Defence spending to reach new heights

Research evidence excerpt

Defence spending to reach new heights

Macquarie Equity Research Codan

Opportunity for DTC

When encompassing estimated communication layer drone costs and US-specific programs,

together these frame a large, multi-year, structurally growing US demand pool that plays

directly to DTC's niche. DTC's key offering of resilient datalink, mesh-networking and EW-

hardened communications layer is directly linked to various components that multi-domain

drone and unmanned systems require.

Whilst headline spending is substantial, we estimate the comms/C2 "connective tissue" slice

that DTC targets would sit between high-single to low-double-digit percentages of unit cost.

Highly valuable opportunities for DTC from the US programs outlined above include the

LUCAS program, US Army medium/long-range reconnaissance echelons developments and

ongoing R&D developments in DAWG.

Collectively, these programs validate and expand DTC's addressable market and structurally

shift its revenue towards recurring, non-conflict US defence demand over the medium term.

NATO Summit Defence Industry Forum announcements

The NATO Summit Defence Industry Forum started yesterday on 7 July, with a focus on

transatlantic defence production, joint procurement and capability initiatives. Overnight,

NATO announced the new "Drone Edge" initiative, which will include more than $40bn in

investments from 30+ allies (mainly Europe) into counter drone capabilities over the next five

years (NATO international).

"Drone edge" initiative key takeaways:

• NATO is rapidly expanding its ability to deploy and operate drones at scale; at the same

time NATO is building robust counter drone defences.

• NATO will launch a counter-drone marketplace to provide procurement of new NATO-