WildBlue to Add Up to 25,000 New Subscribers in 2010
ViaSat’s newly acquired WildBlue satellite-based Internet service will add 20,000-25,000 net new subscribers this year as the new owner fine-tunes it in advance of a 2011 satellite launch, company officials told analysts in a conference call. WildBlue, which had about 424,000 subscribers in mostly rural markets as of March 31, was purchased by ViaSat earlier this year for $568 million. ViaSat kept WildBlue’s Greenwood Village, Colo., headquarters as well as many of its 240 employees. It plans to phase in changes to the service gradually this year as it prepares for the ViaSat-1 satellite launch in late Q1 2011, company officials said. The Loral-built Ka-band satellite is expected to go into operation in Q2 2011, they said.
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WildBlue, which launched in June 2005, currently leases capacity for its service from EchoStar on AMC-16 at 85 degrees west and EchoStar-9 at 121 degrees west. It’s expected to move some capacity to ViaSat-1, which will be capable of delivering downstream data rates of 50 Mbps or more, ViaSat officials have said. WildBlue’s data rates currently peak at 1.5 Mbps for its “Pro” package, which also includes a 256 kbps upload speed. WildBlue starts with a 512/128 kbps service.
WildBlue has suffered from capacity issues. To offset these, ViaSat will move to improve in the rural portions of the western U.S. by taking capacity from the western U.S., company officials said. In the past, WildBlue managed its capacity by imposing a fair access policy that limits the amount of data that can be downloaded/uploaded in a 30-day period. For example, with the entry level package, users are limited to downloads of 7,500 MB of data and 2,500 MB for uploads. If users exceed the limits, their speed is reduced. The thresholds typically affect less than 3 percent of WildBlue customers, the company said. The packages start at $49 monthly.
In moving to improve WildBlue, ViaSat expects to add AcceleNet software to it by late Q2, company officials said. ViaSat subsidiary Intelligent Compression Technologies develops AcceleNet, which features a WAN controller designed to accelerate applications. “We're going to have better metrics for the service and we're going to have more consistent plans” this year, CEO Mark Dankberg said. “We're expecting modest subscriber growth this year” that will expand with the addition of the ViaSat-1 satellite in 2011. Of its 424,000 subscribers as of March 31, 227,000 were wholesale and 197,000 were retail, the company said. Average revenue per subscriber was $41.50 and annual churn was 27 percent, ViaSat said.
ViaSat’s Q1 net income fell 14 percent to $10.4 million from a year earlier as it took a $1.6 million asset impairment charge related to the WildBlue purchase. Revenue rose 28 percent to $212.6 million as it benefited from the addition of WildBlue. ViaSat’s satellite services revenue jumped to $57.5 million from $2.1 million a year ago as a result of WildBlue. Revenue from commercial networks slipped to $51.41 million from $51.46 million, while those from government contracts dropped to $100 million from $108 million, the company said. ViaSat will spend about $160 million on ViaSat-1, including insurance and launch costs, company officials said. It also is weighing plans for a ViaSat-2 satellite that would go into service in 2013, possibly through a partnership, Dankberg said.