Viasat Inc. said trouble with its ViaSat-3 Americas communications satellite will delay growth in its business of providing fixed broadband service from space.
(Bloomberg) — Viasat Inc. said trouble with its ViaSat-3 Americas communications satellite will delay growth in its business of providing fixed broadband service from space.
The “anomaly” disclosed last month in the spacecraft’s antenna “creates unanticipated challenges,” the company said in a letter to shareholders released Wednesday alongside results for its fiscal first quarter. Viasat is working to determine the cause and corrective action, according to the letter.
“Growth in our fixed broadband business is expected to be delayed compared to what would have been obtained with nominal antenna performance,” Chairman Mark Dankberg and President Guru Gowrappan said in the letter Wednesday.
Viasat’s first quarter results broadly beat analysts’ estimates. Its shares were down 0.3% in late trading to $28.13 at 6:52 p.m. in New York. The company’s ViaSat-3 Americas satellite, weighing six metric tons, is key to its push to serve customers in North America.
Viasat doesn’t expect its current fiscal year financial results to be significantly affected, but growth for fiscal 2025 will be trimmed by the satellite’s performance, Dankberg said on a call.
“We believe we will continue to grow in fiscal year ’25 as well, but not to the same extent,” Dankberg said. “US fixed broadband today represents about 13% of revenue. And that business will be the one that’s primarily affected.”
The company said on July 12 that ViaSat-3 encountered an issue with its reflector as the spacecraft deployed in orbit. Shares have plunged 34% since the announcement as of Wednesday’s close. ViaSat-3 launched April 30 as the first of three next-generation satellites intended to multiply Viasat’s capacity to provide broadband from space.
Viasat, based in Carlsbad, California, last month said it might redeploy other satellites or re-allocate a subsequent ViaSat-3 class satellite. On Wednesday it said it has 13 satellites in space and more on the way, allowing “augmentations” as it works to overcome the problem.
Average cost for each of the three ViaSat-3 class satellites is about $1 billion, according to an estimate by William Blair analyst Louie DiPalma.
Viasat’s fixed-broadband service competes with Space Exploration Technologies Corp’s Starlink, and it’s losing customers to the Elon Musk-led firm, DiPalma said in a July 13 note. Still, losing customers there could free up capacity for airline clients, DiPalma said.
Viasat has reported lower fixed broadband revenue in the US as it devoted more bandwidth to its growing in-flight services, and said it faced bandwidth constraints as it awaited ViaSat-3 Americas. Viasat’s systems were installed on about 2,270 commercial aircraft; in a filing it listed customers including Delta Air Lines Inc., Qantas Airways Ltd. and JetBlue Airways Corp.
ViaSat-3’s reflector was supplied by Northrop Grumman Corp’s Astro Aerospace, Ars Technica reported last month, citing an interview with a Viasat executive. Neither Northrop Grumman nor Viasat responded to requests for information on the device’s maker.
The boom holding the reflector is a larger version of those used on the James Webb Space Telescope, Viasat said.
–With assistance from Loren Grush.
(Updates with share price in fourth paragraph, comments from Dankberg in sixth paragraph)
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