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ViaSat-3 delayed, but looking for opportunities

August 13, 2020

Mark Dankberg, chairman and CEO of Viasat, says his company’s plans to launch the ‘next generation’ Viasat-3 iteration of its satellites fleet are being affected by the Covid-19 crisis. Nevertheless, a recent cash-raising exercise gives Viasat some extra opportunities.

“The Covid pandemic is definitely creating some issues for us to overcome, but we continue to make good progress. We’re at the point of the programme where the payload integration is coming together. We’re testing larger and larger subsets of the payload, and we’re making really good progress on those milestones.”

Dankberg told analysts that three months from now, on its next earnings call, should provide more accurate updates on the launch plans. Meanwhile, Viasat is hoping that Boeing was working hard on delays and that launching was being aimed for mid-2021. “I think we feel a lot more comfortable giving the specifics next quarter,” Dankberg added.

Viasat reported that two major investors (Intercorp, a strategic partner for Viasat’s LatAm regions,   and Baupost) had injected $175 million of new equity into Viasat. Dankberg told analysts: “We see a bunch of opportunity, and I think that having an additional equity base gives us more maneuvering room to deal with that — to deal with the opportunities that are coming a lot. And we never can say anything until things are done, but there are definitely opportunities out there where I think this will be helpful.”

Dankberg gave some hints as to what Viasat might be looking for: “It would be, in general, things that would be helpful to either defense, to broadband services properly, and possibly some things that we might do in the aeronautical [business]. And then also, there’s also some potential opportunities to make interesting value propositions in some of our markets that could be enabled by some of these potential transactions. I’d say that’s kind of the theme that we’re looking at.”

Dankberg added that he thought that the clutch of new Low Earth Orbiting satellite projects, including the Jeff Bezos-backed Project Kuiper, would end up with higher bandwidth costs than geostationary satellites. “I think that the main themes that we’ve been saying on LEO is that the cost of useful bandwidth is going to be quite a bit higher than it will be for our GEO satellites. And so we think that’s a pretty strong advantage for us in most of the markets that we’re in. We’ll also have lots of coverage, especially in the ocean areas, probably before the LEO systems, too.”

He admitted that one aspect of Viasat’s business, that of supplying bandwidth to airlines for their In-Flight connectivity and bandwidth, was under pressure. “This is obviously the most challenging time ever for our commercial airline customers and the progression out of the bottom of the market is — it’s happening. It’s happening slowly, but it’s happening steadily.”

Dankberg said that the decline in demand was down 90 percent in May, 80 percent in June and 75 percent in July, and thus it was a slowly improving picture as passengers came back.  “I would say that there, the attention [airlines] are paying to in-flight connectivity is significant. I mean, I think as anything they’re seeing, this is probably even more important than it was before that people want to be connected while they’re flying.”

“I’d say we’re optimistic, but anything that we describe will be on a schedule that’s convenient for our airline customers, and that’s how we’ll hopefully be able to announce things,” added Dankberg. “But the other point is that of the orders that we already had entering into the pandemic, pretty much all of those are still intact, and we still expect to deploy them once the market picks up again.”

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