TEAM: DELTA
MISSION
SataLink, Incorporated.
CURRENT SITUATION 10 of our 15 satellites are projected to reach the end of
their useful lives between 2019 and 2023
GOALSDevelop a satellite replacement plan and a
corresponding high-level business strategy that addresses the anticipated current and future conditions the company will face in the satellite communication market
AGGRESSIVE CONSERVATIVE
CONSERVATIVE
Pricing Strategy
• High Revenue• High Growth
• Defensive Market Positioning
• 30% Lease• 70% Spot
• High Revenue• High Growth
• 30% Lease• 70% Spot Rate
• Defensive Market Positioning
• 70% Lease• 30% Spot
• Diversified Market Positioning
• 50% Lease• 50% Spot
• 70% Lease• 30% SpotAGGRESSIVE
Market Strategy
Defensive
Expansionary
Diversified
PROPOSED SOLUTIONS:Expansionary Diversified Defensive
Satellite Locations:1. Europe2. Asia & Middle East3. America 4. Europe & Middle
East; 50/50%5. Asia; 100%
Market Position Strategy:• High Revenue • High Growth
Pricing Strategy:• 70% Lease (20%
Discount)• 30% Spot
Market Position Strategy:• Diversified • Multi-coverage
Satellite Locations:1. Europe 2. Asia & Middle East 3. America 4. Asia & Middle East;
60/40%5. America
Pricing Strategy:• 50% Lease (20% Discount)• 50% Spot
Satellite Locations:1. America2. Europe 3. Asia4. America5. Asia
Market Position Strategy:• Conservative Revenue• Market Maintenance
Pricing Strategy:• 30% Lease (20%
Discount)• 70% Spot
SPACECRAFTS1000L 800M & 600S 600SDL
Provides the largest magnitude of “Economies of Scale”
Lowest Fixed Cost per Transponder ($1.82 Mn.)
220 Transponders
Highest fix cost per transponder compared to 800M & 600S
Has not been tested and the potential risk of failure is too high
Higher fixed cost per transponder
$2.08 Mn (800M) 2.43 Mn (600S)
130 Transponders (800M)
70 Transponders (600S)
1000 L
600 SDL600 S800 M
SOLUTION 1ExpansionaryBenefits: Risks: Higher Fill Rates Forward Looking Hedged Risk Reliable Cash Flow
Geo-Political Market Saturation Under Developed Infrastructure Lower Avg. Rev/ Transponder
(1) Europe (1) Asia & Middle East(1) America
(1) Europe & Middle East(1) Asia
SOLUTION 2Diversified ModerateBenefits: Risks:
Higher Revenue Potential Lower Market Saturation Moderate Distribution of Risk Balanced Revenue Stream
Lower Future Growth Increased Market Exposure More Volatile Cash Flow
(1) Europe (1) Asia & Middle East(1) America
(1) Asia& Middle East(1) America
SOLUTION 3Defensive Moderate Benefits: Risks:
High Market Exposure Lower Market Diversification No Exposure to High Growth Market Most Volatility In Cash Flows
(1) Europe (1) Europe(1) Asia
(1) America(1) Asia
Preserve Current Market Share Maintain Client Relationships No market Saturation
PRICING STRATEGY Expansionary Diversified Defensive
• 70% Lease (20% Discount) • 30% Spot
• 80% Fill Rate
• Average Rev/Trans: $1.65 Mn.
• Most Secure Cash Flows
• 30% Lease (20% Discount)• 70% Spot
• 70% Fill Rate
• Average Rev/ Trans: $1.70 Mn.
• Volatile Cash Flows
• 50% Lease (20% Discount) • 50% Spot
• 75% Fill Rate
• Average Rev/Trans: $1.67 Mn.
• Balanced Cash Flow
Expansionary Diversified DefensiveFINANCING
15 Year Capital Lease PMT: $58.7 Mn
Debt Paid 2015 - $150 Mn Debt Paid 2016 - $100 Mn
Loan 2018 $96.9 Mn
2020-2027 Debt Repayment:
Debt PMT: $150 Mn Total Paid: $1.21 BN
15 Year Capital Lease PMT: $58.7 Mn
Debt Paid 2015 - $150 Mn Debt Paid 2016 - $100 Mn
Loan 2018 – $88.09 Mn Loan 2019 – $176.19 Mn
2020-2027 Debt Repayment:
Debt PMT: $150 Mn Total Paid: $1.19 Bn.
15 Year Capital Lease PMT: $58.7 Mn.
Debt Paid 2015- $150 Mn Debt Paid 2016 - $100 Mn
Loan 2019 - $102.77 Mn
Sale of Satellite 2018 Value: $306.93 Mn
2018 - $150 Mn 2019 - $150 Mn
2020-2027 Debt Repayment:
Debt PMT: $150 Mn Total Paid: $1.20 Bn
FINANCIAL HIGHLIGHTSExpansionary Diversified Defensive
• NPV: $4.00 Bn.
• Debt Paid: $1.21 Bn.• Ending: $2.04 Bn.
• Ending Cash: $6.46 Bn.
• NPV: $3.57 Bn.
• Debt Paid: $1.19 Bn.• Ending: $2.06 Bn.
• Ending Cash: $5.70 Bn
• NPV: $2.87 Billion
• Debt Paid: $1.20 Bn.• Ending: $2.05 Bn.
• Ending Cash: $4.68 Bn.
Expansionary Diversified DefensiveSENSITIVITY ANALYSIS
DefensiveChange in Fill Rate NPV %Change
10% $ 5,216 63%5% $ 4,204 32%
Current $ 3,192 -5% $ 2,181 -32%
-10% $ 1,169 -63%
DefensiveChange in Price NPV %Change
10% $ 4,433 39%5% $ 3,813 19%
Current $ 3,192 -5% $ 2,572 -19%
-10% $ 1,952 -39%
Diversified
Change in Fill Rate NPV %Change10% $ 5,589 56%5% $ 4,582 28%
Current $ 3,574 -5% $ 2,566 -28%
-10% $ 1,559 -56%
DiversifiedChange in Price NPV %Change
10% $ 4,666 31%5% $ 4,120 15%
Current $ 3,574 -5% $ 3,028 -15%
-10% $ 2,482 -31%
ExpansionaryChange in Fill Rate NPV %Change
10% $ 5,985 50%5% $ 4,993 25%
Current $ 4,001 -5% $ 3,008 -25%
-10% $ 2,016 -50%
ExpansionaryChange in Price NPV %Change
10% $ 4,892 22%5% $ 4,446 11%
Current $ 4,001 -5% $ 3,555 -11%
-10% $ 3,109 -22%
POTENTIAL SYSTEMATIC RISK
Failed Satellite Launch
Manufacturing Delays
Delayed Satellite Launch
Defective Transponders
Interest Rate Risk
Satellite Obsolescence
RECOMMENDATIONSolution 1:
Expansionary
Highest NPV: $3.90 Billion
37% Debt Reduction
Reliable Cash Flow
Minimized Risk Profile
Forward Looking
Balanced