EFTA01385486.pdf

3 January 2018 HY Corporate Credit HY Multi Sector.Media. Cable & Satellite international operations where the residential satellite speeds are even more competitive). The majority of the subscriber bases at rural telcos, such as Windstream. Qwest (CTL), and Frontier, take speeds at 50 Mbps or below. While those capabilities are improving over time, the launch of Jupiter-3 and ViaSat-3 in the beginning of the next decade is going to provide the satellite industry with a big opportunity to expand its tangible addressable market with both constellations able to offer speeds in excess of 100 Mbps. The issue that still weighs heavily in the favor of DSL providers is one of cost. We still think DSL will price itself at a cost level that will provide some insurance policy against a wholesale loss of customers. We do think, though, that there is a market in the embedded base of DSL subscribers where some would gladly pay more for higher levels of throughput. On the enterprise-facing side of the business, providers are in the process of Industry-wide pressures have changing the landscape and opportunities as the major players have launched the next gen High Throughput Satellites (HTS). In Network Services, while the only been partially offset by new capabilities provide many new benefits such as added capacity and new growth In new revenue Ines addressable end markets, the earliest impact of the advanced technology was With next-gen HTS servIces significant pressure on pricing that the industry experienced throughout 2016 and early 2017. As we've progressed through the year, commentary from management teams have acknowledged pricing has stabilized in the last 6 months or so. With legacy services declining due to the proliferation of fiber in certain geographies coupled with pricing pressure, the offsetting growth has had to come from mobility, enterprise, cell backhaul, etc, but the pick-up in those services is slow in aggregate. Mobility picked up quickly considering it's the only game in town. Speaking directly on Intelsat, management has spoken of a longer-than Intelsat management hes expected sales lead cycle of selling the new HIS capacity into customers. spoken an "longer sales Currently, this appears to be taking on the form of "when" not "if" as we continue to expect that the industrial logic of the industry upgrading its cyder. That's Industry- capacity makes inherent sense. We believe this will prove to be one of the speak for demand not yet situations where carriers such as Intelsat will need to help develop the corning dose to catching up customer solution set and then sell those end services into customers and with supply. We expect drive revenue. While this implies that we do not expect a "line out the door" to Intelsat to develop customer sign up for this new capacity, we are still convinced that the ramp in revenue solutkos with Its new HIS will come, but that there is still work to do by Intelsat and others to help develop the solutions sets that customers will then buy to address future capacity to help sdmulate business needs. demand growth. Spectrum Monetization?: Following an NOI from the FCC in August 2017, which asked the question of how to free up valuable C-band spectrum (3.7-4.2 GHz), Intelsat responded proactively with a proposal alongside Intel that would The FCC wants to free up C- allow the satellite industry (90% of C-band is owned by Intelsat and SES) to sell Band spectrum the wireless swaths of frequencies to the mobile industry as we get closer to the arrival of Industry would be wiling to 5G technology in the next few years. If we study the industry responses to pay Sr goons to !tend Intelsat and Intel's joint proposal, overall the wide majority of ex parte filers are overwhelmingly supportive of freeing up spectrum in this band. Where Intelsat and SES an rich in differences lie is in how that plan would be implemented, whether the FCC this valuable asset Sure, this needs to be involved and how quickly this plan could be brought to reality. We could still go wrong and not expect the FCC (this is a rather broad and uninformed guess) to provide materfallas In • way that feedback to Intelsat and Intel's proposals as well as the industry's ex parte could meaningfully help Ilx filings in late 1Q18 or early 2Q18. At that point, the process could potentially take on many forms, including an accelerated path under which Intelsat and IN7EL's trap structure lbws Intel could start forming a consortium to start a private clearing and sales but the signs seem to line up process or a more public NPRM process that look to have the FCC involved in to a dyeable path Sr partial something that more closely resembles a public auction. Undoubtedly there moneersdon are also lots of other options in between. Important in our mind, though, is the notion that the FCC very much wants to free up spectrum in this band (ideally suited for many future 5G applications), the wireless industry very much wants Deutsche Bank Securities Inc. Page 213 CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0086772 CONFIDENTIAL SDNY_GM_00232956 EFTA01385486