Specialist
Former Director at Viasat Inc
Agenda
- Operating environment for satellite service providers, focusing on the competitive positioning of a vertically integrated model
- Viasat (NASDAQ:VSAT) demand trends for in-flight connectivity and consumer broadband through ViaSat-2 and ViaSat-3
- Potential ViaSat-3 ARPU profile, relative to historical levels
- Outlook for 2019 and beyond – international expansion and satellite build-out challenges
Questions
1.
Can you share an overview of Viasat’s operating environment across in-flight and consumer broadband, highlighting 2-3 key trends or drivers that you think investors should be paying attention to?
2.
A high-level theme that may be on the horizon is LEO [Low Earth Orbit] and MEO [Medium Earth Orbit] satellite constellations. How should we think about these as they play into the ecosystem? Do you view them as a material threat to Viasat?
3.
How has Viasat been able to compete with legacy copper telco, cable, other terrestrial options in the residential business? How has its competitive positioning evolved over the past few years?
4.
Can you unpack the competitive dynamics that play into airline wifi and the value proposition of Viasat being vertically integrated to airlines?
5.
Can you share additional comments on Viasat’s positioning, threats, opportunities or core parts of its business model that you’d like to highlight or question?
6.
How much headroom do you think Viasat has to gain share in the US in-flight activity segment? It has successfully gained share with American. Could Delta be a growth driver for the company? How should we think about market share more broadly?
7.
You commented that there’s a difference in the unit economics of plane connectivity and you’re unsure whether Gogo could change its economic model. How should we think about the necessary scale for Viasat to operate profitably? How does that differ to Gogo and why might the company be constrained on its charges per consumer?
8.
Contract structures are different based on the airline, but how have pricing pressures on IFC [in-flight connectivity] contracts trended over the last few years? Have trends materially changed over the last six months? Might they change in the future?
9.
Can you discuss Viasat’s backlog and how aggressive it might be in deploying and driving that down, cosnidering the Max groundings? Might this be a material headwind?
10.
Is Viasat active in increasing the total connected passengers? If so, what’s the company’s role in that? I think you could bring in partnerships such as Apple Music here.
11.
You said that JetBlue has sometimes over 70% of the total planes connected. How should we think about a guide in terms of where you see it being achievable across the board for Viasat? Could it get at least half of all planes connected? Is that accretive on a revenue basis?
12.
You mentioned that you see players such as Gogo servicing for airlines. Can you discuss switching costs per plane from air-to-ground to satellite, what it means for estimated time required, as well as the amount that airlines are paying, which might withhold Viasat from making meaningful market share gains?
13.
What has inhibited more meaningful penetration of the Chinese market? Do you think the announced partnership with China Satcom might change Viasat’s growth trajectory in that region?
14.
How has ViaSat-2’s residential pricing held up? What is the competitive landscape like from a pricing perspective? Who is Viasat competing with in the subscriber race? Is it faring well vs its peers?
15.
How should we think about the evolution of bandwidth demand and how high Viasat might have to raise capacity for some? We saw this for the likes of ViaSat-1. Do you think that will also impact the total revenue opportunity for ViaSat-2 and ViaSat-3?
16.
Supplier issues have delayed the launch of ViaSat-3 to 2021. Are you concerned about what has been panning out there?
17.
Around USD 2bn in CAPEX is being put into the constellation. What ROI do you think is achievable for Viasat once it pans out?
18.
Given that it needs to sell capacity ahead of time, how important are partnerships in EMEA and APAC for the success of V-3? Are there areas of concern in terms of Viasat’s ability to establish the necessary partnerships?
19.
Do you expect Viasat to be under a CAPEX holiday once ViaSat-3 is in the air? Where would you expect investments to be put, with that cushion that it may receive once ViaSat-3 is live?
20.
Returning to your comments on LEO constellations being focused on different markets, why do you think they wouldn’t target Viasat’s IFC and residential internet business? Could this be a technical barrier or do you have other reasons to believe that they might not look to compete more directly?
21.
Do you think the satellite industry needs to undergo consolidation? If so, would you expect Viasat to be a consolidator?
22.
How do you expect the industry to progress over the next 1-5 years? Are there any potential wildcards? What might that mean in terms of a best- and worst-case sceario for Viasat?
23.
What KPIs do you consider the best to track Viasat’s relative health?
24.
Would you like to highlight anything that you feel we haven’t covered or didn’t do justice to? Additionally, do you have any closing remarks?
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