PARIS — Satellite broadband hardware and services provider Viasat Inc. said in-flight connectivity service revenue totaled $150 million for the year ending March 31 on the strength of new in-flight connectivity (IFC)-equipped planes entering service.
The Viasat fleet totaled 1,312 aircraft as of March 31 — up 60% from a year ago — with another 490 in backlog awaiting installation.
The IFC service is lifting Viasat’s Commercial Networks division, which builds the hardware. That division reported a 21% increase in revenue for the year and a reduced operating loss of $108.6 million.
Takeaways from Viasat’s Q4 conference call:
— Double-digit revenue growth for year ending March 31 in all three divisions — Satellite Services, Commercial Networks, Government Systems; total revenue up 30% to nearly $2.1 billion.
— The ViaSat-1 satellite, in service since 2013, has “enabled” $1 billion in adjusted EBITDA on a capex investment of $500 million and has more than 10 years of service left.
— Viasat-s dual Ka-/Ku-band antenna, in service for government customers, is now being deployed for wide-body long-haul commercial aircraft to provide backup in case of satellite launch issues and to broaden coverage area.
— Boeing 737 Max accounts for around 4% of Viasat’s installed base and will be a drag on service revenue, but not a large one.
— In-flight connectivity (IFC) growth is driving growth in Commercial Networks for equipment sold to airline customers. As of March 31, 1,312 aircraft were in service, plus 490 in backlog awaiting installation.
— Churn down, ARPU up in Satellite Services division, where IFC service revenue is now 22% of total division revenue.
— The Government Systems division continues to lead the way. Full-year revenue up 24% to $956M; EBITDA margin stable at 26%. Co. continues ‘filling in the white spaces between what military operational units need and what government procurement regulations deliver,’ said CEO Mark D. Dankberg.
—Capex was $675M for full year and will rise to around $975M in coming year with spending on three-satellite ViaSat-3 constellation, to launch starting 2021.
IFC provider Gogo Inc. said the failure earlier this year of the Intelsat IS-29e satellite demonstrated the inherent advantages of Ku-band satellite technology, with its large fleet of satellites from multiple fleet operators, compared to Ka-band.
Gogo said Intelsat 29e customers were quickly relocated to other Ku-band satellites, minimizing their service outages, in contrast to what would have happened if a Ka-band satellite went down: http://bit.ly/2HchxBR
That’s one reason why several antenna manufacturers are working on dual Ka-/Ku-band hardware.
Viasat Chief Executive Mark D. Dankberg said the Viasat dual-band equipment has already proved itself with U.S. government customers and that the company in the coming year will be investing in placing the dual-band system with long-haul commercial airline fleets.
Viasat has said its ViaSat-3 satellite fleet, rising the global from geostationary orbit, will be complemented by capacity offered by third-party satellites, such as what it has done in Brazil and Australia and plans to do in China: http://bit.ly/2H89lBp
The strategy adds to the capacity available to Viasat and helps position the company as a friendly neighbor in Asia and Latin America instead of a threat.
Introducing the dual-band antenna adds another layer of protection to prospective airline customers in the even the ViaSat-3 program is delayed.
Dankberg said the ViaSat-3 program will be in service at a time when many airlines are planning retrofits of their IFC hardware or planning deliveries of new planes.
The dual-band strategy allows Viasat to bring into service aircraft customers even if ViaSat-3 is late.
“It’s kind of an insurance policy against the timing of satellite launch,” Dankberg said. “One of the things the international carriers are looking at is, not just do we have 100% of their routes covered, but what fraction of their seat miles do we have covered? Once we get to the 70-80% ranges, it’s really interesting.
“If you can use Ku-band to fill in the gaps at a modest up-front cost, that’s a pretty attractive offer as well.”
Dankberg said the Ka-band unit suffers no performance penalty by adding the Ku-band capability to it.
Viasat President Richard Baldridge said most Viasat long-haul customers “spend a lot of time in our high-capacity Ka-band coverage, so we’re really just talking about the fraction of the time outside that coverage.”
Viasat said the average monthly subscriber revenue for the year was up 12%, to $81.99, a figure that includes IFC revenue. The company’s fixed broadband subscriber count was not provided, but Viasat said it increased slightly.
UPDATE May 29: In a filing with the U.S. Securities and Exchange Commission (SEC), Viasat reported 586,000 subscribers as of March 31, compared to 576,000 a year ago.
Dankberg reiterated Viasat’s policy of favoring fewer consumer subscribers paying for premium services over generating growth in the number of subscribers.