Viasat Inc. VSAT recently joined forces with Microsoft Corporation MSFT to offer its Real-Time Earth (RTE) services to Microsoft Azure customers. The availability of this hybrid space and ground network, which brings affordability and reduced latency to the earth observation and remote sensing applications, is likely to be a boon for Microsoft’s cloud customers.
Leveraging next-generation and legacy low earth orbit satellites using the S-, X-, and Ka-bands, Viasat’s RTE network offers state-of-the-art Ground-Station-as-a-Service (GSaaS) to the commercial and government earth observation and remote sensing communities. This pay-per-use basis model will enable Azure customers to enjoy seamless access to Viasat's ground service solution — from initial commissioning and calibration to subsequent telemetry, tracking and command services and downlinking of critical payload data.
This service will be made available for Microsoft Orbital ecosystem — a new service introduced by Microsoft to provide satellite operators with direct access to Azure through owned and partner antennas. Viasat will utilize its 5.4 meter S-/X-band antennas systems and 7.3 meter S-/X-/Ka-band antenna systems for this service. It will also use its VHR-3200 receiver for the project, which is capable of downlink speed ranging from 15 Megabits per second (Mbps) to 6400 Mbps for computing at the edge. This, in turn, will increase the scalability, flexibility and security of sensitive data transmitted across the satellite network.
Viasat enjoys a leading position in the satellite and wireless communications market. With the rapid proliferation of the smartphone market and usage of mobile broadband, the user demand for coverage speed and quality has increased, which in turn is fueling the demand for network tuning and optimization to maintain high data traffic. The company attracts millions of U.S. consumers and enterprises with its high-quality broadband service. Encouragingly, Viasat’s blue-chip customer base, which comprises the U.S. Department of Defense, civil agencies, allied foreign governments, satellite network integrators as well as large communications service providers and enterprises, adds to its strength. Currently, the company’s Government Systems segment is acting as a major profit churner. Viasat is eyeing opportunities to extend broadband satellite mobility to rotary wing aircraft, as it is a large addressable market that can emerge as a key profit churner.
In addition, the company is ramping up investments in the development of its revolutionary ViaSat-3 broadband communications platform, which will boast nearly 10 times the bandwidth capacity of ViaSat-2. The ViaSat-3 payload program has begun its transition to the construction phase. These satellites will be capable of covering one-third of the world, including the Americas. The second ViaSat-3, launching in 2020, will cover the Europe, the Middle East and Africa region. The ViaSat-3 platform will help form a global broadband network with sufficient network capacity to allow better consumer choices with an affordable, high-quality, high-speed Internet and video streaming service. In a nutshell, Viasat has garnered enough economies of scale and scope to serve vast emerging markets of South America, Africa, the Middle East and Western Asia. Hence, momentous market traction of ViaSat-1 and ViaSat-2 satellites, coupled with strategically planned ViaSat 3 satellites, is expected to provide the company a solid competitive edge over peers, thereby bolstering growth in the long run.
Viasat’s Satellite Services business is progressing well, with key metrics including ARPU (average revenue per user) and revenues showing impressive growth. ARPU is growing on the back of a solid retail distribution network, which accounts for an increasing proportion of high-value and high-bandwidth subscriber base. Further, the rising adoption of in-flight Wi-Fi services in commercial aircraft is proving conducive to growth of the Satellite Services business.
The stock has lost 54.8% over the past year against the industry’s rally of 18.4%.
Viasat currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the industry include Motorola Solutions, Inc. MSI and Qualcomm Incorporated QCOM, both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Motorola has a long-term earnings growth expectation of 9%. It delivered a positive earnings surprise of 11.1%, on average, in the trailing four quarters.
Qualcomm has a long-term earnings growth expectation of 19.8%. It delivered a positive earnings surprise of 14.3%, on average, in the trailing four quarters.
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