x 18.7x
OHB.DE OHB Technologies (c ) € 13.02 $320.18 $284.84 0.4x 6.0x 8.9x 23.5x 20.7x 16.6x
Mean 1.0x 8.3x 16.0x 26.3x 18.6x 14.9x

Towers
AMT American Tower $ 50.00 $19,935.00 $24,595.11 12.4x 19.8x 31.4x n/m n/m 38.5x
CCI Crown Castle $ 40.44 $11,761.17 $18,743.74 10.0x 16.6x 31.7x n/m n/m n/m
SBAC SBA Communications $ 38.77 $4,457.00 $7,216.18 11.5x 19.6x n/m n/m n/m n/m
Mean 11.3x 18.6x 31.5x n/m n/m n/m

General Telecom
S Sprint Nextel Corporation $ 4.78 $14,282.64 $29,000.64 0.9x 5.0x n/m n/m n/m n/m
T AT&T $ 29.36 $173,549.60 $238,582.60 1.9x 6.0x 11.6x 8.8x 12.3x 11.5x
VZ Verizon Communications, Inc. $ 37.75 $106,710.95 $201,872.95 1.9x 6.2x 13.8x n/m 16.9x 14.4x
Mean 1.6x 5.7x 12.7x 8.8x 14.6x 12.9x

Satellite Broadcast (DBS and DARS)

BSY.L British Sky Broadcasting (f) £ 8.39 $23,536.68 $25,495.19 2.5x 8.5x 17.2x 18.5x 33.8x 28.0x
DISH Dish Network Corp $ 24.17 $10,712.87 $14,287.92 1.1x 4.5x 6.6x 9.5x 9.2x 9.1x
DTV DirecTV Group Inc. $ 46.16 $37,318.05 $46,512.05 1.9x 7.3x 11.9x 17.2x 14.9x 11.3x
SIRI Sirius XM Radio $ 1.72 $6,765.10 $9,395.99 3.3x 11.7x 17.8x 32.3x n/m 34.4x
Mean 2.2x 8.0x 13.4x 19.4x 19.3x 20.7x

Cable Television
CMCSA Comcast Corporation $ 24.43 $67,829.90 $93,402.90 2.5x 6.4x 11.7x 18.6x 15.7x 13.3x
TWC Time Warner Cable Inc. $ 69.91 $24,349.65 $44,730.65 2.4x 6.5x 12.0x 18.3x 15.6x 12.6x
CVC Cablevision Systems Corp $ 34.35 $10,307.40 $22,521.12 3.1x 8.9x 14.7x 23.6x 18.1x 13.9x
Mean 2.6x 7.3x 12.8x 20.2x 16.4x 13.3x

Machine-to Machine Communications

DGII Digi International Inc. $ 10.36 $260.86 $169.26 0.9x 8.4x 16.4x 28.5x 23.5x 17.9x
SWIR Sierra Wireless Incorporated $ 10.89 $338.68 $230.02 0.4x 16.0x n/m n/m 16.5x 11.3x
NVTL Novatel Wireless Inc. $ 5.49 $173.70 $104.99 0.3x n/m n/m n/m n/m 18.9x
NMRX Numerex Corp $ 9.42 $142.43 $132.60 2.3x n/m n/m n/m 30.4x 23.0x
TCM.L Telit Communications plc (f) £ 0.83 $102.19 $122.62 1.1x 20.3x n/m n/m 23.7x 9.2x
Mean 1.0x 14.9x 16.4x 28.5x 23.5x 16.1x

New Media
MSFT Microsoft Corporation $ 25.41 $213,520.23 $181,939.23 2.7x 6.3x 6.9x 10.4x 10.0x 9.2x
AAPL Apple Inc. $ 350.44 $322,769.26 $263,062.26 3.4x 11.7x 12.2x 19.4x 15.3x 13.3x
YHOO Yahoo! Inc. $ 16.58 $21,700.57 $18,997.56 3.0x 12.9x 24.1x 22.0x 22.1x 18.2x
GOOG Google Inc. $ 575.36 $184,863.17 $153,353.17 5.2x 13.0x 14.8x 21.7x 25.1x 21.8x
ERTS Electronic Arts Inc. $ 19.71 $6,583.14 $4,612.14 1.3x n/m n/m n/m 29.4x 22.9x
Mean 3.1x 11.0x 14.5x 18.4x 20.4x 17.1x

Satellite Imagery
GEOY GeoEye $ 39.64 $876.44 $1,051.24 3.2x 6.2x 10.0x 32.9x 20.3x 16.5x
DGI DigitalGlobe Inc. $ 28.73 $1,309.23 $1,466.83 4.6x 8.7x 29.9x n/m n/m 28.7x
Mean 3.9x 7.5x 20.0x 32.9x 20.3x 22.6x

OVERALL INDEX
High 14.3x 20.3x 31.7x 33.4x 33.8x 38.5x
Mean 3.1x 10.0x 16.3x 20.1x 19.3x 18.1x
Low 0.3x 2.2x 2.5x 8.8x 8.4x 8.0x

(b) EPS estimates from Thompson First Call. Near Earth does not estimate EPS and does not condone or v alidate these estimates. n/m Not Meaningful.
(c ) Conv erted to US $ from Euro at an ex change rate of 1.4133 US $ per Euro. n/a Not Av ailable
(d ) Conv erted to US $ from C$ at an ex change rate of 1.0255 US $ per C$.
(f) Conv erted to US $ from British Pound at an ex change rate of 1.6014 US $ per British Pound.

Member of NEAR EARTH SATELLITE INDEX

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From The Ground Up Volume 7, Issue 2
NEAR EARTH ANALYSIS: M&A TRANSACTIONS
Selected Satellite, Telecom, Media & Aerospace Transactions
(US$ in millions unless noted)
Transaction Value/
Date Equity Transaction LTM LTM
Announced Acquiror Target Value (a) Value (b) Sales EBITDA
Satellite Operators
12/05/06 Abertis Telecom EutelSat (32% share) 1,000.0 1,838.0 7.3x 9.7x
12/18/06 Telesat (new) Telesat/Skynet Combined 3,491.0 3,990.0 7.1x 13.4x
06/19/07 BC Partners Intelsat 5,000.0 16,400.0 7.7x 11.3x
08/02/07 Abertis Telecom Hispasat (28.4% share) 199.0 199.0 5.8x 7.9x
09/23/09 GHL Acquisition Corp Iridium Satellite LLC 500.0 517.3 1.6x 5.6x
10/01/09 ViaSat, Inc WildBlue Coimmunications, Inc. 568.0 500.0 2.4x 6.6x
Mean 5.3x 9.1x
Ground Equipment & Systems Integrators
05/12/08 Comtech Telecommunications Corp Radyne 201.9 223.6 1.5x 16.0x
05/09/09 Rockwell Collins Datapath, Inc. 130.0 130.0 0.5x n/d
03/05/10 Integral Systems CVG-Avtec Systems, Inc. 34.7 34.7 1.0x n/d
06/16/10 Teledyne Technologies, Inc. Intelek plc 28.0 35.0 0.9x 6.0x
10/13/10 Gilat Satellite Networks Wavestream Corporation 130.0 130.0 1.9x 10.6x
11/26/10 Veritas Capital CPI International, Inc. 393.1 545.2 1.5x 14.1x
Mean 0.6x 11.7x
Satellite Managed Network Services
03/19/07 CIP Canada Investment Inc. Stratos Global Corporation 293.3 621.5 1.2x 6.3x
06/01/09 Globecomm Systems Inc. Telaurus Communications LLC 7.6 7.6 0.6x n/d
11/23/09 Inmarsat plc Segovia, Inc. 110.0 110.0 1.6x n/d
03/08/10 Globecomm Systems Inc. Carrier to Carrier Telecom BV 15.0 15.0 0.8x n/d
05/21/10 Harris Corporation CapRock Communications 525.0 525.0 1.5x 9.7x
11/08/10 Harris Corporation Schlumberger GCS 347.5 347.5 2.0x 8.5x
Mean 0.6x 6.1x
Aerospace and Defense
05/12/08 Finmeccanica SPA DRS Technologies Inc 3,358.0 4,930.0 1.4x 11.0x
05/13/08 Cobham plc M/A-COM 425.0 425.0 0.9x 6.8x
06/04/08 Cobham plc Sparta Inc 416.0 416.0 1.4x 12.1x
12/16/08 Sierra Nevada Corporation SpaceDev, Inc. 31.7 26.6 0.7x 23.3x
12/23/09 OM Group EaglePicher Technologies LLC 171.9 171.9 1.4x n/d
03/05/10 Orbital Sciences Corp. GD Advanced Information Systems 55.0 55.0 1.1x n/d
06/30/10 The Boeing Company Argon ST, Inc 807.1 765.4 2.5x 31.4x
10/13/10 Veritas Capital Lockheed Martin EIG 815.0 815.0 1.3x n/d
12/08/10 GeoEye, Inc. SPADAC Inc. 46.0 46.0 1.7x n/d
12/20/10 Raytheon Company Applied Signal Technology, Inc. 539.0 505.5 2.2x 17.3x
Mean 1.3x 17.0x
Video Distribution
04/23/07 Motorola Terayon Communication Systems Inc. 139.7 127.2 1.9x n/m
12/07/07 Macrovision Corp Gemstar-TV Guide Intl Inc 2,842.1 2,325.1 3.7x 21.9x
03/12/09 Harmonic Inc. Scopus Video Networks 78.3 47.6 0.8x n/m
10/01/09 Cisco Systems Inc. TANDBERG ASA 3,322.0 3,622.0 4.0x 18.7x
05/06/10 Harmonic Inc. Omneon, Inc. 274.0 274.0 2.6x n/d
Mean 2.6x 20.3x
Towers
03/17/06 Crown Castle Trintel Communications 145.0 145.0 10.1x n/d
03/17/06 SBA Communications Corp AAT Communications Corp 1,002.0 1,002.0 12.0x 17.9x
05/08/06 Crown Castle Mountain Union Telecom LLC 309.0 309.0 11.9x n/d
10/06/06 Crown Castle Global Signal 4,000.0 5,800.0 12.1x 26.6x
07/21/08 SBA Communications Corp Optasite Towers 253.2 428.2 14.8x n/m
Mean 12.2x 22.2x
General Telecom (Wireless)
03/06/06 AT&T (new) Bell South 67,000.0 89,000.0 4.3x 10.7x
08/07/08 Verizon Wireless Rural Cellular Corp 728.0 2,757.0 4.1x 9.7x
01/10/09 Verizon Wireless Alltel Wireless 5,900.0 28,100.0 2.9x 8.3x
12/24/09 Sprint Nextel Corp. Virgin Mobile USA 348.0 509.0 0.4x 4.4x
Mean 2.9x 8.3x
Machine-to-Machine Communications
11/21/08 EMS Technologies Inc. Satamatics Global Ltd. £30.67 £30.67 3.0x 6.9x
12/02/08 Sierra Wireless Inc. Wavecom SA 306.0 271.0 2.3x n/m
07/01/09 Inmarsat plc SkyWave Mobile (19%) 113.2 113.2 2.8x 7.5x
01/22/10 Francisco Partners Cybit £22.85 £22.91 1.0x 3.9x
06/29/10 Gemalto NV Cinterion Wireless Modules GmbH € 163.0 € 163.0 1.1x 8.2x
11/08/10 Novatel Wireless, Inc. Enfora Inc. 64.5 64.5 1.1x n/d
Mean 1.9x 6.6x
Radio
07/29/08 Sirius Satellite Radio Inc. XM Satellite Radio Holdings Inc. 2,301.7 3,957.7 3.4x n/m
07/30/08 Bain Capital Clear Channel 17,923.8 23,724.1 3.5x 10.8x
05/29/09 Cox Enterprises, Inc Cox Radio 381.5 704.3 1.8x 6.2x
Mean 2.9x 8.5x
(a) When Equity Value w as not disclosed, Transaction Value w as used
(b) Calculated as Value of Equity plus interest bearing liabilities and preferred stock, less cash & equivalents n/d Not Disclosed
n/m Not Meaningful

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From The Ground Up Volume 7, Issue 2
 ABOUT NEAR EARTH LLC
Near Earth is a specialized Investment Bank which brings the highest quality senior level
attention to companies in the greater commercial satellite/space, telecom, aerospace and
technology industries.

Near Earth provides a full range of capital raising, advisory and consulting services to
companies and their Boards. We also provide financial advisory services, valuation, structuring,
and due diligence support to private equity, hedge and distressed debt funds. Please contact us
if you would like our assistance with a contemplated satellite, telecom or aerospace investment
or portfolio divestment.

For more information about our current assignments or about Near Earth LLC, please visit our
website at www.nearearthllc.com or contact us at our location below:

Headquarters
250 Park Avenue, 7th Floor
New York, NY 10177
Telephone (212) 551-7960

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From The Ground Up Volume 7, Issue 2
IMPORTANT DISCLOSURES AND INFORMATION ABOUT THE USE OF THIS DOCUMENT:

Near Earth, LLC ("Near Earth") has published this report solely for informational purposes. The
report is aimed at institutional investors and investment professionals, and satellite, media and
telecom industry professionals. This report is not to be construed as a recommendation or
solicitation to buy or sell securities. The report was written without regard for the investment
objectives, financial situation, or particular needs of any specific recipient, and it should not be
regarded by recipients as a substitute for the exercise of their own judgment. The content
contained herein is based on information obtained from sources believed to be reliable, but is
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From The Ground Up Volume 7, Issue 2