Even with the U.S. government’s budget cutbacks, broadband services provider and satellite communications terminal ViaSat Inc. said its military business continues to grow. The company said on November 11th that it was as if the cutbacks did not even exist and its consumer satellite broadband service in the United States was approaching 600,000 subscribers.
In general, defense contractors have been hit heavily by the across-the-board budget cuts known as sequestration. Nevertheless, not every company doing business with the U.S. Defense Department was affected by the cuts, ViaSat being one of them. Its Government Systems division reported an 11 percent increase in revenue last quarter, to about $129 million, and product revenue increases offset a decline in government services in the quarter.
The military stopped using ViaSat satellite capacity for the Blue Force Tracking–2 contract, which accounted for the services revenue dip, said Mark D. Dankberg, Chief Executive of ViaSat. Hardware for intelligence, surveillance and reconnaissance platforms as well as provision of command and control functions for government networks is a source of business growth for ViaSat, even as the defense budget shrinks. Likewise, there is no reason to believe that troop withdrawal from Afghanistan will affect revenue.
As of October 4th, ViaSat’s consumer broadband service reported 591,000 subscribers, which was a 7 percent increase from early July. On average, subscribers are also paying more per month, opting for ViaSat’s new VOIP voice feature and higher-volume subscriptions. The company did, however, experience a higher rate of churn, which seems to be due to volume limits on the satellite service that were not fully explained to new customers. “Some [Exede distributors] accounted for a disproportionate amount of the churn and we’ve terminated some of them,” said Dankberg.
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