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YIR: STM Group, Inc.
by Emil Youssefzadeh, CEO

2008: STM’s performance during the past year was in line with our targets. Our product and standards based VSATs were selected for the largest public education based network, awarded with over 5000 schools in Turkey. We also delivered over one thousand terminals for a civil defense network in Europe, and through a UK-based service partner, our product was selected for rural broadband services in Scotland for over 800 sites. On top of that, our numerous current customers using our SatLink and Solante system platforms expanded their networks, with deployment of several thousand more VSATs and more hub capacity.

We also made significant in-roads expanding our recurring service business. Capacity and traffic in STM’s SatLink teleports in Florida and California for our marine-based services were expanded and new customers were brought on-line at our Spanish teleport. We also brought into service a new teleport in Brazil and expanded the capacity on our other teleport serving Latin America.

We are especially proud of our R&D initiatives and progress in 2008. Most notably, we introduced our DVB-RCS compliant SatLink mesh networking VSATs and a wide-band burst demodulator for our SatLink hubs capable of concurrent processing of up to 32 TDMA carriers in a single 1U chassis. The new mesh VSATs are targeted at private network customers who want to have single hop IP connectivity to other branch locations, while at the same time have public broadband or private VPN access to the corporate data center. We expect to see a rapid introduction and large demand for IP-based desktop video conferencing in the emerging markets, along with delay sensitive peer-to-peer applications, both of which can not be served without a well-designed mesh product.
br /> The Company also started the field deployment of our GSM rural base stations in 2008. This product and R&D initiative is a new market entry for our company and is somewhat distinguishable, but very much compatible with our core capabilities in RF systems and MF-TDMA. The base station product is readily integrated with our VSAT systems and builds on our strengths in serving rural markets. We have focused here on addressing the critical challenges mobile operators face when expanding into rural markets, particularly the lack of reliable electric power and the need to keep capital and operating expenditures low.

The financial crisis that started in the U.S. has inevitably moved to the emerging markets and this is going to be challenge for our industry, which is facing credit restrictions and inevitable reduction in capital expenditures. Nevertheless, most of the telecom and mobile operators will have to continue their growth and network and traffic expansion. While this poses a challenge in the growth of our network systems sales, it is an opportunity to build-up our recurring turnkey network services revenue with both new and current customers. Thankfully, we have a strong cash position that allows us to meet these investment requirements on behalf of our customers, for both expanded shared teleports and private managed hub and network systems.

4) What current strategic partnerships are important to STM?

STM Group has developed crucial strategic partnerships, as well. Two years ago, we formed a strategic alliance with Avanti Communications Ltd. of the U.K. for supply of our DVB-RCS compliant SatLink VSATs and hub products. This alliance was a major stepping stone for our company to leap frog into the market for the development and supply of Ka band terminals. This last year we reached milestones on these product initiatives and will be ready for volume delivery of Ka band terminals with price-performance points that beat what is currently available.

2009: We expect next year to be a mix of challenges and opportunities. We spent more in R&D in 2008 than in any prior year, and will continue investing in new products and technologies that can help us grow our business in new markets. This includes continued focus on our GSM base station, mesh VSAT, and Ka band initiatives, plus some new related initiatives now underway. All of these will bring us into new geographies and new applications in the coming years, as we see the combination of VSAT and cellular wireless technologies as key to the expansion of IP networking for voice, data, and video services to large, underserved populations. The financial crisis is slowing this expansion for a while, but it is inevitable that modern high-speed communications will reach one or two billion more people throughout the world in the next five to ten years.

About the author
Mr. Youssefzadeh founded STM in 1984 and has led its phenomenal success since he reformed it as privately held STM Group, Inc. in 2003. Widely regarded as a pioneer in the VSAT business, his accomplishments include: the launch of a domestic satellite program in his native country, Iran, in the 1970s; research and development for switched TDMA and other advanced satellite communication projects at Hughes Aircraft; plus extensive innovations in MF-TDMA networking systems at STM. He earned his Masters and Engineering Degrees in Electrical Engineering, with focus on information theory and satellite communications, from Stanford University.

About the company
STM Group,Inc. is a leading provider of high-performance, standards-based satellite network systems and services for mobile and fixed-line IP-based telephony, data and multimedia applications used by enterprises, governments, telecommunications providers and systems integrators. Founded in 1984, the company has a long history as an internationally recognized innovator in the research, development, manufacturing and deployment of industry standards-based Multi-Frequency Time Division Multiple Access (MF-TDMA) networks based on Very Small Aperture Terminal (VSATs) and carrier-class hub system products. STMís products were the first in the industry to be certified by SatLabs as compliant with the DVB-RCS industry standard. Today, under contract with the European Space Agency, STM leads an industry consortium to evaluate, develop and test the next generation of tecnologies aimed at inclusion in future DVB-RCS standards.