WorldSpace Southern Africa Pty Ltd.

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WorldSpace (Southern Africa) (Pty) Ltd.

• Presentation to Select Committee on Labour
  Public Enterprises National Council of
  Provinces (NCOP)
• 29th November 2005

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Panel

• Hamza Farooqui Managing Director Afristar
  Region
• Jim Myers Regulatory Consultant
• Janet Mackenzie Cliffe Dekker Inc

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Contents

• Section 1 Introduction to WorldSpace and its
  satellite radio service
• Section 2 Key regulatory considerations
• Existing rights of WorldSpace
• Treatment of permissions under ECB
• Effect of exclusions
• Suggested Amendments

Section 3 Commercial rationale and conclusion
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Introduction to WorldSpace and its satellite
radio service
SECTION 1
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WorldSpace System is the only
constellation of digital satellites capable of
transmitting digital audio radio services
directly to an enormous global audience

• Digital satellite radio system with
  multi-continental coverage
• Footprints cover an estimated 5 billion people
• Provides a total of up to 480 channels of digital
  quality programming
• Digital processing on-board the satellites allows
  radio programming to originate from anywhere

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WorldSpace - A satellite radio company

• WorldSpace founded the Satellite radio industry
  in 1990 and was the first to design implement
  the technology to deliver satellite radio
  services
• Satellite radio in the US has experienced
  tremendous growth over the past two years - only
  DVD players reached the 1 million sales mark
  faster
• XM and Sirius Satellite Radio launched service in
  late 2001 and early 2002, respectively, and now
  serve approximately 8 million subscribers in
  North America
• Satellite radio is by far the most exciting
  technology product that has been introduced to a
  global market
• WorldSpace has successfully completed the ITU
  coordination process for the use of the L-Band
  spectrum for satellite radio services in all
  markets outside of the US

WorldSpace is the only company providing digital
satellite radio services outside of the US
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Major WorldSpace milestones

• 1990 Company founded by Noah
  Samara
• - Vision of enabling information affluence in
  emerging markets
• - Confluence of huge demand, revolutionary
  personalized satellite technology and emerging
• regulatory receptiveness
• 1991 - 92 Began national licensing process
  for satellite system
• 1992 At 1992 ITU Radio
  communication Conference, gained global
  allocation of spectrum for satellite
  complementary terrestrial radio services
• 1992 - 95 Developed technology, business
  plan started ITU coordination process
• 1995 - 96 Established consortium of
  industrial and financial partners
• 1996 - 97 Satellite construction underway
  chipsets and receiver development
• 1997 - 98 Built organization and prepared
  to launch
• 1999 - 2000 Launched commercial service for
  portable fixed reception
• 2000 - Present - Conducted 1st ever
  demonstrations of satellite repeater technology
  developed software-based chipset for service
  to vehicles
• - WorldSpace-licensed technology brought into
  commercial use in the USA by XM Satellite
  Radio
• - Listed on NASDAQ in August 2005

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WorldSpace executive summary

• Unsurpassed content and distribution
• Global content, 24x7 basis
• Regional, voice from home content, by language
• News, music formats on a nationwide basis
• Ability to uplink content anywhere, anytime,
  throughout the coverage area
• Up to 80 digital quality channels for home, car
  or portable reception
• Initial focus on major markets in China, India,
  the Middle East, South Africa and France
• Total coverage area has 5 billion people, 300
  million cars
• Regulatory status
• AfriStar and AsiaStar completed ITU coordination
  and notification process
• Complementary gap filler licensing and
  coordination process commenced in key markets
• Proven, easy-to-use, low-cost technology
• Over US1.4 billion already invested to create
  infrastructure
• Low-cost, compact receive terminals are easy to
  set up and use anywhere
• One-to-many, scalable, addressable and
  encryptable digital sound service, allows
  cost-efficient delivery system

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Current Status South Africa

• Johannesburg regional operations in existence
  since 1998
• Johannesburg uplink in existence since 1998
• Corporate responsibility sponsored the building
  of a school in Orange Farm (Freedom Park
  Primary), sponsored the ODL (Open Distance
  Learning) conference All Africa Ministers
  Conference in Cape Town
• Free-to-air service launched in 1999, with 40,000
  receivers currently in Southern Africa
• Regulatory environment broadcasting and signal
  distribution licensing applied for, and ICASA in
  the process of licensing satellite broadcast
  services in terms of sections 4 34 of the
  Broadcasting Act
• 82 key retailers in Johannesburg, Cape Town,
  Durban, Pretoria, Port Elizabeth and East London,
  together in partnership with Elsat
• Mobile (in-car) satellite radio service
  introduction planned for 2006

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Key regulatory issues to be addressed
SECTION 2
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Existing rights of WorldSpace

• WorldSpace (Southern Africa) (Pty) Ltd. is
  controlled by WorldSpace, Inc., a US company
• Permission to provide a satellite broadcasting
  service S4(1)(a) of the Broadcasting Act
• Permission to provide channels in respect of a
  broadcasting service S4(5)(a) of the
  Broadcasting Act
• Permission to provide a broadcasting signal
  distribution service S34(1)(a) of the
  Broadcasting Act
• ICASA was to put into place the regulatory
  framework for subscription broadcasting services
  before converting permissions into licences and
  has been busy with this process since March 2003

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Treatment of permissions under ECB

• S92(5) of the ECB safeguards existing rights
  under the Telecommunications Act, Broadcasting
  Act and IBA Act
• Persons who have been granted permissions under
  existing legislation will not be licensed in
  terms of the transitional provisions of Chapter
  15 of the ECB
• Permission holders will have to be licensed in
  terms of Chapter 3 of the ECB

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Effects of the exclusion

• Permission holders will be subject to a different
  licensing process to all other entities currently
  providing services under existing legislation
• Permission holders will be subject to licensing
  processes and licensing terms and conditions
  which are potentially more onerous
• Permission holders are likely to be faced with
  licensing delays
• In some instances, a deprivation of rights may
  occur (i.e. where an individual communications
  network service licence is required for a
  broadcasting signal distribution service)
• Permission holders will not be able to make use
  of broadcasting signal distributors until they
  are licensed S62(2)(b) of the ECB
• Permission holders will not be able to
  interconnect their services until they are
  licensed S37(1) of the ECB
• Permission holders will not be able to enter into
  facilities leasing arrangements until they are
  licensed S43(1) of the ECB
• The effect of the ECB is to unconstitutionally
  nullify and deprive permission holders of their
  existing rights

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Suggested amendments

• Reference must be made to permissions and
  permission holders rights granted under the
  Broadcasting Act in
• - Section 92 (5),(6)
• - Section 93 (1) (11)
• - Section 62 (2) (b)
• Detailed amendments have been provided in our
  written submission to the NCOP

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Commercial rationale and conclusion
SECTION 3
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Commercial rationale and conclusion

• WorldSpace satellite infrastructure covers
  Europe, middle East, Africa and Asia.
• Relationship with XM satellite Radio brings best
  of breed technology, products and services
• WorldSpace four channels to XM and distributes
  over 70 channels in its own network
• XM which uses WorldSpace technology have
  distribution partnerships with General Motors,
  Honda, Toyota, Hyundai, Nissan, VW/Audi, Porsche,
  Kia, Suburu and Suzuki.
• Subscription take up rates indicate that by the
  end of 2005, subscriber numbers should exceed 6
  million.

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Commercial rationale and conclusion

• WorldSpace invests in local countries through
• - physical infrastructure facilitating up and
  down links
• - offices providing sales, marketing and
  maintenance support
• - staff and facilities for adding local content
  to channels for global distribution
• - creating on the ground skills transfer and
  development
• WorldSpace offers local country artists and
  personalities global exposure
• - Satellite radio is credited with much of the
  responsibility for the popularity of Latin
  American music in North America
• - Facilitate the niche music category creation,
  distribution and popularity
• WorldSpace recently announced a US150 million
  investment in India to grow presence in that
  market
• WorldSpace requires the basic infrastructure
  previously described to provide this service,
  together with a stable and predictable regulatory
  framework

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Commercial rationale and conclusion

• Foreign investment
• Job creation
• Global exposure for South African artists and
  personalities that could not be achieved in any
  other manner
• Additional revenue for the government through
  revenue generated locally from subscription
  services
• Build up and rollout of cutting edge technology
  in a country, together with inter-related
  industries such as automobile sector with
  substantial value add opportunity
• In conclusion, WorldSpace seeks the assistance
  and support of this body to assure these
  opportunities become reality in South Africa.

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Thank you
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Questions and Answers