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Management Presentation

October, 2009

Broadband Innovation in Latin America

Regional forum for the Americas development

Promoting Access to BroadbandMexico City, April 18-19, 2012

Foro regional de desarrollo para la Américas

Promoviendo el Accesos a la Banda AnchaCiudad de México, 18-19 de Abril 2012

According to the Broadband Commission for Digital Development, which has done a great job on this, the high-speed, high-capacity Internet broadband connections are an essential element in modern society, with wide social and economic benefits

The economic, health, government and education sectors demand the use of digital contents to access more information and to develop a new life style by using TIC´s

The digital content industry experienced a moment of expansion with new ways of watching TV, listening to the radio, playing music and video games, producing movies, online sales, social networks, or simply reading a book, which demand more bandwidth

Satmex’ Broadband Market ResearchThe growth of broadband

The practical result is that broadband enables the combined provision of voice, data and video at the same time so, the following applications, among others, will take full advantage of this

It should be noted that contents will play an important role on these applications: broadband doesn’t make sense without useful contents to be supported

− Government− Health− Education− Science

e

Satmex’ Broadband Market ResearchBroadband Applications

Smart− Grids− Buildings− Communities− Cities

Source: IYU world communication /ICT indicators database . Report by the Broadband Commission for Digital Development

Satmex’ Broadband Market ResearchBroadband Subscriptions

In 2011 the Americas represented one quarter of total Broadband households worldwide and which 8% goes for Latin

America

Global Broadband market has a 2011-2015 CARG of 7.7% to reach 744 million household connections

Broadband Subscriptions

Broadband Subscriptions per region

Some regions are advancing faster than others, during the following 5 years, regions with larger expected CAGR are Latin America with 11.9%, Middle East with 11.7% and Asia-pacific with a 10.4%

Source: 2012 SNL Kagan, a division of SNL Financial LC, estimates

Satmex’ Broadband Market ResearchHousehold per region

3.7% CAGR

11.9% CAGR

10.4% CAGR

11.7% CAGR

8.2% CAGR

2.8% CAGR

Satmex’ Broadband Market ResearchBroadband Additions

Broadband Household CAGR in Latin America will be of 11.9%

It is expected to consider Latin America in growth phase for the following years

Latin America’s total broadband additional connections in 2015 will be around 32 million

Source: 2012 SNL Kagan, a division of SNL Financial LC, estimates

7 more populated countries represents 88%of total

Broadband connections in Latin America for 2011

In 2015 this rate will remain steady in 18%

Is estimated that Broadband Market penetration in Latin

America will grow consistently from 29% in 2011 to 40.6% in

2015

Satmex’ Broadband Market ResearchBroadband households in Latin America

Source: SNL Kagan Global Multichannel Comparison Table 2012 and Frost and Sullivan Latin American Broadband Services Markets 2010

2011 2012 2013 2014 2015Argentina 46% 51% 57% 61% 64%

Brazil 22% 25% 27% 30% 34%Colombia 25% 27% 28% 30% 31%

Chile 45% 48% 50% 53% 55%Ecuador 18% 23% 28% 32% 35%Mexico 52% 58% 62% 65% 67%Peru 15% 16% 18% 19% 21%

Others 4% 5% 6% 7% 8%

Broadband households Market penetration by country

BB Households / Households

2011 2012 2013 2014 2015

Cable 26.3% 26.9% 27.6% 28.1% 28.4%DSL 69.2% 67.9% 66.1% 64.0% 62.0%Fiber 0.8% 1.6% 2.8% 4.5% 6.4%

Satellite 0.3% 0.3% 0.3% 0.3% 0.3%Fixed Wireless 3.2% 3.1% 3.1% 3.0% 2.9%

Other 0.1% 0.1% 0.1% 0.1% 0.1%

Broadband(Million Households 2011

Brazil 15Mexico 14.4Argentina 5.2Colombia 2.7Chile 2.0Peru 1.0Ecuador 0.7Others 5.3

More populated regions represents a total of 40.9 million

connections

In 2009 Broadband Satellite market share is the lower in all

regions, representing an opportunity for Ka-band low cost broadband in a growing

market

Satmex’ Broadband Market ResearchBroadband households in Latin America

Source: 2012 SNL Kagan, a division of SNL Financial LC, estimates

Brazil, Colombia and Peru have less than 25% broadband market

penetration

Latin America Broadband market is considered to be in growth stage based on the low penetration rates in most of the countries

Revenues in 2009 were of 7.7 USD billion and the potential revenues in the long term is around 19.3 USD billion

Market concentration is 64.2%1 and is

expected to increase

Customers in Latin America have a medium satisfaction rates mainly because the high prices and low bandwidth

High prices and low bandwidth could be driven by the high concentration rate in the top 3 operators Telmex, Telefónica an Oi and their main broadband product is DLS

1) 64.2% in Connection market share and 63.3% in Revenues Market shareSource: SNL Kagan Latin America Special Report and Frost and Sullivan Latin American Broadband Services Markets 2010

Satmex’ Broadband Market ResearchMarket penetration and concentration

DLS Broadband dominates in all regions

This concentration is driven mainly by Broadband DSL operators offer, which concentrate most of the connections and it is growing faster than other tipes due to the limited coverage triple or quadruple and high cost in other services like satellite.

Ka-Band broadband in Latin America introduction will drive a massive market to use Satellite broadband due the price reduction and speed increase

Ka-Band characteristics will generate a more efficient solution for specific users with specific needs

2009-2015 CAGRDLS Cable

Brazil 23.8% 18.3%Mexico 16.0% 11.3%

Argentina 11.4% 6.8%Colombia 15.3% 11.6%

Chile 5.8% 14.9%

Source: Frost and Sullivan Latin American Broadband Services Markets 2010

Satmex’ Broadband Market ResearchBroadband market share by application

Unlike the other countries, Chile has a higher CAGR in cable than DLS broadband

Broadband Innovation in Latin AmericaSatellite technology trends, Ka Band

11

Reasons to use Ka-Band

Ka-Band Satellite technology trends

Ka-Band Satellites have had a slow introduction in Latin America, how ever this trends to change in the following years due new, more accessible and

flexible technologies

• Reach regions with lack of wired broadband• Lower the price per equipment (compared to Ku-band broadband)• Increase the available bandwidth to applications “Point to Point”• Improve the quality of satellite IP services• To respond to the demand of the mass market by band broadband• Provide cost-effective services of IP technology for the professional market

• Spot Beam Technology• Frequency re-use• Specialized in Broadband Services• High Power• Small dishes• Less expensive equipment• Point to point applications• Better quality for IP services

Broadband Innovation in Latin AmericaAlternative Models to provide satellite Broadband solutions to different Sectors

• Social Developments to close the Technological gap for rural communities

• Countries would have to dedicate part of their budgets to develop this type of programs

• Governments shall promote regulations in order to open markets to the Competition

• High Speed internet • IP Solutions• Voice and Data applications• Equipment cost is still high to end-users

• High Speed Internet Services focused on closing the Technological Gap

• Tax benefits

Remarks

Possible benefited sectors

Commercial

Government–sponsored projects

NGO’s

• High Speed Internet Services for remote places• Expected lower costGeneral Users

For the characteristics of the upcoming generation of Ka-band Satellites, different possible users will be

benefited

106.0° – AMG-106W

107.1° – UKSAT-14 (Spaceway 4/Jupiter-1, 2Q2012)

115.1° – USASAT-71K

111.1° – CANSAT KA-4

117.0° – LUX-G7-38C

118.7° – CANSAT KA-5XAnik F3 (119.0°W) 1 spot South East CAN

Anik F2 WildBlue-1

45 Spots USA & CAN109.2° – CANSAT-33 (Telesat / Ciel-1)

121.0° – USASAT-31GEchoStar 9/Galaxy 23

4 Tp Ka / 1 spot

105.0° – USASAT-31K

107.3° – CANSAT-50

103.0° – USASAT-31L

99.0 – USASAT-31N

97.0° – UKSAT-13 (HNS)

AMC-1511 Tp KaCONUS or MEX

Spaceway F2 (99.2° W)DirecTV 11 (99.2° W)CONUS

115.0° – IOMSAT 11A

114.9° – MEXSAT-114.9 KA

G (N/U)

CAN (N/U)

CAN (C)

CAN (C)

EUA (N/U)

EUA (N/U)

EUA (N/U)

MEX (C)

101.0° – USASAT-31M (file DirecTV 8 y 9S)

EUA (N/U)

G (C)

109.1° – UKSAT-16 (Spaceway 5/Jupiter-2, 2Q2016)G (C)

G (C)

EUA (N/U)

LUX (C)

CAN (N/U)

116.8° – LUX-G8-39 (SES)

VIASAT-1 (115.1°W) 56 Tp Ka USA & CAN

113.0° – GIBSAT-113W (SES)

RUS (C)

F (C) 102.0° – AST-102W

LUX (A) 119.0° – LUX-G6-38

118.0° – INMARSAT-KA 118WG (A)

EUA (A)

LUX (C)

EUA (C)

Broadband Innovation in Latin AmericaUIT files priority in the Arch 121.0°-97° West

(C) B

(N/U) CAN

(N/U) EUA

(N/U) EUA

(N/U) CAN

(C) F

(N/U) URG

(C) EUA

(C) B

(C) PNG

(C) MLA

AMC-16/GE-6 10 spotsCONUS or MEX

Nimik 48 Tp Ka

Venesat-1/Simón Bolivar 2 Tp Ka

Spaceway F3 (HNS)USA

(C) CHN

(N/U) G

(C) G

(N/U) G

(C) LUX

Galaxy 28

Nimik 2

(A) LUX

(C) J

(C) G

UKSAT-10 – 95.0°

(2GHz MSS Satellite ICO-G1, Ka TT&C & Feeder Link) ICO-G – 93.0°

(TeleBras) BSAT-2F – 92.0°

CANSAT-30 – 91.0°

USASAT-31S – 89.0°

LUX-G7-43 – 87.0°

USASAT-31U – 85.0°

(Administration) LUX-G8-44 – 83.0°

CANSAT KA-3 / CANSAT-31 – 82.0°

N-SAT-A-81W – 81.0°

(Administration) DRN-D2 – 80.0°

VENESAT-1 / 1A– 78.0°

[Proyecto VIASAT-2, 1Q2014] USASAT-71B – 77.3°

(TeleBras) B-SAT-2N – 84.0°

(MeaSat Satellite Systems) MEASAT-ROUTE-3B – 75.5°

(Spaceway 6, 2Q2016) UKSAT-15 – 90.9°

(China Satcom) CHINASAT-AL9 – 86.3°

(SES) AM-SAT-79W-G – 79.0°

NEW DAWN 1 – 77.0°

(ManSat Ltd.) IOMSAT-S25 – 76.8° (C) G

Broadband Innovation in Latin AmericaUIT files priority in the Arch 95°- 77.3° West

The broadband networks are powerful tools for accelerating progress towards the Millennium Development Goals (MDGs), and they will underpin all industrial sectors and increasingly are the foundation of public services and social progress.

Digital contents are transforming the Information Society

It is very important to continue working on the technology development to access broadband networks, i.e. Ka Band

Also, it will help a lot if our countries have flexibility in their regulations to facilitate access to these new technologies

On the other hand, satellite operators like Satmex, may have limited access to key orbital slots because many of them are under control of big Administrations, and we can’t take advantage of satellite cost reduction if there is not enough room to place them in orbit

Broadband Innovation in Latin AmericaConclusions