Q3 2023 Viasat Inc Earnings Call
[music].
Welcome to the bias that FY 'twenty third quarter earnings conference call.
Today's call is Mark tank Burke Chinh.
You May proceed Mr <unk>.
Okay. Thanks, Thanks for joining us today.
We released our shareholder letter shortly after market closed and is available on our website and will be referring to on this call.
Joining me on the call today are Rick Baldridge, our Vice Chairman, Kevin Garnett rider.
Officer, our Chief Financial Officer, Shawn Duffy.
Our general counsel.
Corporate development and Peter Lopez from Investor Relations.
Sports on forms 10-K, and 10-Q copies are available from the Senator from our website at T. Margaret.
Thanks, Robert So I'll start with a brief overview and then we'll go right into questions. So.
The most important point for today is that construction and test on the bypass III American satellite has been completed.
Scheduled to launch on April 8th which follows a pair of NASA International space station missions that had been pushed.
One to two weeks later than previously plan because of the Soyuz replacement mission to bring back cosmonauts from the ISS.
Bringing that satellite into serviced addresses are most immediately challenged which was bandwidth constraints.
In the U S that have caused us to steadily downsizer residential business to support the strong growth we've had in fact connectivity.
The class had three will be able to serve areas that are currently full and to introduce updated plans with higher speeds more bandwidth from greater value.
Also supports five hundreds of our existing customers in the Americas as capacity to the good growth, we've had in Brazil, and Mexico and opens additional new geographic and vertical markets were confident it will drive growth.
The satellite should reach a total tot just a couple of weeks after lunch and we expect to start initial payment services properly and to start to scale and during the summer.
Viasat three EMEA Europe Middle East and Africa satellite is not far behind this plan for lunch.
In September .
It is important coverage to our mobility businesses and capacity to a number of other markets. It's also the catalyst expected to enable us to reach positive free cash flow agent.
The Asia Pacific satellite is not too far behind now.
Overall, new orders are up year over year, we're making very good progress on in fact connectivity actually we think one exciting examples of the recent announcements Delta Airlines, making free wi-fi available and therefore fleet.
We've worked methodically with them to be sure we both understand the growth in demand deliver the service quality they expect.
Scale.
Today, we are at about a total of around 3000 flights a day with free wi-fi.
Now that's between Delta and Jetblue, that's growing pretty rapidly.
And of course, we also will continue to serve all the other lines, we supported including at those same major universities.
[laughter], good opportunities and working with airline partners to scale passenger engagement with Wi Fi affordably in in ways that best suits their business models and brands.
We shifted about 245 terminals in the third quarter for commercial air and brought about 160 planes into service, which is about a 17% year over year growth nor.
New orders have been very good with both new and existing customers and we still have over about 1200 additional payment out of order.
Airline customers are seeing the way that some of their new aircraft deliveries probably in the range of about 50 to 60 cumulative by the end of our fiscal 2003, but.
We expect deliveries of new styles will grow sequentially in the fourth quarter anyway.
I've also been equipping special on there I'm from China U S. In China, the largest domestic air travel markets and we believe the ability to serve international flights to and from China with our partners that seamlessly will be important to many global airlines as well as to the Chinese International Airlines.
He was a major point for today is is around the close of the sale of our TTL business just after the end of the third quarter.
We will net as we expected about $1.8 billion in cash Greg restrictions on our balance sheet.
Also realise a gain of his head on over one and a half billion dollars.
So including that game FY at 23 will actually be a very possibly enforce.
Oh sure we can drive our satellite services business instincts have significantly greater growth potential.
As we mentioned last quarter, we have some right sizing to do as a result of his tail and that's on your way.
Then regarding inmarsat the remaining gigs to close the transaction are primarily UK in the European community antitrust approvals.
We expect to have good insight into the regulatory.
The regulators current views on the matter this quarter.
So the shareholder data shareholder letter also provides our financial data for our third quarter of fiscal twenty-three and year to date those results are below our expectations for the year.
In the quarter with the largest factor being the significant delays and lots of the first by sat through satellite relevant to the schedule, we expected entering the year.
I've had other challenges on supply chain, the second cost her delivery schedule of some of our products.
The way the airplane deliveries to our customers and encryption products certification issues that are not specific to us.
The demand for our products and services are strong.
Had good year over year performance at borders.
With the T V L gag will report our highest ever earnings for the fiscal year by a long shot.
We expect to start fiscal year 2004 was the onto the person <unk>. We think the outlet from there is very exciting as described in the shareholder letter.
So is that we'll hook it up for questions.
The floor is now open for your questions to ask a question. This time. Please press Darren wanted to telephone keypad. If any point you would like to withdraw from the queue. You can press the start button again can you provide the opportunity to ask one question and one <unk>.
Follow up questions.
We'll take a moment render roster.
Our first question comes from the lineup Rick.
From Raymond James Please [noise].
Oh good afternoon everybody.
Right.
Okay.
Sure hold a letter a couple of two questions first Mark you talk about the mindset first <unk> coming over to America as we got a lunch date glad to have that.
Hello are you anticipating.
It sounds like there's a pent up demand for your letter how long did it take it takes to fill that up and what are we thinking that we need to be starting to think about that for the first question.
[laughter] well cause the good way we lay.
The way we've operated in the past has worked well for us.
Is.
We kind of fill it up and then we.
Then we.
You'll see room or do we basically tend to evolve our service our customers mix to kind of higher yielding customers.
Which is kind of what we're doing here I don't think of them as the.
We've talked multiple times about this hierarchy of.
Value and services difficulty disorder with government and by Maritime those those types, who we generally have been filled.
Filled up it's kind of like two to three years of songs.
Typically will fully intended to do and then we.
And then we.
Above that.
[noise] coupla years or so the.
Kind of our approach to advice at four we've been we've been working on is really focused on the technology, making sure that you know we got the performance that we expect and we can.
We can produce it.
More more predictable schedule, but it's pretty much the same platform.
Timing of that.
We will adjust.
Just based on kind of our our cash flow blow right to that.
Current satellite satellite in our assessment of demand for it. So we don't we're not gonna.
Put out a specific timetable for it yet.
Okay also the shareholder letter interesting comment about directed device Inmarsat, obviously knows elbowed smoked a room that you're interested in.
It'd be high level of tennis, obviously, the doors are closed but can you tell me <unk> tell us how do you feel that that directed device satellite to smartphones.
This is going to come to pass there's a carrier model and the <unk> <unk> models in the marketplace or coming into the marketplace.
<unk> back to one so how do you see this this market until materializes and <unk>.
You have a really tight platform or how would that work. So just horrible thoughts on a directed device.
Okay, well first we're interested in the directed device market.
The last Lady I could go back people expect to be.
To address in a very large market, but with probably relatively low average revenue per user.
But we also see that a lot of the things that.
Out of the things in space and the ground network that are done to be able to serve that market housebroken really enhance the exist.
Existing mobile satellite services market it or.
Nah, it'll enable you know higher speeds.
More bandwidth lower everytime pricing all of which would expect also benefit.
Just a market for it.
For those operators that have.
Access to mobile satellite services spectrum, and and the tools to address those those markets.
The the bank I think the big.
Issues or uncertainties around the direct satellite indirectly handset market are really around [laughter] what.
What are you speed surfing on that it can be delivered to each phone how many phones can you serve in a geographic area what will the airtime pricing be would be used for more than emergency services, but a lot of that.
Really going to depend on a lot.
How does the same factors that drive the project market, which is.
Cause we don't talk about sports really getting.
Good signal good density of bandwidth.
[noise] suggested for the spectrum that operating in in the areas, where there's going to be the highest demand and what is interesting about the.
About this handset market is it's probably gonna be even more geographically concentrated than the broadband markets will be so.
So we you know we've actually been looking at design architectures.
That.
Both Joe and Leo.
They're both interesting we think that.
Be able to deliver.
Pretty comparable services from each it will probably take cooperation among several of the spectrum holders to achieve that.
And we don't we don't think it's necessarily a G O R D O specific market.
We do.
Do have concern until we've been we've been one of the ones pointing out some of the issues around sustainable space in lower orbit we are.
Think that there should be concerned around.
The cross sectional area mass of some of the satellites that have been proposed for this service we're not sure. That's the right that's going to be a good direction.
And we you know what we do have ambitions to do is to be able to deliver.
Services that are.
Much more interesting than just.
Emergency services and that can be scaled to very large numbers of customers. That's that's kind of the.
It's kind of an overview at this point.
Oh I appreciate we will stay too is it <unk>.
X Ray.
[noise] Mmm just from the lineup Bill Cusec from J P. Morgan. Please proceed.
Hi, This is Nick on fulfil thanks for taking the question I'm wondering if you could provide an update on how churn is trending and fixed broadband and how any like increase competition, maybe playing into that.
As well as with the strategy would need to return to six broadband grows once myself three launches just given the competitive intensity. Thank you.
Okay.
We haven't broken out turn by buying market.
Goodbye specific markets, but I can tell I can tell you is.
Recently turns been subsiding for us.
We had.
Some of some of the church that we saw was probably.
Ooh.
The Covid timeframe when People's signed on for contracts and you were very dependent on.
And that their home, but since suppose since a lot of those are out of the contract that actually turned moderated for us we think.
See we do see that there's gonna be more competition in the markets that are targeted.
By us.
People estimate 10 to 15 ish million homes.
A reasonable candidates for satellite broadband, but you know the big the big issue is the value proposition of the service in terms of speed volume price and then I think the other thing that's becoming more and more important than that we're really focused on.
Or the ability to stream.
Yes.
Dreaming.
Not a speed intensive but it is very bandwidth intensive.
And so we.
Difficult for pretty much any seattle, either terrestrial wireless service to support that and an unlimited way. We think we're going to be really competitive in that aspect of the market. So I think for us.
We the the big thing, but I've had three allows us to do is to update our.
Speeds bandwidth.
Pricing and I think we'll continue to be able to do.
Drive churn down with the strikes a snack.
Huh.
[noise] [noise] [noise] [noise] [noise] [noise], our next question.
Comes from the line up Landon Park for Morgan Stanley . Please proceed.
Thank you Alright, <unk> did you get cough or did you have anything else to that you wanted to add on to that no no, but I think the last thing I'd say it was that you know we.
Turn to continue to improve.
With the new plan that we can offer that was the last thing I said I I don't think okay.
Cut off for now okay.
Okay. Thanks, So you're on my side I was wondering you know delta finally, launching their free wi-fi product with well.
She was the partner they they have a target laid out to have global.
This is a global product by the end of 24, Yeah. What is the prospect for you to be able to to.
King retrofits on their international fleet or their regional Jets and then maybe can you just review and I don't know if you can talk about that specifically, but at a higher level of potentially what are your ISP contract structured in terms of.
Fixed versus variable and how can we expect are a bunch of trend and what are they calling harper levels and and work and those trying number of free wi-fi model.
[noise], Okay, [laughter], so a lot in there.
So on the Empire Wi Fi.
We do have a very good relationship with Delta named supported the notion that will be their partner, including.
The global wide bodies I think that's part of what they're looking for is consistent service across.
Oh wait.
So.
We think.
That.
And they they're confident in Viasat three is enabling us to do that on a global basis.
In the time frame that they're looking for.
The the the.
Hello.
Business models, one of the things that we have.
Done is we've tried to Taylor.
Service models that we offer to different airlines to there to there.
Their brand once and emptied.
The way, they're trying to use it like kind of activity.
On their flights and and and.
Barry is a little bit by type of pain or roots.
I need to fly to risks.
There is there's like we said before there are fixed and variable components to it and the variable parts are dependent on the airline tomorrow and.
The way their fights.
Plan what are the roots are plan. So it's hard to put a specific number on it but.
I think overall are <unk>.
Revenue per plane all things in.
When you consider kind of a full service model that we have a very.
Very representative of what others in the industry have had we're not gonna break out average revenue per plane.
[noise] in particular, but it it's it's pretty representative of what.
That are in these kind of full service models of pet [noise].
What what kind of upside can you see under free wi-fi model in terms of.
Per cent increases as as that.
Matures.
I'm not gonna put up I'm, not going to put up a per cent increase I I think that what what we.
We are seeing and expect what we would expect to see another.
Other places where we've used in pie Wifi. So you can see.
Passenger engagement rates go from the five or 10% range up to the 30, 40% range pretty easily so I think that'll be it.
More uptake and that's I think that's one of the things that makes us attractive for it is the ability to support that.
We're not we're.
We're not going to give any numbers about how that will translate into revenue.
Revenue per plane.
Understood and then just one follow up for Sean.
Some of the financial guidance blanked out in the letter.
Can you maybe just glitched for me, how you're getting to the 4499.
Target for physical 24 versus.
The tune on Oprah pro forma.
Sure I I think that's it.
<unk> and.
First keep in mind.
A return kindergarten next year, you need to get right with respect had not having a teenager anymore.
You know obviously, you will have credit across our business and then continuing operations I keep that in mind.
And then capital perspective.
This your leg.
At 1.2 million ourselves and that'll be all for that.
Next year will see at about 510 counter at Cat.
But in Mexico change quite a bat and they'll they'll have a lot more on that as thick as a cat person be neat well I can kick in satellite like going back yeah.
That's kind of it kind of role that alright, an hour plus <unk>. After he got turned off that mark.
So what's the underlying cashback, that's implied by that 24.
Oh I think it is.
If you just kinda.
Like an actual attack he began fur.
Well Incase Tibet, Capex, and you know I'm not gonna give kind of that.
Total cashback and then.
I think he can kind of do the math, if we change if you triangulate that one again.
Okay understood and then they're just so I make sure I'm understanding purposeful 23.
The mid single digit guidance from last four <unk>.
Correct. So what is the.
The annual EBITDA number gonna be in the low five hundreds.
Continued operation experiences.
I think like let Lee fan.
Next year.
[noise] expect it to grow and then a couple of can you happier.
I think I think I'm, sorry, I was asking about the pace debates for fiscal twenty-three.
Alright, 23, but at least that you can think of that 22 on a continuing operations Baker.
Be about <unk>.
Okay.
And that was about what.
500, and physical 22 right.
Hello, <unk> Hello.
Sorry for that.
Okay perfect great. Thank you very much Shawn and Mark.
Excellent.
Our next question comes from the line of Mike Crawford from D. Riley Securities. Please proceed.
Thank you can you tell us what if any changes are in the timeline with a UK, it's a competition or markets authority phase two review when do you expect that decision and how soon after that presume minutes favorable you could close in Merced.
Okay.
Hey, Mike This is Robert player so.
<unk> for the CMA in the end of March is when we would expect them and what they have indicated that their plan to be wrapped up in such favorable then we should be able to close theoretically shortly thereafter.
As long as the European Commission.
[noise] along the same timeline, but that's a drag out potentially further after the CME. So it really depends on how quickly. The European Commission finished narrow view, if the CMA and Scott and friends at the end of March.
But as soon as both of those processes that that they would expect to be able to close pretty quickly after that.
Oh, Okay. Thank you and then the follow up question is relates to.
You provided your.
Central satellite launch timeline is there any similar information you can give regarding inmarsat.
I think their their lunch information is supposed to be available through their website. They do you all want to one of their satellite.
Six satellite this month.
But they have their follow on satellites are probably coupla years behind that I think there's a gap.
Four there.
789 satellites.
Okay Alright.
[laughter].
[noise] our next question comes.
From the line, it's Caleb Henry from Colby and a living person.
[noise] you guys a question about the link 16 business. So I'm just curious.
Even though the sale is done if there is any opportunity for bias that providing sort of space space link 16 or did that all go away with the the sale.
The the link 16 specific businesses went with the sale, but we do have space contracts that cover a variety arrange a communique.
Communications way forums data links and.
We can include links 16 is one of those waveforms.
And a multi multi way forms based system.
And.
That's part of it is part of the.
The sale, we are providing a module.
To to have that enables them to cooling 16, so we'll have that heart.
Common hardware for that application.
Okay does that mean, they're still opportunity.
To participate in the development agencies constellation that's supposed to use link 16.
And then do you still have the satellite that you're building with a blue Kenyan or.
Is that something that was sold as well so be it.
<unk> contract that we had for X P. I, an SDA payloads did go with that business.
Oh.
Our next question comes from the line of <unk> from Needham.
And company please.
[noise]. Thanks, a question you know mark thinking about.
<unk> business scales here apart from adding all the.
Just increase capacity from class at three.
What kind of key parts of the business do you think need to scale to address the global opportunity in terms of infrastructure channel support.
Those sorts of things that you think about taking that business global.
Thanks.
Sure Yeah, well I think you know.
I think one of the good things about what we're doing with fries have three as we pretty much at.
Oh, the business models for the businesses that we've already been doing well in place so.
And Ellington.
And residential or rural and the countries in which we've been operating we've setup business bottles, where our ability to plug in more.
More bandwidth is pretty straightforward and I think that includes the in-flight connectivity space because we already have.
When we're done this pretty purposely purposefully, but we have customers in Australia Asia Pacific.
Latin America Europe .
In the Middle East.
Ready.
We support with our full service model. So I think that that's one of the.
Think that's most exciting about getting by us at three I mean global basis.
It really is.
Something that we can just plug into existing models, especially an empire connectivity because that is really.
Kind of a direct to airline.
Isn't this for us and we have we have.
I think we have a good go to market Salesforce that covers the airlines all over the world.
And we have the support infrastructure that we can leverage for that as well.
Got it that sounds great and just a quick question about the the letter about your reallocation of capacity in the IFC, how should investors think about the time frame that it takes you to truly kinda reallocated, we're talking months quarters to reallocate tetrapak.
D in and move it into a particular new applications.
Okay No that's a good question too.
The airline business has grown.
The main thing that we've we've done very carefully purpose is.
Is to.
I understand what this traffic command will be on a geographic basis, and then also be able to gauge you and I don't mean, what are the airplanes are receipts are gonna be weird when but also.
To match you expected bandwidth demand on each plane in each airline.
I hope you have a sufficient bandwidth.
That is.
To the demand on those planes and that when we do it.
What we've.
Had to do I think it's a choice. It's a choice that we've made deliberately and I think it's going to be good for the company. It's definitely been good for the our IFC customers.
I think it would be good for shareholders is to.
To plan ahead, and what we've done is we've used natural churn on the residential business.
That frees up bandwidth in places, where they may need it and those places where we both needed privacy that we can replace those customers with with new with new customers.
When we get Viasat three problems can be way easier. It's available I have a lot of bandwidth everywhere and we'll just be able to add customers I'll go inside connectivity and in Arizona and and a few other businesses within the U S that we think we can.
Garden Grove, as well, but think of it as the reallocation process is really something we only have to go through when we're we're phone.
We have to allocate bandwidth Ah because.
Because we don't have enough to serve all the demand we could see and all of the markets and will be addressed it's really a question of making choices about what we choose to serve keeping up with demand that we see.
Okay. That's good.
That's.
Thanks, Ron.
The next question comes from the line of Lewis.
From William Blair. Please proceed.
Mark Rick Sean Robert and Peter Good afternoon.
Oh really.
I'm following up on Landon's question does viasat have a product slash antenna to provide <unk> regional jet aircraft such as T. R. J 700, some <unk>.
E. R. J 175, I I know that you provide connectivity for for jet Blue's larger E. R. J, one nineties, but do you have a smaller antenna.
Mahler Regional January .
Right now a lot of it really depends on the operating model of the of the airline and the exact type of aircraft that they have but I think you know from a from a commercial business.
From a commercial business get probably that you want 90, the smallest that we currently have.
Any kind of scale.
Okay.
Currently are you are you ruling yourself out then for for Delta Regional Jets.
Nope Nope I think we have you know I think we have.
Airline products that we're developing that will go down to a smaller smaller planes, we certainly do that sure.
Smaller aircraft at our business Jets, others, it's really a question of coming up with something that's that's.
Mountains.
Well in economically for this specific types that our customers want until we are working on more fuselage counted.
And as for those smaller.
<unk> of aircraft.
Sounds good and for the government encryption business.
Has violence have received the product certifications that were previously delayed and are you out of the woods there.
Oh.
I would say pretty close the the government.
So.
The issue is.
Haven't been issuing certifications across a range of products for.
For reasons that they know that they have but there is customer demand for especially for a number of our products and so that's the.
Kind of evaluating that demand relative.
Relative to what their certification guidelines orange will be and they have informed us that they expect to issue those certifications.
Later this month.
That's that's great.
Great and one for.
How should we think about the customer premise equipment capex and Opex cost.
Four viasat three residential customers when you to play the new terminals.
Okay. So I think what I read.
Think about the customer.
Customer premise equipment similar.
Apart so similar cat prior years and that early on Fag right, Okay, and after a little higher cause it's all brand new appointment.
And then as we have natural turnover and Nathan <unk> tend to come down over time.
The Rams and we have next year, when you're thinking about <unk>.
<unk> I mean, that's gotta go at significantly you're on the air can think about is about to react. When it is finished here. So that gives you just hang up and will have significant indefinitely.
Oh, no that's fine it's primarily.
I mean, we have advertising.
No definitely <unk>.
And as we're starting to prepare for a second orange and marketing Yep I need to plan, you'll see those coming in.
EBITDA.
You know large in the finance.
I think with respect to that you get a companion.
Just to remind people cause we'd like to next year.
Full year by a cat.
Trained for example, operating expenses on my pounds, we've been talking about that this year.
Fish are kind of scale. It turns out that 50 million Mark next year might have the full weight is the fact that.
Three crowned and then.
Detailing more revenue sung at Toby building out and he and he actually can think of that number is calling for about 85.
And those are kind of in companion.
Okay.
Sounds good and is there any type of like benchmark in terms of like for every customer should there be like $200 of of Capex associated with the the customer premise equipment or.
Any other type of round numbers Sir.
Well.
Typically when we when we go out.
With Sean said with a new generation satellite I'd say, no $800 numbers for Sac could be.
<unk>, it's a it's a blend of add.
Advertising commissions equipment itself installation, it's all of those factors and it won't be.
Likely won't be markedly different.
Mix of those.
Of those costs will depend on what the band is and.
What we what we can.
But we can support each and each region.
That's kind of Ah.
Opening.
It could be it could be a little I think at the beginning Chinese sometimes a little higher than that.
At the beginning with the appetite.
And then it can come down 100 to $200 right ballpark.
<unk>, Yeah <unk> okay.
Oh, Okay and as it as it relates to the vice at three email lunch that is targeted for September you mentioned, how it with.
United launch Alliance is that with their new Vulcan Centaur rocket.
No that's Annapolis launch.
What are their vast Alice lunches.
Okay.
And one one final question this is a bit more.
But following up on Rick's question as it relates to.
Satellite directed device.
Would it be possible for you to <unk>.
<unk> with Spacex in the future he needs to have an antagonistic relationship with with Inmarsat, but now you are emerging with them. So.
Smooth Dover, but is there a scenario.
In which you could Lee.
At least a portion of Inmarsat, Alabama spectrum to space X and partner with them for.
Ah direct to handset accurate or are you committed to like launching an operating you're you're on constellation <unk> a vertically integrated manner.
So it's a it's a good question I think that in general weirder.
Oh out of our value add is in this space systems that we can put together and so that's you know at the end and dealing with.
Or any you know any other perspective Parker.
Be an economic trade about.
What's the nature of a partnership.
Whose provides which.
Resources are capabilities, but personally we don't rule out.
Entering with anybody so we do I think we I think we've shown that we can really add value in this space architectures more than we could just in these fees for spectrum as an example.
We never say never.
Yes.
Thanks, that's all that I have thanks, everyone.
Thanks for the lakes.
Our final question comes from the line of land Apart from Morgan Stanley . Please proceed.
Thanks for taking a follow up <unk>.
The T D all persons.
Are you guys planning to use.
He was about to pay down.
Or anything or are you going to keep it.
Buffer are you still paying draw.
On your Inmarsat financing at the close of that transaction or.
This replacing that in some way.
Can you tell me one of those items.
He might have done this is shaun.
And you know we definitely on that when we got the pricing for me to take out on a revolver.
Did do that.
You know right now I had to pay with a backdrop for that.
Credit markets that are 2025.
Having a little extra liquidity makes sense.
And with respect him and that the transaction I think gives us a ladder joannie.
And we haven't even connect my task.
Is there any reason you one wanted top that financing doesn't the attractive right sorry about that.
Yeah, I I mean, I I definitely think that we.
Look at that transaction and and look at the <unk> in a line does the capital structure.
And I agree with you today.
Where we are today.
You know in a in a good technician nearby.
Consideration.
<unk>.
At no our attention.
You should be able to make sure we're going to get information at the right capital structure for the financing of the transaction.
Understood and then <unk>.
One for you Mark as well.
<unk> as we look forward to that you guys <unk>.
The letter talked a lot about the <unk>.
Flexibility all of that satellite capabilities.
When we think about the gross mm capacity of the banks that wanted to can you comment on what the utilization rate on that gross capacity cause I ended up being out of those assets are stabilized and and what the heck can look like <unk> asthma.
Oh, that's okay [laughter].
First of all it it's a really good question, it's a complicated question because different.
So I mean, you can you.
You've probably seen.
Sort of.
With a coke busy on on demand curve from cable companies or others.
The home residential businesses.
You'll see for instance, there is.
I'd say for like six PM until 11 PM Midnight, you see very intense usage and then it can fall off pretty significantly.
Overnight and you'll make it a little peek in the morning hours and then not so much in the daytime.
People and kids get home from school.
See that's an example of a utilization curve that would be.
That would be common to all the users and let's say give it time.
Right.
Common applications like residential if you look at it and fight what you'll see is.
Mmm.
When you look at it I said when you look at it.
Graphically.
D for Delta. This is this is an.
An example is similar for American the United.
You know other other major carriers is when they have a.
If you look at the sort of the same type of chart as I described it residential what you'll see is.
Very high usage when a lot of airplanes people, who are in those in those geographic areas around those hub airports and.
Lastly usage in between certainly doesn't go to zero airlines have different schedules, but you'll see these pronounced peaks and so when you think about utilization.
The issues is is.
You have capacity that's not.
Not flexible or if you have that.
Right that only have use or fix coverage over specific areas and can move it around.
Utilization tends to reflect the.
The demand and each of those areas when you combine.
[noise] weighted combination of those two different markets.
Right.
When you look at those.
When you look at those at times, when it's not very well utilized the thing that Viasat three that just do is move back in with somewhere else.
That's the thing that's really really unique about it we can move it somewhere else.
Pretty far away, so far enough away, where we if we can take advantage of time zone effects are far enough away where he can.
Take advantage of different.
You are different.
Connecting times that typically airport systems or.
We're also looking to do similar things with other mobile markets, including land Louisville and maritime.
So that's what we think that's gonna, let us do this kid pretty pretty meaningful increases in utilization in high demand areas and.
Kind of the way I think the way to think about it is.
Especially from a capital efficiency perspective is that if you can use this.
This is one of the things we try to put together.
Show show investors is.
If you think of demand.
The demand underground or if you're in the air it's really a property of who your customers are space systems failure modes congestion occurs tends to be in hot spots and so.
Being able to move bandwidth around what we think is reconsider we we can do a way better job of serving hotspots than other space systems. That's that's what we're working on it it's a it's a really.
<unk>, but I think the economic payoff Sir.
Significant.
Does that answer your question.
It it certainly provides color I guess I mean.
I'd Love if you could provide more specificity of September you just want a number [laughter].
[laughter] well not yet.
What what what did you say, it's a meaningful increase.
Is viasat two at.
I mean, I <unk> I assume you guys.
Have a sense of what the utilization on that satellite.
Yeah. So it is.
It really varies by place right. So because you you have.
Right. So it's hard I guess, what I'm asking is there's there's 240 gigs of gross capacity and you guys provision.
<unk> for users and the beams on that side of like our essentials.
So how much of that gross capacity is essentially.
Provision.
Yeah, you guys <unk>.
In your capacity limitations right. So.
Have you bumping into that 70 per cent generalization that yeah. That's the issue is at least.
You run into provisioning limitations in specific places sometimes.
Before before the growth of verified spaces pretty much due to residential as we added input.
Input users that we have for the provision for the peak demand between the two markets and until we got to be.
That's not an easy thing to do but it got to be pretty good at forecasting and managing to that and I think our provisioning levels are.
Are pretty good.
Pretty pretty efficient and efficient in that.
We're able to meet the service level agreements that we described.
The process, but I think that we're pretty pretty close to the provisioning you can get.
When you don't move bandwidth around with that too.
There are some opportunities to do some dynamic scheduling and we do some of that fast that three et cetera to another really big level. The thing I would say, though is if you look like one of the metrics to look at and think this is really important I think of it cause it was the peak demand for the average demand.
For for a given the airplanes and those numbers peaked averages can be high, especially with some of these some ability markets like more than 10 to one so that just gives you a sense of that.
And she places what what the potential is doing this.
[noise] understood. Thanks for all the <unk>.
Okay.
Yeah that does conclude today's questions I would now like to turn the call over to <unk> for closing remarks.
Okay. Thanks.
So just in summary, good luck to reemphasize the significance of putting that at first glance at three satellite and with having a lunch date now in early April just about two months away.
And with the Europe Middle East Africa, well, it's not that far behind so.
The bandwidth coverage and flexibility it provides really addresses our most immediate growth issues and I think that's.
Question kind of helps those emphasize that.
And with the <expletive> out of our T. D. L products business, we've got a lot of financial maneuvering room the.
Over a billion and a half dollar gain on that sale will actually make our fiscal twenty-three our most profitable you've ever and we think it's indicative of the value.
Each of our businesses.
We continue to believe providing the complementary nature of our business skills and resources.
<unk> that would be good for the companies people customers UK space business and for our shareholders.
So thanks, a lot for joining us. This afternoon, please don't hesitate to contact Peter or any one of our team.
Any further questions on our results were other topics.
And in fact redecorate.
This concludes today's call you may now disconnect.
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