Viasat, whose share prices has driven down 15% YTD is coming under increasing strategic pressure. Some hedge funds are promoting a short thesis that the core US broadband business is weak because competition will eat into it. To be fair to Viasat, it has been clear that it wants to expand into two areas: a) Geographic expansion to Africa and Asia where broadband is less competitive and b) into the In Flight Connectivity Market where prices are high and demand is rocketing.
The trouble is, Viasat does not have the cash to build a new fleet and neither does it have the international satellite spectrum rights. So it has worked on a joint venture with EUTELSAT to gain these things. It started off with a small deal to share capacity on a single KA band satellite that EUTELSAT has over Europe. But the mooted expansion to jointly financing an African HTS satellite has failed to materialise. It has been widely discussed that there are visceral disagreements inside EUTELSAT, with the TV-centric senior management happy to throw their lot in with the data-centric Viasat. But the old timers are aghast at the notion that EUTELSAT could hand over spectrum rights and market access to Viasat for so little, in what really should be the main drivers of EUTELSAT’s growth in future. As a result, it looks like that deal is on the skids.
If that is the case, Viasat is going to have to come up with a new way to enter these new markets, especially Europe, Middle East and Africa where it already has some leased capacity and government services to build upon. If it does not produce a home run on this strategic expansion soon, the doubters will grow more confident that its US strategy is weakening.