Carlsbad satellite Internet provider Viasat expects to complete its pending buyout of rival Inmarsat this month — bulking up the combined companies' competitive position amid stiff competition in the satellite broadband market.
Viasat Chief Executive Mark Dankberg outlined the expected time frame of the Inmarsat deal during a conference call with Wall Street analysts on Wednesday for its fiscal fourth quarter and full-year financial results.
In late 2021, Viasat agreed to pay $850 million in cash, issue 46.3 million shares of stock and assume $3.4 billion in debt to acquire London-based Inmarsat. Those terms today value the acquisition at $6 billion. It has been bogged down in regulatory review but now is close to clearing those hurdles, although Viasat executives acknowledged that there were still a lot of "moving parts" related to the financing.
As well as talking about Inmarsat, Viasat executives also gave an update on the status of ViaSat-3 Americas — its new terabit-class satellite that blasted into orbit on April 30.
Dankberg said the satellite has reached its orbital slot some 22,000 miles above Earth. It will undergo further testing before beginning to beam down bandwidth by mid-summer.
"It is going to greatly expand our coverage and provide the bandwidth to grow all of our satellite services," said Dankberg. "There are just a few steps to go with this first one."
A second ViaSat-3 satellite is scheduled to launch later this year, providing coverage to Europe, the Middle East and Africa. The third 1,000-gigabit-per-second ViaSat-3 for Asia Pacific aims to enter orbit next year.
Space has been a fast-growing market — led by Elon Musk's SpaceX and its Starlink fleet of low-altitude Internet satellites. SpaceX said on social media earlier this month that it now has 1.5 million customers worldwide — up from just 250,000 about 15 months ago.
A combined Viasat and Inmarsat aim to compete globally by targeting commercial airlines, business jets, governments, ships, drilling rigs and other business customers, which often require encryption, cybersecurity and tailored services.
Viasat's inflight Wi-Fi has been installed on 2,230 aircraft, including from Delta, JetBlue, American, United and Southwest Airlines. It has won orders for 1,000 Delta planes, including portions of its long-haul wide-body fleet.
But increased competition from Starlink and limited bandwidth on its existing satellites has resulted in a loss of residential customers for Viasat. The company didn't disclose how many subscribers have left. Its satellite services revenue, which includes residential and in-flight connectivity, fell 3 percent in the fourth quarter. But it grew 2 percent for the full 2023 fiscal year to $1.2 billion.
Other segments of Viasat's business, such as network gear and government, posted solid results. Overall, Viasat's revenue increased 1 percent to $2.8 billion for its full fiscal year. Adjusted net income for the year fell to a $600,000 loss.
Looking ahead, Viasat expects financial results to improve with the Inmarsat acquisition — which is expected to contribute to earnings immediately, as well as ViaSat-3 satellites coming on line.
"We believe the combination of virtually global coverage, the amount of useful bandwidth for capital dollar invested and ability to dynamically move that bandwidth to the places with the greatest demand are unique to the designs of these satellites and will prove to be especially valuable in global mobility markets," said Dankberg.
