Q2 2023 Viasat Inc Earnings Call

[music].

Welcome to Viasat fiscal year twenty-three second quarter earnings Conference call. Your host for today's call is Mark <unk> Chairman and CEO . You May proceed Mr. Dirk Berg.

Thanks, everybody for joining us today.

The shareholder letter shortly after market close and is available on our website.

Are you referring to that on this call.

Joining me today on the call are Rick Baldridge, our chairman, Kevin Hochman rider.

Operating officer.

Our.

Chief Financial Officer, Shawn Duffy, Robert Blair, Our General Counsel.

From a corporate development and Peter Lopez from Investor Relations.

So first of all Robert provide our safe Harbor disclosure thanks Mark.

This discussion will contain forward looking statements. This is a reminder that factors could cause actual results to differ materially additional information concerning these factors contained in our SEC filings, including our most recent reports on Form 10-K and Form 10-Q copies are available from the SEC or from our website back to you Martin.

Okay. Thanks, So I'll briefly touch on some of the main points, we discussed in the letter before I take questions.

First our progress on the completion on the first.

III satellite has been really good close to plan since last quarter.

<unk>.

As its functional environmental and deployment test the different skus pyro technique devices.

The remaining tasks now I can respect that.

Yes.

Payables and restore the satellite to launch configuration.

We expect the satellite will be ready for shipment to the onsite in December .

Schedules for some U S national priority launches that are contending for Falcon heavy facilities.

Have shifted since our previous conference call. So at this point, we can't give a specific launch window.

First quarter calendar 'twenty three.

During the early part of the quarter.

Working with Spacex to launch as soon as possible.

Financial results for the quarter were consistent with the outlook. We described during our last call.

Awesome.

We previously reported we executed an agreement to sell on.

Link 16 tactical data links business to the Alberta Harris for $1 $96 billion in cash.

The letter and our filings reflect separating those CBL results from our continuing operations.

In total second quarter revenue was $745 million.

6% year over year.

That's aided by the previously reported Acacia payment and 5% growth in overall services revenues with product shipments impacted.

Delayed deliveries of some new plays to some of our airline customers.

Supply chain certification delays for some products.

Adjusted EBITDA grew 21% year over year to $188 million.

Aided by the Acacia payment very good growth in IFC services with headwinds from ACA by activating more of the Viasat three ground infrastructure and advanced Hodge constraints on available use bandwidth on residential.

Including the ongoing reallocation standby connectivity.

Dissipation.

There are substantial additional airplanes coming into service in the second half.

This fiscal year, and some impacts of supply chain spot shortages on component pricing.

The resulting product margin impact.

Total new orders were excellent in the quarter at over $1 1 billion.

Backlog remains strong as does our delivery orders and options.

Thank you.

Hi, the Q value, even though we've consumed.

About 400 million that.

Sure.

Order book.

On a year over year basis.

Our fiscal year 'twenty three outlook is revised down somewhat reflecting the cumulative effect of the viasat three launch delays combined with.

The infrastructure and network Activations delays, some portions of new aircraft activation.

Due to those delay deliveries to the airline customers.

Bandwidth constraints on residential broadband and some supply chain impacts we do anticipate very good growth in the second half.

Fiscal year.

In flight connectivity planes in service as we described last quarter, that's going to be driven by retrofits.

Yes.

We will also have growth.

IFC terminal shipments and our.

Our standalone estimate doubling adjusted EBITDA by fiscal year, 'twenty relative to fiscal year 'twenty, including adjusting for the link 16 sale remains intact.

As we previously described the link 16.

This resulted in about $1 8 billion.

The net cash proceeds which will substantially reduce debt leverage.

Standalone basis, and those demos that transaction.

The U K.

Competition markets authority or CMA review of Inmarsat transaction has entered phase two.

Published their findings from phase one tenant kind of striking dismissal of all the other competitors in aviation connectivity are first steps starting to meet with the new panel that was foreign for phase II that provides more facts on the nature of both incumbent and new entrant competition. We believe there's a strong case that substantial.

Competition will be sustained on a go forward basis and the process can still be completed within the original timeline.

So with that well open it up for questions.

Certainly at this time, if you'd like to ask a question. Please press star one on your telephone keypad.

Richard Prentiss with Raymond James Your line is open.

Thanks, Good afternoon everybody.

Eric.

Couple of questions two housekeeping ones first.

The 23 fiscal guidance.

Does that include the one timer benefits it looks like it's in there for <unk>.

Commercial networks I assume that's in there for all the types of items.

Thank you Sal, yes, our guidance does include that.

Results for Acacia.

Second kind of housekeeping one is.

Awesome.

The free cash flow positive timing.

Shortly after a couple of quarters after the Viasat three D.

Yes.

Has the change in the supply chain and installation costs et cetera changed any of your thoughts about what return free cash flow positive.

Rick I think I always think of it is around.

Timing with respect to how it pegged to the EMEA for ally.

We've said before that we need to get the satellite.

And once we do that that kind of a checkpoint is very similar.

Okay, and then more of a theoretical long term question, we've seen a lot of discussion and announcements.

Events satellite Slash smartphone communications.

Share with us kind of your thought.

That's about <unk> <unk>.

With or without Inmarsat.

Taliban in eurobond services versus five genes.

What's happening in this space.

Okay.

We do think it's a really really interesting application for satellite.

To the extent that you can provide connectivity and.

Yes interesting services.

Can you go beyond <unk> to include things like messaging Mayo AOI web.

Maybe a few others can provide interesting services you can do it too.

Hi.

I mean.

Really attractive market.

The things that are.

And just ask.

One.

Just on tier.

Breakdown of with and without Inmarsat number one.

Barry <unk>.

Challenging connectivity technical problem, we think.

It really plays to our strengths in terms of.

High capacity connectivity from space and in this case to just manage user devices.

I think that.

What's going to be needed just to do that and some.

Some way.

In space given all of the.

The increased focus on those issues recently.

And I think that's one area in which we're already doing work.

We think we can.

Partnering with.

Other holders of spectrum.

On that opportunity and the other one is.

With.

That transaction will be one of the largest holders.

Global mobile spectrum.

There are some really big advantages.

In terms of serving that market.

Hi, Sam SaaS spectrum as compared to trying to reuse terrestrial spectrum.

That's another way in which we.

We're aiming to participate.

The combination of having the spectrum and having the technology I think is going to make us.

Craig real good opportunities for us.

Great and then how should we think about the timing of when this becomes real and meaningful.

Well.

So I think.

I think that you're already seeing.

With Globalstar and Apple.

Let's say, we put it into.

Two buckets one bucket is can be can it be done at all and I think we're.

We're going to see yes, it can be done can be done.

The issue is really going to be.

It kind of links you can create reliably.

Two devices.

And has that are like ours.

Other smart devices. So the real issue that is going to be scale and scale.

And the number of simultaneous users because thats going to have a big impact on us.

<unk> services, you can bring to market.

<unk>.

At higher speeds with greater scale is going to require new space system to do that and so that pretty much anybody is going to be.

Thank you.

Two to three years out.

At least.

Great that's very helpful. Thanks, Mark.

Thanks, Greg.

Landon Park with Morgan Stanley Your line is open.

Hello, Thanks for taking my questions everyone.

Maybe just following up on.

And Mark on your satellite smartphone comments can you maybe unpack your view in terms of the.

Benefits.

The MSS spectrum vessels.

Horizon terrestrial spectrum.

Yes.

This type of service do you think you guys practical that it can be done.

From zero or would this require.

If our in orbit.

Sure.

From an investment standpoint.

Okay.

I'll give you a opinion here.

Is the issue.

The license MSS spectrum versus recent terrestrial spectrum.

The reason the terrestrial spectrum.

To be very complicated in most markets because.

Wei.

The way that.

Industrial spectrum analogy, where you'll have different carriers, sometimes in different countries.

Very close together.

It's going to be hard.

Ashley.

Operators are making exclusive deals with a carrier since in our region.

It's going to require that another carrier.

One out of the same service.

Half two.

In a different space system used at spectrum.

And that kind of plays out.

The opportunities.

Actually in avoiding interference with terrestrial.

So it becomes a real problem.

Also.

And just to jump to the other one is.

The real issue when it comes to connecting.

And connecting those types of devices. The powder products density that you can make on the ground.

Once you can make.

It's just a measure of how much power mainly from your side of it to the ground. Okay. So if you start from higher up.

Starting with horsepower.

But at the end.

At the same power on the ground it doesn't matter what altitude income from there.

There is opportunities.

Opportunities for both Geo and Leo systems, we're looking at Boeing.

I think they both can deliver similar functional performance.

Two the handsets.

Really just a question of economics.

Yes.

What does it cost you to deliver a certain amount of power to to those areas that have the greatest demand.

It's kind of the main issue that everybody deals with satellite services in general.

Thank you.

Markets will be.

Geographically very concentrated.

Because.

Certainly going to be over land also.

So you're going to have this funny situation, where a lot of the demand is near metro areas.

Even though those arent very wrong Theres, just so many inter metro areas.

There is going to be a lot of demand there and if you want things like emergency services in times of disaster, something you may need to add capacity to connect a lot of problems.

Kind of a technical issues and I think those are the ways.

The pluses and minuses.

Ngls in two different forms of spectrum.

Thanks Mark.

On.

Services segment.

Revenue was down.

A decent bit sequentially can you just maybe unpack that for me.

Yeah on the broader ISG business, how are you guys thinking about business aviation.

At this point.

Some announcements recently from star lifestyle.

Wondering how you think that you can scale in that market with the Viasat threes.

And then just one last one for Sean on the fiscal 'twenty five guide.

I just want to make sure Im understanding are you confirming it as if you had PDL still in fiscal 'twenty five are you, saying even without PDL.

We will hit those targets I wasn't entirely clear.

Okay, just on the second one that's pretty some performance.

If you took our FY 'twenty results.

Excluding the PDL contributions to that adjusted EBITDA, and then you compare that understood.

Our FY 'twenty, five and that's where you get the Tula.

Okay. Thanks Robert.

On the second one.

So there.

From a from a.

Revenue perspective.

Probably the main driver on services.

There's a couple of drivers.

One is we still are expecting really strong growth.

Commercial aircraft in service this fiscal year.

There has been delays.

We see.

Second half.

Strong activations.

Sure.

Second half is.

Much higher.

Proportion retrofits, so we don't have the aircraft delivery issues.

Issues and then also some of the aircraft deliveries our debate will go will come in in that segment.

But because of all of that growth we have to we have to clear spectrum I mean, we have a clear bandwidth.

On our satellites in advance.

The growth.

The implied perhaps a little bit behind that so that's one issue we still have we do have some headwinds.

Yes.

In residential broadband, partly the economy as a whole and inflation I think is putting more pressure on higher broadband.

Broadband services.

That's one.

There is we do see more incursion from.

Terrestrial wireless.

And there is more of a factor for sure as well.

<unk>.

Yes.

Good news.

We are.

Boeing to be emphasizing.

Especially with Viasat three but in the past.

We're going to start being able to offer.

A lot more bandwidth for specific streaming services, we have one really exciting partner and that that will be launching.

We've been doing beta test and I think probably early early.

Next quarter.

Operating more of that that's one and I think we're I think now it's looking like the speeds that we're offering are going to be really competitive.

And.

And we think that will especially for those people that do have streaming I think are alright.

Consumption will be very competitive so I think I think that.

I would say.

Okay.

Depending on when Viasat three comes into service.

I think youll see youll start to see that residential business come back in the implant business is we think is going to go really struggling in that interim time.

And then the other thing just on the margins and the EBITDA as we are getting hit by those.

Infrastructure the ground segment cost because as we get really close to launching a satellite we're activating more and more of that ground network infrastructure.

She has extensive because it's intended to offer hundreds of gigabits a terabyte of capacity.

Yes.

Yes.

Aviation.

As well.

Hi.

And the longer term.

Business aviation longer term business aviation business aviation.

You know that.

We we really started with ku band in earnest over the.

Last year or so we had a.

We focus on.

Distribution with Oems and in increasing our distribution and that's been working so it's growing it's growing pretty fast growth in terms of what to migrate people from.

Lease bandwidth to RFK bandwidth so number of KAR terminals is growing as a proportion of our total terminals at the number of K terminals is growing.

Well I think that the.

We.

And I think thats the amount of bandwidth that we can offer in the space looking very very competitive.

So, yes, we still think Thats a.

That's completely fine market for us.

Hey, Lance.

Hello.

Okay.

Yes.

Thank you that does keep in mind that even though.

Let me add satellite timing a little bit.

Not taking our foot off the gas with respect.

Wanted to be ready.

All of this ramp this year.

50 pipeline.

That's on an annualized basis Shawn.

Yes in the year.

Yes.

Hi.

Sure.

Sure.

Mark are you able to say how many <unk> you guys have between Canadian 10 year today.

On the on the commercial IFC you guys have targeted 2400.

Yes.

Previously as it still.

Scott.

Yes.

Commercial target is that what we gave last quarter was 2400 at the end of the year commercial business aviation as low hundreds.

I don't.

I'm trying to be evasive, but I think it's low.

Sure.

Great. Thank you.

We don't have a split for you right now on <unk> versus <unk>.

That's fine.

Getting to be majority Kay I think.

Great.

Really appreciate you taking the questions.

Okay. Thank you.

Mike Crawford with B Riley Securities. Your line is open.

Thank you so much.

Is that just received a nice $410 million.

Blue Force tracking extension award.

Can you talk at all about any changes.

Between your planned constellation build assuming.

That youre able.

To consummate this transaction.

Yes.

One of the things, we still need more information.

Exact status.

Payments scheduled for.

I didn't mark.

On quarter for the remaining.

Months.

Thanks ally.

They've launched one theres another one coming up in about a year I think.

Those are their newest L band satellite.

They will probably.

The planning more replenishment for L band satellites.

We think is.

And if there is an opportunity which is what we've been doing in the broadband.

In the broadband market, which is.

Hello.

For sophisticated satellites represent much much greater value in terms of.

Available bandwidth per dollar capital dollar.

What we see with the.

I'll try to direct the handset market being a little bit of an extreme.

We think there is quite a bit of elasticity.

Four.

Mobile satellite demand with lower time pricing.

That's going to be our main focus I think you'll see.

Dan Shaw.

<unk> and <unk>.

Got it.

And was delivered from MFS.

Airtime.

And I think Thats correct, thats going to payoff in government Maritime aviation and a lot of these new markets as well.

Okay. Thank you and I think related.

Could you say like kind of percent complete.

<unk>.

Capex that you've.

Put into.

V S III EMEA, <unk> APAC and <unk> for those three satellites.

Yes, Mike.

As way, we kind of look at it is across.

Jack as a whole.

Thank you.

Yes Anthony.

Ladies right around there.

That bias that respond but is that including the first <unk>.

Satellite, which I think you've started to invest in.

Is that excluding that.

Yes, we are making some investments.

And traction there we're metering that at this point.

And there.

Okay and right now it's just.

One of those satellites that you've started or more R&D.

Investment that would be applicable to similar other sites that Ford class satellites.

So two parts we have a satellite.

Structured contracts for the satellite and the other the main the main driver.

We've been working on which we'll do in the payload.

As a more highly integrated version of <unk> III also should be.

Get a bit easier to manufacture and assemble integrate so we have one of those under.

Sure.

Target.

Yes.

Most most of the expenses, so far but in the payroll.

Yes.

Okay.

And then Sean says, we're going to be but we're just managing the capex spend rate to achieve our overall balance sheet growth objectives.

And so that.

Right now.

Floating a little evidence.

Kind of.

John .

Our Gen launch data.

For the Q&A.

First of all I think we.

Talk about that at all.

And in future call Brian Okay.

We are making.

Okay. Thank you I have two other quick questions one.

Can you remind us of the time period covered through the Acacia verdict.

And then how much time and counting has accumulated.

Where Cisco willfully continue to infringe on your IP.

Hey, Mike This is Robert player so far.

First case went through sales made through 2019, so as Amin is worth during 2019.

Any.

Eric is that we're after that timeframe for their use of our intellectual property would be for any time on the products that were an issue in that case.

Yes.

For 2024 and will continue to this day any sales they made on those products. We have an additional case that relates to their use of intellectual property on different products.

Just.

It's just getting started so following the appeal, it's just getting restarted to that cases at the edge.

And it's on track.

Okay. Thank you and that period that ended through 2019 when did that period start.

Yes.

I don't recall.

Agreements, starting I want to say.

2014, I can't draw a direct line though.

Alright, so just able that time period, representing the same amount of stuff. So you can't take the two time periods and just draw a linear line.

A product deliveries.

Okay, well I would certainly wouldn't want to be in a position and then final question you talked about resolution.

Transient supply chain and certification bottlenecks and is that happening or do you expect that to happen and what can you further add regarding that.

Sure.

The supply chain issues are a little bit like whack a mole.

They tend to surface.

Yes.

Fairly suddenly.

Kind of the main way, we have been dealing with.

Resorting to spot market.

Filling any gaps.

Alright.

Yes.

I don't.

I think we've done reasonably well, but I think overall our situation is not much different.

Others.

Especially for US it's more afternoon.

I was going to say more often than high end semiconductors.

That's not really the case, we can have we can have shortages of commodity components that just show up as well.

In the.

The cases, where we can basically.

A higher paying the higher spot market prices.

That brings best for our customers.

The other failures that we'll see them higher Cogs.

What kind of products we're shipping.

I think.

I think it's hard to declare them today.

Okay. Thank you very much.

Thanks, Mike.

Ryan Koontz with Needham <unk> Company. Your line is open.

Hi, Thanks for the question just a quick follow up on your IFC commentary there.

Should we think about your share opportunity moving forward beyond this fiscal year and it sounds like you are really executing well, there and onboarding new customers and planes.

What point do you think that the.

Commercial business starts to saturate a bit in the U S.

Talk briefly about the international opportunity for you Okay, great. Thank you.

Okay.

The IFC market.

Yes.

It's very dynamic I think that.

The airlines.

But it is the airlines are trying to respond to what they perceive as what their passengers want.

And there are lots of different airlines are testing different thanks sung.

Some cases.

What they're really looking thinking of of what their road first passenger satisfaction I'm trying to figure out if they do that.

Sure.

Our content by giving them.

Better meal core banking connectivity available, giving connectivity way.

Lots of different strategies I think.

U S is.

A market, that's pretty well pretty well connected on the ground and airline competition is pretty fierce.

I think that market is ahead of mode.

Okay.

I think I think there's going to be good growth in <unk>.

Total number of claims connected growth.

Long term growth in number of patients.

And.

I think we're going to compete well I think what we've tended to do well.

Yes.

Hey.

Try to help the airlines.

Yeah.

To come up with.

To use IFC.

Sure.

With their overall market go to market strategies and how to.

Okay truly flexible and delays and which will offer the implied connectivity, we don't have a single mode, there and and our willingness to integrate.

Hi.

Hey art.

That's a funny situation because.

By par.

The greatest use of bandwidth.

Activities for entertainment. So the airlines are wrestling with that as well.

There is.

Most of the analysts expect the market's going to grow pretty substantially in the next.

In years, and I think we will compete well.

Thanks.

Okay.

The types of services that we can offer.

I think the other thing that we have been.

Yes.

Been pushing.

Is that the airline.

Yes.

A measure.

Service availability.

This provides us with cost service level agreement.

Important.

I'll give you one.

One example is.

One way to tell.

The implied connectivity is working as well.

You picked up some famous five somewhere and you do a speed test on it and see what the best speed you can get the airplane is another way would be.

You have an airplane for the people and when you look at it as what speeds of each passenger jet and Thats. The one that we've really been focused on because I think ultimately with it.

Passengers really want to say.

Whatever it is that theyre doing to work well.

Less concerned about this.

What's the speed of the airplane and more concerned about being able to do whatever they are they are objective is kind of throughout the Fi.

That seems to be resonating so so far so.

Yes.

Super interesting thanks for that Mark and just a quick follow up on the streaming technology you talked about it.

Is this like a.

CDN software stack, you've license youre going to product as part of the offering or how should we think about that new development. If you can talk at all about it.

To get too much but that's the basic idea is.

Which is what is.

I think.

Is getting is getting there is some standards around us, which is really to push cvs out even farther to the edge so that more.

For the content can be delivered directly to end users.

The real trick there is doing that economically and thats the part that.

It goes beyond the standard.

Using the standard to accomplish that goal.

Yes.

With that to the extent that that is done well.

It's a big big multiplier to.

Usage that's available.

The subscribers that are.

Better streaming content users.

Yes.

80% of all <unk> has delivered over consumer broadband networks.

Opportunity in there.

Yes.

That's really great look forward hearing more thanks, Vince sites I appreciate it.

Thanks, Brian .

Chris Quilty with Quilty analytics your line is open.

Okay.

Thanks, I just wanted to follow up the southwest is that still scheduled for Q3 rollout and should we expect.

When you guys initially launched on American you went from like.

It does an aircraft to over 100.

On a quarter or the following quarter is that the sort of ramp we should be expecting.

So southwest right now our agreement with them is for their new aircraft deliveries, so that that's going to be.

The pace is going to be metered by.

So those things from Boeing.

So that that well see.

And.

I think there is.

I think it's up to 700 ish total thats covered by that agreement.

It's good for us.

Like to do.

As his offer that service so attractive that they wanted updates or hopefully will takes hedges right now their plan is.

Two more quick.

To improve the service.

So our immediate targets.

Do a really good job on these airplanes.

Good point.

For other airlines.

We do have a mix of.

Retrofits and new paint delivery.

I think the next couple of quarters, we'll see.

A big ramp because of the number of retrofits we have.

Okay.

As the Viasat three coverage expands.

Probably move from more narrow band of wide body or are there any.

Product developments that are needed to make that transition or was it pretty seamless.

Go after the larger aircrafts.

So.

<unk> wants to go after the larger aircraft we have out wide.

Wide bodies are rich.

Okay.

And we do now have some transatlantic wide bodies and service as well.

I think we are well prepared for that.

Great.

Final question is this was just a little bit subjective you've talked about.

<unk> and it sounds like sort of a whack a mole type issue.

That said I mean, if I were to Porsche acquired a number are we is the supply chain issue.

80% of where it was pre prepayment dynamic or some number like that and I guess the more important question is are you seeing forward progress or are we stalling out in terms of some of these supply chain issues does that keep hearing them quarter after quarter now.

Hey, Chris This is Kevin Hart's provider overall, the number of supply chain issues are declining there are fewer this quarter than last quarter. Unfortunately, when you have the component shortage you got to get 100% of the vessel.

We intend chart, two short, 80% better, but you still get delivered.

General and the market in terms of demand worldwide to clients for integrated circuits. We are benefiting from it. So Q4 will be better than Q3, and expect that trend to continue in the global macro economic sense, but to look at it from merely quanta qualitative means like you are in targeted depends on the product as some may be.

Basis across.

Higher product line.

Yes.

Kevin you talked about it so one of the things we've certainly seen this.

Brokers are orders are they're pretty significant contributor to the supply chain issues.

What they do is bad for the manufacturers and as bad for US. So I think one of the things Youll see happening.

Add to this given that all of a sudden there's not going to be in the market for brokers and then a lot of parts shortages will get we will get solved pretty pretty quickly, but I think and I think we're getting closer to that but a lot of it is driving.

The brokers out of the market.

Okay.

You probably know I think the orders are backed by the trial lawyers.

[laughter].

Okay.

Louie Dipalma with William Blair. Your line is open.

Okay.

Mark Rick Sean and Peter Good afternoon.

Hello.

What is.

The timeline for the U K CMA phase two investigation and what you expected.

New timing for the close of the Inmarsat merger if the investigation goes in your favor.

So.

Phase two has.

Basic period, which would be completed by March 30, and can be extended.

If need be but it's intended to close by March 30.

What we had said when we announced the transaction was 12 to 18 months, which would be in may.

That's kind of what our expectation was so we're working to get it done within that.

Our timeframe that that March 30 timeframe.

There is a there is enough there is an opportunity.

Good.

Not go the entire phase II period, so there's a couple of milestones in there.

We go we have we got to talk to them next week to give.

Our kind of view of this thing getting started.

Another milestone in December and a couple of early in next year. So I think we'll know more by January February .

Yes.

Great and.

Previously when you announced the Inmarsat merger I think you were targeting our pro forma net leverage of five times on the deal close and now you are divesting three Harris and you just provided.

And new potential timing for the close so I was wondering what the new pro forma pro forma net leverage should look like.

Yes.

So I think what.

Thank you.

Yes.

Hey, Gary.

That formula.

<unk> be about.

70 basis points and credit.

I'll let alone.

And we're still up.

Okay, So $4 three times that.

Okay.

I think that yes, we have.

Okay. Thanks, Matt.

Great.

For for Mark or Rick It seems that many of the big four U S. Airlines are moving forward with with free Wi Fi, though it may be contingent upon the activation of your Viasat three.

A few years ago, Mark you can just you conjectured.

That the economics of free Wi Fi may look something to the effect of $1 to $2 per passenger as a cost to the airlines do you still think that range is.

Appropriate and how do you.

Think about how like Sir in third parties, such as T mobile or others like like Amazon May.

Want to subsidize that cost four for marketing purposes are to benefit their own subscriber base.

Yes.

Okay. Okay. So.

To review I think one of things.

Yes.

In the past.

Revenue total revenue opportunity.

Range of one to $2 per board in passenger and Thats.

A little bit different than the price that we would charge the airline.

Third party because.

Passengers.

Different passengers may use the internet in different ways.

Under different terms right you may have.

These are not representative of any particular airline, but airlines may decide that certain classes.

Passengers, thank goodness pastor premium economy high Tech Internet for free where they might do it for certain classes of frequent flyers or as we've done in the past.

Yes.

We've had sponsorship deals with.

Came into streaming companies.

We're doing more of those so.

So I think that the kind of revenue opportunity.

In that ballpark, one to $2 and some of that revenue may end up being shared with you as an example, or some netting out expenses.

Expenses might otherwise be.

I think that that.

One to $2.

Revenue per board in passenger.

That's a good target, it's not it's not where we're at yet.

Alright.

Great.

How about that.

Yes.

That makes sense.

Another another question.

Do you view any other defense assets.

Non strategic or along those lines are you satisfied with your liquidity.

Following the divestiture of L. Three Harris and the close of the Inmarsat deal.

The more steps need to be taking to improve leverage and liquidity.

So I don't we don't plan any other divestitures.

The main thing, we're doing to improve our beverage and liquidity, we want to drive up our earnings.

Hi.

Performing well in the markets that we're going after it and I think thats. The main thing in terms of the.

And kind of.

Synergies that we get in our business.

Yes, the link 16 business was and still is a little bit complicated because.

It's a data link.

Other participants in the data link market have synergies with other data links so hopefully Harris in particular is very strong in.

Particular data.

How common data link.

So other other participants in that ecosystem has synergies that we did.

Obviously, we're still we're still doing well.

Winning the awards, but the long term.

Got.

It was the.

Investment stream that didn't really leverage the rest of what we're doing.

<unk>.

So we are now becoming more satellite centric one other area. We have on the government side is really a cryptography inside those.

Those are very very relevant.

The space business, So we don't see.

Any any divestiture there.

Yes.

Don't take any of this is.

<unk> guidance about what we will or won't do just that.

Going through the <unk>.

<unk> about how we thought about the TV business and whether or not those same dynamics others of our existing businesses.

Okay, Great and then following following on the smartphone line of question you addressed this a little bit but inmarsat has.

68 megahertz of global L band Spectrum rights, which is significantly more bandwidth than iridium and globalstar combined and both of those satellite operators are pursuing.

Smartphone partnerships what greater capabilities.

In March that are potentially <unk> and inmarsat have with <unk>.

That access.

Spectrum and the answer to one of the questions.

You mentioned potential partnerships. So I was wondering if you can elaborate like what do you mean by by partnerships with with that L band spectrum.

Okay.

So one of them.

So.

So basically one of the things is.

When we.

Yes.

When we did our analysis around the Inmarsat acquisition news based on the existing business portfolio that we each had we anticipated that there would be an opportunity in the direct to handset market.

We're still really interested and I think that the combination.

The.

The spectrum that Inmarsat has and the technology that we.

No when I talk about the technology that we have.

And what we've done in ground based beam forming for.

Alright.

Work.

We work very closely with Lugano over the use of very existing satellite and then you look at the technology that went into Viasat three.

There is a lot of opportunity there.

As well and some of those technologies that we did.

They are applicable to.

Non geo as well and so combining some of our technology with the things that inmarsat.

Working on it.

Those are really good good opportunities for us we do think that in the long run that that market is.

There's going to be a part of it.

Price elasticity in that market, having lots of spectrum and the right technology is really the way to.

To drive costs down.

A bigger market.

Take that.

Pat.

And that opportunity and it seems to be playing out as well.

Okay.

When we announced the transaction.

Got you.

Final one.

As viasat four supposed to be a MEO has in a medium earth orbit.

Satellite or have you said, what it's supposed to be so.

For just to recap.

We expect that for the seven Terabits per second.

Geo satellite that would be an Americas focused.

It would be.

Really gives us a lot more.

Hiring really good economics, we are in pretty good bandwidth.

Super competitive in those markets those markets for you.

And mobile Arrow residential business out of those markets, we do have.

Which we're working on as well.

It can be in the multi terabits range, but I think we're I think we're going to get at.

It should have an opportunity to get good value out of that as well.

Sounds good that's it for me thanks, everyone.

Okay. Thanks Lee.

So I think Thats our last question just quick summary.

Satellite construction is pretty close to done.

Got to work through on schedule with Spacex.

For the first quarter.

The delay that delay in the supply chain issues for us and for the airlines.

Is impacting our outlook a little bit as we described in the letter the near term.

Okay.

Are you still seeing really good our awards were really really strong very happy with that <unk> transaction is progressing.

And that will greatly improve.

Our balance sheet reduce debt leverage.

Liquidity.

Ed.

I think we've got good approach to working.

U K CMA approval for the transaction.

So thanks, everybody for joining us.

Speaking again next quarter.

Yes.

This concludes today's call. Thank you for your participation you may now disconnect.

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