Eutelsat divests European Satellite Broadband business to Viasat

[donaldk]

Eutelsat will retain 49% and with Viasat establishes a direct to consumer business, instead of an exclusively b2b businessmodel. Viasat launched its Starband service in Europe in 2003, on leased capacity, and supplying BT and one or two other ISPs, but withdrew from Europe due to lacking uptake. Becoming a technology platform provider only, primarily to Eutelsat. With an established platform and busines it is apparantly time to divest and return to core activity of infrastructure provision. Hopefully the push will see an entry of broadband as current offers are basically metered options, with a relatively small dataallotment. But giving the US heritage of Viasat as an operator, that does not seem too likely. Nor do I expect lower prices, as US operators are spoilt with high prices for internet access services. It will establish the potential for a more uniform service offering especially in smaller markets that have lacked serious or more affordable satellite internet access service.

In a seperate announcement Viasat announced it will launch a high capacity Ka-band satellite for Europe. So Eutelsat buys into additional satellite ifrastructure, besides divestinga majority share in its service and platform, and refocussing of its service offering.



New Partnership Will Leverage Eutelsat's Successful European Broadband Business and ViaSat's Advanced Broadband Technologies and Consumer ISP Business Expertise


Eutelsat Communications (NYSE Euronext Paris: ETL) and ViaSat Inc.(NASDAQ: VSAT) today announced an agreement to create a joint venture combining Eutelsat's current European broadband business with ViaSat's industry-leading broadband technologies and consumer Internet Service Provider (ISP) business expertise.

Building on a decade-long relationship, Eutelsat and ViaSat are joining forces to create a partnership that will expand Eutelsat's current wholesale broadband business and launch a new consumer retail service in Europe. The joint venture will initially leverage KA-SAT, Eutelsat's high capacity broadband satellite.

Commenting on the new partnership, Michel de Rosen, Eutelsat Chairman and CEO, said: "With KA-SAT, our unique dedicated High Throughput Satellite, Eutelsat has built an effective, high-quality, broadband platform for Europe in which ViaSat has played a key role as technical partner. Broadband is an important component of our strategy, and we seek to partner with market-leading companies that contribute to enriching our offer. ViaSat is a partner that we both trust and value for its track record in setting industry standards and developing technologies that unlock broadband opportunities. Our joint venture will take our relationship to a new level and give further impetus to affordable, high-quality Internet services in Europe."

ViaSat's Chairman and CEO, Mark Dankberg continued: "Eutelsat is the clear leader in the European broadband market and is an obvious partner in extending our global reach. We have worked together for more than a decade - creating the satellite broadband market and sharing a vision for the future of satellite broadband. We complement each other extremely well. We offer a powerful team to close the digital divide in Europe today and well into the future. The joint venture combines an unprecedented collection of expertise in satellite operations and technology, broadband networks, and wholesale and retail distribution throughout Europe that forms the foundation for next-generation internet services. We're excited to be working with Eutelsat to bring a proven model to the European and Mediterranean markets."

Since KA-SAT entered service in 2011, Eutelsat has capitalised on its high capacity satellite platform in Europe and the Mediterranean Basin to reach 190,000 customers. ViaSat has proven success in the consumer residential market.

The joint venture will consist of two businesses coordinating efforts to expand the European broadband market:

Wholesale Services will be focused on providing wholesale broadband services in the European and Mediterranean regions to the newly established retail services business and existing Eutelsat distributors. Eutelsat will contribute its current European broadband business including the KA-SAT satellite. ViaSat will continue to provide selected broadband technologies for KA-SAT gateways and terminals and will acquire a 49 percent interest in the business for a consideration of € 132.5 million. For future capacity, the partnership will continue to evaluate over the next few months the ViaSat-3 technology and the extent and the terms under which it would utilise the European capacity on the new ultra-high throughput ViaSat-3 platform, which ViaSat expects to bring into service in 2020. The partnership will also continue to study other options to add growth capacity in the nearer and long term.

Retail Services will be focused on building a direct-to-consumer ISP business in Europe. Enhanced service plans will be introduced in select European countries throughout 2016, setting a foundation for growth in the retail services business with the availability of future satellite capacity. The business will be owned 51 percent by ViaSat and 49 percent by Eutelsat.

Completion of the transaction is subject to regulatory approvals and other customary closing conditions, and is currently expected to close during the second quarter of 2016.

[donaldk]

So Viasat will launch a European Ka-band satellite, so Eutelsat buys into additional satellite ifrastructure, besides divesting and refocussing service offering.

ViaSat Unveils First Global Broadband Communications Platform to Deliver Affordable, High-Speed Internet Connectivity and Video Streaming to All
- Each ViaSat-3 Satellite Offers Over 1-Terabit Per Second of Network Capacity -- which is Equal to the Total Capacity of All Commercial Satellites in Space Today

- Platform Gives Consumers Choice In Internet Provider by Enabling 100+ Mbps Broadband to Any Home

- First Two Groundbreaking ViaSat-3 Class of Satellites Underway with Boeing


       

CARLSBAD, Calif., Feb. 9, 2016 /PRNewswire/ -- ViaSat Inc. (NASDAQ: VSAT), a global broadband services and technology company, continues to redefine the role satellite plays in the competitive broadband communications market with the introduction of the ViaSat-3 ultra-high capacity satellite platform – which is comprised of three ViaSat-3 class satellites with state-of-the-art ground network infrastructure. Work is underway with the first two ViaSat-3 satellites, with ViaSat starting work on the satellite payloads and Boeing Satellite Systems starting on the associated satellite bus platforms, expected for integration and delivery in 2019. The first two satellites will focus on the Americas and Europe, Middle East and Africa (EMEA), respectively, with a third satellite system planned for the Asia Pacific region, completing ViaSat's global service coverage.

Delivering More Choice through More Network Capacity
The ViaSat-3 platform is the next big step for ViaSat to fulfill its ambition of delivering a global broadband network with enough capacity to deliver more consumer choice with an affordable, high-speed, high-quality internet and video streaming service. The first two satellites will deliver more than twice the total network capacity of the approximately 400 commercial communications satellites in space today – combined.

The ViaSat-3 platform can serve more customer demand by:

Delivering a 100+ Megabit per second (Mbps) residential internet service, enabling 4K ultra-high definition video streaming;
Supporting each aircraft with hundreds of Mbps of in-flight connectivity services and video streaming for commercial airlines, business jets and high-value government aircraft;
Providing up to 1-Gigabit per second (Gbps) speeds for use in maritime, oceanic and other corporate enterprise applications such as oil and gas platforms; and Offering affordable satellite Wi-Fi connectivity to the billions of unconnected people in emerging markets.

Technology with a Global Mission
ViaSat's innovative satellite and ground technology provides unprecedented capabilities in terms of service speed, cost and flexibility. The platform:

Delivers more than 1,000 Gbps – or 1-Terabit per second (Tbps) – of network capacity per satellite to enable high-speed internet, including video streaming, at scale;
Leverages dynamic flexibility to continually direct capacity where customers are located – whether at home or on the move. With an estimated one half of the world's population living on only one percent of the Earth's land and the other half broadly dispersed, the ability to target capacity is critical to creating a true global broadband network;
Utilizes cloud technology for network processing and operations. By migrating portions of the network into the cloud, the platform advances and simplifies network infrastructure, improves system-wide reliability and reduces network capital and operational costs; and
Operates compatibly with ViaSat-2 class terminals, to extend coverage, improve transmission speeds and further reduce network capacity costs to a fraction of what they are today.

"The innovations in the ViaSat-3 system do what until now has been impossible in the telecommunications industry – combining enormous network capacity with global coverage, and dynamic flexibility to allocate resources according to geographic demand," said Mark Dankberg, chairman and CEO, ViaSat. "While there are multiple companies and consortia with ambitions to connect the world with telecom, satellite and space technologies, the key technologies underlying ViaSat-3 are in hand today, enabling us to move forward in building the first broadband platform to bring high-speed internet connectivity, including video streaming, to all."

[donaldk]

ViaSat Announces Third Quarter Fiscal Year 2016 Results
- Third quarter revenues reached $347.8 million, fueled by record revenues in Satellite Services and Government Systems segments

- Quarterly operating cash flows were strong at $112.0 million, funding the entire fiscal 2016 year-to-date next-generation satellite investment

- ViaSat-3 global satellite constellation underway with work already started on Americas and EMEA satellites

- ViaSat-2 to now launch with Arianespace, building confidence in a mid-2017 calendar year start of service

- ViaSat and Eutelsat entering into a European broadband partnership


       

CARLSBAD, Calif., Feb. 9, 2016 /PRNewswire/ -- ViaSat Inc. (NASDAQ: VSAT), a global broadband services and technology company, today announced financial results for the fiscal third quarter ended December 31, 2015.

"Our third quarter results show strong revenue and earnings growth in Satellite Services and Government Systems segments – driven from our ability to  create value in broadband markets through superior bandwidth economics," said Mark Dankberg, ViaSat chairman and CEO. "With revenues, earnings and margins still rising four years after ViaSat-1 entered service, it's clear that leading the global industry in satellite network capacity efficiency offers compelling growth prospects for ViaSat. Our new launch agreement with Arianespace builds greater confidence in bringing ViaSat-2 into service by our mid-2017 calendar year target. With double the productivity of any other satellite broadband system, ViaSat-2 provides the resources to improve our services; grow revenues, earnings and margin; expand our addressable consumer market; and further accelerate our momentum in global mobility. The ViaSat-3 class satellites are even more transformational. With total network capacity and data delivery costs that are expected to be approximately four times better than ViaSat-2, ViaSat-3 will be the world's first Terabit per second satellite – offering global connectivity with unrivaled economics and coverage flexibility."



Financial Results







(In millions, except per share data)
Q3 FY16
Q3 FY15
Year-Over-Year  Change
First 9 Months FY16
First 9 Months FY15
Year-Over-Year  Change
Revenues1
$      347.8
$      339.6
2.4%
$    1,045.5
$    1,017.8
2.7%
Adjusted EBITDA1
$        86.0
$        85.9
0.1%
$        250.0
$        255.8
(2.2)%
Net income1,2
$          9.7
$        14.8
(34.2)%
$          17.3
$          32.8
(47.3)%
Diluted per share net income1,2
$        0.20
$        0.31
(35.5)%
$          0.35
$          0.68
(48.5)%
Non-GAAP net income1,2
$        19.8
$        23.9
(17.2)%
$          46.7
$          58.7
(20.4)%
Non-GAAP diluted per share net income1,2
$        0.40
$        0.49
(18.4)%
$          0.95
$          1.22
(22.1)%
Fully diluted weighted average shares
49.6
48.4
2.5%
49.2
48.1
2.4%







New contract awards1
$      340.4
$      313.1
8.7%
$      1,032.1
$      1,122.1
(8.0)%
Sales backlog3, 1
$      866.0
$      992.9
(12.%
$        866.0
$        992.9
(12.%


Segment Results







(In millions)
Q3 FY16
Q3 FY15
Year-Over-Year  Change
First 9 Months FY16
First 9 Months
FY15
Year-Over-Year  Change
Satellite Services






  New contract awards1
$      128.0
$      114.7
11.6%
$        375.9
$      434.7
(13.5)%
  Revenues1
$      141.2
$      123.8
14.0%
$        413.8
$      369.5
12.0%
  Adjusted EBITDA1
$        63.5
$        47.6
33.4%
$        180.0
$      155.5
15.8%







Commercial Networks






  New contract awards
$        65.4
$      55.9
16.8%
$        153.4
$      174.4
(12.0)%
  Revenues
$        55.4
$      84.0
(34.0)%
$        188.6
$      263.1
(28.3)%
  Adjusted EBITDA
$      (14.9)
$        6.0
(347.7)%
$        (30.0)
$        16.2
(285.5)%







Government Systems






  New contract awards
$      147.0
$      142.5
3.2%
$        502.8
$      513.0
(2.0)%
  Revenues
$      151.1
$      131.7
14.7%
$        443.1
$      385.2
15.0%
  Adjusted EBITDA
$        37.5
$        32.2
16.4%
$        100.1
$        83.8
19.5%


1
During the nine months ended December 31, 2015 and January 2, 2015, the Company recorded $20.6 million and $46.9 million, respectively, with respect to amounts realized under a legal settlement agreement associated with certain patents and intellectual property, of which $18.8 million and $27.0 million were recognized as product revenues in the Company's Satellite Services segment, no amounts and $18.7 million were recognized as a reduction to selling, general and administrative expenses, and $1.8 million and $1.2 million were recognized as interest income in the condensed consolidated financial statements, respectively. Further information on the settlement is contained in ViaSat's Quarterly Report on Form 10-Q for the quarter ended December 31, 2015.


2
Attributable to ViaSat, Inc. common stockholders.


3
Amounts include certain backlog adjustments due to contract changes and amendments.


Companion Announcements from February 9, 2016
In addition to its third quarter fiscal year 2016 results announcement, ViaSat today announced:

ViaSat and Eutelsat have entered into an agreement to form a European broadband partnership that includes establishing a new retail consumer entity led by ViaSat with a 51% ownership position. ViaSat will also acquire a 49% interest in Eutelsat's existing European wholesale business.
ViaSat secured two launches with Arianespace – one for ViaSat-2 and one for a ViaSat-3 class satellite. The transition of the ViaSat-2 launch to Arianespace builds confidence in the launch schedule to meet ViaSat's goals of bringing new high-speed service plans across North and Central America, the Caribbean and the North Atlantic Ocean by the middle of calendar year 2017. ViaSat has also designated a ViaSat-3 class satellite launch to long-term partner, SpaceX, using their Falcon Heavy.
ViaSat unveiled the ViaSat-3 platform, the next big step for the Company to deliver a global broadband network with enough network capacity to enable more consumer choice with an affordable, high-speed, high-quality internet and video streaming service. ViaSat has started work on the first two ViaSat-3 payloads, and work has begun with Boeing Satellite Systems on the associated satellite bus platforms. Both satellites are expected to be integrated and delivered by Boeing in 2019.
Satellite Services
In the fiscal third quarter, ViaSat's Satellite Services segment achieved record high revenues, up 14% year-over-year. Revenue growth spanned all market sectors, with residential broadband offerings and emerging in-flight connectivity being the primary drivers. Adjusted EBITDA performance for the third quarter grew at more than double the rate of revenue, increasing 33% over last year's period, helping to drive the segment's Adjusted EBITDA margin up year-over-year to 45%. Highlights for the quarter include:

Consumer subscribers were at 687,000 at the end of the fiscal third quarter, up 2% year-over-year.
A continued focus on higher value plans drove another quarter of average revenue per user (ARPU) increase, up by 7% year-over-year to $56.74, a new record high.
ViaSat unveiled the Exede® WiFi Modem offering download speeds up to 25 Mbps; no other U.S. satellite ISP today offers speeds this fast for residential use. ViaSat also introduced new Exede Business plans, offering affordable high-speed internet service options for primary connectivity, plus a new internet back-up plan.
In-flight internet service expanded to 446 commercial aircraft as of ViaSat's fiscal third quarter, a 58% year-over-year increase. ViaSat's ability to deliver a free "best in air" connectivity and video streaming experience, especially on JetBlue and Virgin America, is gaining momentum among airlines and passengers with over one million device connections made per month, and is also helping to engage internet and media sponsors.
JetBlue, in cooperation with ViaSat, is now going to allow passengers to access ViaSat's Ka-band satellite-supported service from gate-to-gate rather than only while above 10,000 feet.
In Business Aviation, ViaSat formed a strategic partnership with Jet Aviation St. Louis to develop the first-ever hybrid Ku-/Ka-band radome to advance in-flight connectivity and video streaming on Gulfstream large cabin business jets. ViaSat also announced it is integrating its terminal and global Ku-band internet service with Rockwell Collins to advance in-flight cabin and flight deck connectivity.
The Satellite Services segment achieved strong year-to-date revenue growth of 12% to $413.8 million, and first nine months' Adjusted EBITDA growth of 16% to $180.0 million compared to the same period last year. Excluding the $39.7 million benefit from the fiscal 2015 second quarter portion of the Loral settlement, Satellite Services segment revenues grew 19% and Adjusted EBITDA grew 55% on a year-to-date basis compared to the same period in fiscal year 2015.

Commercial Networks
ViaSat's Commercial Networks segment experienced decreases in quarterly revenues and Adjusted EBITDA compared to the same period last year as the segment's largest infrastructure program for nbn™ transitions to service launch. Adjusted EBITDA results were also impacted by the segment's rising research and development (R&D) activities. Highlights for the quarter include:

ViaSat received initial orders for residential terminals and other at-home equipment products from nbn, for its commercial service launch, expected in April 2016.
The Commercial Networks segment year-to-date revenue and Adjusted EBITDA also declined compared to the same period last year.

Government Systems
In the third quarter of fiscal year 2016, ViaSat's Government Systems segment revenues and Adjusted EBITDA reached record highs. Revenue increased to $151.1 million, or 15% growth year-over-year, while Adjusted EBITDA grew 16% to $37.5 million compared to the prior year period. Revenue growth reflected an increase in government satellite communications systems products and tactical data link products sales, partially offset by lower information assurance products revenues. Adjusted EBITDA reflected the Company's expanded service revenue base as government mobile broadband platforms continue to grow, with nearly 400 government aircraft in service, as well as decreased R&D. Highlights for the quarter include:

The continuing Appropriations Resolution, ended December 11, 2015, negatively impacted U.S. government ordering flows through the Company's fiscal 2016 third quarter, improving prospects for anticipated near-term contract awards.
ViaSat won an award from Boeing for the production of approximately 90 Link 16 Small Tactical Terminals for the Lots 5 and 6 of the AH-64E Apache Guardian Attack Helicopter production line.
ViaSat introduced the industry's first single-port 100 Gbps encryption device designed to scale from 10 to 40 to 100 Gbps, enabling customers to meet the increasing demand for bandwidth.
In cybersecurity services, ViaSat received a CSO50 Award for its Cyber-intrusion Auto-response and Policy Management System work, as part of a U.S. Department of Energy grant study.
ViaSat partnered with Cobham SATCOM to introduce new product and service offerings to the Mobile Satellite Services market. The Company also signed a Memorandum of Agreement with Addvalue to pursue new products and applications for use over ViaSat's L-Band managed service terminals.
On a year-to-date basis, ViaSat's Government Systems segment revenues grew 15% to a record high of $443.1 million and Adjusted EBITDA grew 19% to a record high of $100.1 million, compared to the same period last year.

Conference Call
ViaSat will host a conference call to discuss the third quarter results for fiscal year 2016.  Details follow:

DATE/TIME:   
Tuesday, February 9, 2016 at 5:00 p.m. Eastern Time
DIAL-IN:       
(877) 640-9809 in the U.S.; (914) 495-8528 international
WEBCAST:   
investors.viasat.com.
REPLAY:     
Available from 8:00 p.m. Eastern Time on Tuesday, February 9 until midnight Wednesday, February 10 by dialing (855) 859-2056 for U.S. callers and (404) 537-3406 for international callers; conference ID 44503099.