Viasat is shifting its focus away from residential broadband and towards its mobility business in light of the anomaly on ViaSat-3. As a result, the company has decided to cancel plans for ViaSat-4 and write down the associated costs. In the second quarter of its 2024 fiscal year, Viasat incurred a $900 million charge due to the impairment on ViaSat-3, total loss on Inmarsat-6 F2, and write down on ViaSat-4, taking into account expected insurance proceeds. Viasat plans to file insurance claims for ViaSat-3 and I-6 F2 by the end of the year.
CEO Mark Dankberg explained that ViaSat-4, originally designed as a super high throughput fixed broadband satellite, will now be repurposed for a future broadband satellite focusing on mobility. This decision is a result of the timing of ViaSat-3s and Viasat’s focus on mobility customers. Dankberg stated that deferring the capital investment for ViaSat-4 will save the company millions of dollars in the short term and improve profitability.
Viasat is awaiting a report on the root cause of the anomaly on the ViaSat-3 feeder link antenna, which will inform corrective actions for the second ViaSat-3 satellite (ViaSat-3 F2). The company also mentioned plans to relocate either the second or third satellite (F2 or F3) to cover the Americas, but the decision has not been finalized.
The company is shelving plans for growth in the fixed broadband market in the U.S. and will prioritize capacity for mobility services instead. Viasat expects the U.S. fixed broadband business to decline until another ViaSat-3 satellite is launched. With the acquisition of Inmarsat, residential broadband now accounts for less than 15% of Viasat’s business.
Viasat reported revenue of $1.2 billion for the second quarter of fiscal year 2024, an increase of 85% compared to the previous year. Adjusted EBITDA for the quarter was $486 million, a rise of 210% year-over-year. Despite a net loss of $767 million due to the $900 million charge, Viasat remains confident in its growth prospects and expects to become free cash flow positive in the first half of 2025.
Satellite services emerged as the highest-earning segment, generating $585 million in revenue, driven by the impact of Inmarsat and increased demand for commercial air in-flight connectivity services. The Government Systems segment also saw significant growth, with revenue reaching $365 million, a 99% increase from the previous year.