ViaSat Garners at Least 150,000 Subscribers for Exede Satellite Broadband Service

The company ended fiscal Q2 with 429,000 satellite broadband subscribers across its Exede and WildBlue platforms, 35 percent of which are getting service from the ViaSat-1 satellite at 111 degrees west that launched last year, company executives said. ViaSat added 24,100 net new subscribers, had 54,835 gross additions and 16,432 customers that switched to Exede from WildBlue, analysts said. It completed 71,000 new service installations in fiscal Q2, up from 66,000 in Q2, but short of the 75,000 B. Riley & Co. forecast, analyst Mike Crawford said. While ViaSat once forecast hitting 90,000 to 100,000 gross additions on a quarterly basis, CEO Mark Dankberg conceded “we won’t get there in the next quarter or two” and there is “room for improvement in what we are doing.” ViaSat parted with a third-party company providing call center and Web service and switched to Xerox’s Affiliated Computer Systems (CED Sept 5 p2). ACS has a group dedicated to ViaSat’s call center and ViaSat is taking a larger role in staff training and paid search.

ViaSat’s Q2 monthly churn was 2.5 percent, slightly above Crawford’s 2.4 percent projection, while average revenue per user (ARPU) was $47.96 against a $46.44 forecast. ViaSat’s fiscal Q1 ARPU was $45.46. The bulk of new Exede subscribers are choosing an entry-level package that carries a $49 monthly fee, delivers maximum 12 Mbps/3Mbps download/upload speeds and has a 10 GB monthly data cap, company officials have said.

With ViaSat poised to launch a Exede bundle with DirecTV by month’s end, ViaSat expects to sign a contract for a ViaSat-2 in fiscal Q3 can has two “competitive options” for building it, CEO Mark Dankberg said. If ViaSat signs its contract in Q3, ViaSat-2 would launch in 2016, given the three to four years it would take to build it, ViaSat spokesman Bruce Rowe said.

ViaSat-1 will be at capacity with one million subscribers within three to four years, spread across Exede as well as wholesale customers like Dish Network’s dishNet and JetBlue and United Airlines, which are to launch broadband services in 2013, ViaSat executives said. ViaSat’s broadband service for airlines is undergoing FAA testing, and the first aircraft are expected to start installing it by Q1, company executives said. ViaSat also has signed a wholesale agreement with a Latin America service provider for ViaSat-1 capacity that “spills over” into Northern Mexico, Rowe said. Rowe declined comment on details of the agreement, including the identity of the service provider.

Dish hasn’t renewed its resale agreement with ViaSat for Exede and WildBlue, and is expected to also sell EchoStar’s HughesNet Gen4 satellite broadband service. “I think things will continue with Dish for a while,” Dankberg said. “Dish will exercise their judgment in how they will divide up” territories in which they sell Exede and HughesNet and is “treating us pretty fairly.” Dish initially told ViaSat in February 2011 that it would renew a resale agreement that expired in August 2011.

Meanwhile, ViaSat swung to a $7.9 million fiscal Q2 net loss from an $8 million profit a year earlier as cost of service revenue rose to $95.3 million from $54.2 million, while selling, general and administrative expenses increased to $54 million from $44.3 million. ViaSat’s revenue grew to $282 million from $223 million a year earlier a satellite services sales, which include Exede, jumped to $67.3 million from $55.4 million. The satellite services group’s EBITDA slipped to $8.7 million from $16.8 million a year ago. ViaSat’s commercial networks division posted EBITDA of $4.7 million, up from $1.8 million a year ago as revenue increased to $86.5 million from $64.2 million. Commercial Networks logged $307.2 million in new contract awards, up from $53.6 million last year. Its government business recorded EBITDA of $31.2 million, an increase from $20.6 million as revenue jumped to $129 million from $103.4 million.