ViaSat, Inc.

Welcome to Viasat's Fiscal Year 23 Second Quarter Earnings Conference Call. Your host for today's call is Mark Dankberg, Chairman and CEO. You may proceed, Mr. Dankberg.

Thanks. And thanks, everybody, for joining us today. We released our shareholder letter shortly after market closed, and it's available on our website. We'll be referring to that on this call. Joining me today on the call are Rick Baldrige, our Vice Chairman, Kevin Hartgenreiter, our Chief Operating Officer, our Chief Financial Officer, Sean Duffy, Robert Blair, our General Counsel, and Paul Provitt from Corporate Development, and Peter Lopez from Investor Relations. So first we'll have Robert provide our safe harbor disclosure.

Thanks, Mark. As you know, this discussion will contain forward-looking statements. This is a reminder that factors could cause actual results to differ materially. Additional information concerning these factors is contained in our SEC filings, including our most recent reports on Form 10-K and Form 10-Q. Copies are available from the SEC or from our website. Back to you, Mark.

Okay, thanks. So I'll briefly just touch on some of the main points we discussed in the letter before we take questions. So first, progress on the completion of the first FISAT-3 satellite has been really good, and it's close to plan since last quarter. It's completed and passed its functional, environmental, and deployment tests. The deployment tests use pyrotechnic devices, so the remaining tasks now are to inspect those, the deployables, and restore the satellite to launch configuration. We expect the satellite will be ready for shipment to the launch site in December. The launch schedules for some U.S. national priority launches that are contending for Falcon Heavy facilities have shifted since our previous conference call. So at this point, we can't give a specific launch window other than first quarter of calendar 23, but we're targeting the earlier part of the quarter, and we're working with SpaceX to launch as soon as possible. Financial results for the quarter were consistent with the outlook we described during our last call. Also, as we previously reported, we executed an agreement to sell our Link 16 Tactical Data Links business to L3 Harris for $1.96 billion in cash. The letter and our filings reflect separating those TDL results from our continuing operations. The total second quarter revenue was $745 million, so 6% year-over-year, not dated by the previously reported Acacia payment and 5% growth in overall services revenues, with product shipments impacted I delayed deliveries of some new planes to some of our airline customers and supply chains and certification delays for some government products. Adjusted EBITDA grew 21% year-over-year to $188 million, aided by the Acacia payment and very good growth in IFC services, with headwinds from activating more of the Viasat-3 ground infrastructure in advance of the launch, constraints on available U.S. bandwidth on residential, including ongoing reallocations to invite connectivity in anticipation of very substantial additional airplanes coming into service in the second half of this fiscal year, and some impacts of supply chain spot shortages on component pricing and the resulting product margin impacts. Total new orders were excellent in order at over $1.1 billion. Backlog remains strong, as does our broker of delivery orders and options and potential IDIQ value, even though we've consumed over about 400 million of that IDIQ order book on a year-over-year basis. Our fiscal year 23 outlook is revised down somewhat, reflecting the cumulative effect of the VICE Act 3 launch delays combined with The infrastructure network activations delayed to some portions of new aircraft activations due to those delayed deliveries to the airline customers. There's some bandwidth constraints on residential broadband and some supply chain impacts. We do anticipate very good growth in the second half of the fiscal year in flight connectivity planes and service as we described last quarter. That's going to be driven by retrofits and line fits. And we'll also have growth in IFC terminal shipments, and government growth. Our standalone estimate of doubling adjusted EBITDA by fiscal year 25 relative to fiscal year 20, including adjusting for the link 16 sale, remains intact. As we previously described, the link 16 sale is expected to result in about $1.8 billion of net cash proceeds, which will substantially reduce debt and leverage on The UK Competition and Markets Authority, or CMA, review of the Inmarsat transaction has entered phase two. They published their findings from phase one, which had a kind of striking dismissal of all the other competitors in aviation connectivity. Our first steps are to meet with the new panel that was formed for phase two and provide more facts on the nature of both incumbent and new entrant competition. We believe there's a strong case that substantial competition will be sustained on a go-forward basis, and the process can still be completed within the original timeline. So with that, we'll open it up for questions.

Certainly. At this time, if you'd like to ask a question, please press star 1 on your telephone keypad. Richard Prentice with Raymond James, your line is open.

Thanks. Good afternoon, everybody.

Hi, Rick.

A couple questions. Two housekeeping ones first. From the 23 fiscal guidance, does that include the one-timer benefits? It looks like it's in there for commercial networks. I assume it's in there for all the type items.

Hey, Rick. This is Shannon. So, yeah, our guidance is inclusive of the Q2 results for Acacia.

Okay. A second kind of housekeeping one is previously you brought up some pre-cash load positive timing. shortly after, a couple quarters after the Biosats 3B would launch. Has the change in supply chain and inflation costs, et cetera, changed any of your thoughts about when you turn pre-cash flow positive?

You know, Rick, I think I would think of it as around the same timing with respect to how it's pegged to the EMEA satellite. We've said before that, you know, we need to get the satellite up and scaled, and once we do that, that's kind of the turning point. So it's very similar.

Okay. And then more a theoretical long-term question. We've seen a lot of discussion and announcements and events around satellite slash smartphone communications. Can you share with us kind of your thoughts about how Biosat would play in that area with or without Inmarsat looking at L-band, S-band, narrowband services versus 5G? Just kind of hear your thoughts on what's happening in that part of the space.

Okay. So we do think it's a really, really interesting application for satellite. Obviously, to the extent that you can provide connectivity and interesting services, which are likely going to go beyond SOS to include things like messaging, mail, probably web browsing, maybe a few others. As long as you can provide interesting services, you can do it to unmodify really attractive market. The things that interest us about it are, one, and I'll just respond to your breakdown of with and without Inmarsat. Number one is it's a very challenging connectivity technical problem. We think that it really plays to our strengths in terms of high-capacity connectivity from space, and in this case to... highly disadvantaged user devices. We also think that what's going to be needed is to do that in some way that is sustainable in space, given all of the increased focus on those issues recently. And I think that's one area in which we're already doing work where we think we can partner with transaction will be one of the largest holders of global mobile spectrum. And there's some really big advantages in terms of serving that market with licensed MSS spectrum as compared to trying to reuse terrestrial spectrum. So that's the other way in which we're aiming to participate. it's going to create really good opportunities for us.

Great. And how should we think about the time frame of when this becomes real and meaningful?

Well, so I think that what you're already seeing with Global Star and Apple is that, let's say, if you put it in two buckets, one bucket is can it be done at all? And I think we're going to see, yes, it can be done can be done. The issue is really going to be what kind of links you can create reliably to devices with antennas that are like smartphones or other smart devices. So the real issue then is going to be scale. And scale is going to mean speed and the number of simultaneous users because that's going to have a big impact on the types of services you can bring to market. And doing it at higher speeds and greater scale, it's going to require new space systems to do that. And so that, for pretty much anybody, is going to be two to three years out, at least.

Great. That's very helpful. Thanks, Mark. Thanks, Rick.

Landon Park, with Morgan Stanley, your line is open.

Hello. Thanks for taking the questions, everyone. Maybe just following up on your satellite smartphone comments, can you maybe unpack your view in terms of the benefits of the MSS spectrum versus reauthorizing terrestrial spectrum? And, you know, on this type of service, do you think it is practical that it can be done from GEO, or would this require a different orbit from an investment standpoint.

Okay, so I'll give you opinions here. One is that the issue on the licensed MSS spectrum versus recent terrestrial spectrum, the reason the terrestrial spectrum is going to be very complicated in most markets because of the way the terrestrial spectrum is allocated, where you'll have different carriers, sometimes in different countries, very close together. And it's going to be hard, especially if operators are making exclusive deals with a carrier, for instance, in a region. Well, that's going to require that another carrier that wants to have the same service has to have a different space system use kind of plays out, the opportunities and the complexity in avoiding interference with terrestrial becomes a real problem. Also, just to jump to the other one, the real issue when it comes to connecting those types of devices is the power flux density that you can make on the ground. The power flux density system at the end, if you have the same power on the ground, it doesn't matter what altitude it comes from. So there's opportunities for both GL and LEO systems. We're looking at both. I think they both can deliver similar functional performance to the handsets. And then it's really just a question of economics of what does it cost you to deliver a certain amount of power to those areas that have the greatest demand, which is kind of the main issue that everybody deals with in satellite services in general. You know, what we think is that these markets will be geographically very concentrated because it's almost all certainly going to be overland. And also you're going to have this funny situation where a lot of the demand is near metro areas, even though those aren't very rural, there's just so many phones in your metro areas that there's going to be a lot of demand there. And if you want, you know, things like emergency services in times of disaster or something, you're going to need a lot of capacity to connect a lot of phones. I think those are kind of the technical issues, and I think those are the ways, some of the pluses and minuses of LEOs and GEOs and the two different forms of spectrum.

Thanks for that, Mark. On the chat services segment, the revenue is down a decent bit sequentially. Can you just maybe unpack that for me? And on the broader IFC business, how are you guys thinking about business aviation at this point? We've seen some announcements recently from Starlink. So just wondering how you think that you can scale in that market with the Viasat 3s. And then just one last one for Sean. On the fiscal 25 guide, I just want to make sure I'm understanding. Are you confirming it as if you had TDL still in fiscal 25, or are you saying even without TDL, you will hit those targets? I wasn't entirely clear.

Okay. Just on the second one, that's pretty simple. If you took our FY20 results and you excluded the TDL, contribution to that adjusted EBITDA. Then you compare that to FY25. That's where you get the two-to-one. On the second one, from a revenue perspective, probably the main driver on services, there's a couple drivers on services. One is We still are expecting really strong growth in commercial aircraft in service this fiscal year. There's been delays, but we see in the second half strong activations. The second half has a much higher proportion of retrofits, so we don't have the aircraft delivery issues, and then also some of the aircraft deliveries that were delayed will come in that second half. But because of all that growth, we have to clear spectrum. I mean, we have to clear bandwidth on our satellites in advance of the growth in the in-flight stuff, and that's a little bit behind now. So that's one issue. We do have some headwinds in in residential broadband, partly the economy as a whole, and inflation, I think, is putting more pressure on higher ARPU broadband services. So that's one. There is, you know, we do see more incursion from terrestrial wireless, and there is more, and Starlink's a factor, for sure, as well. But, you know, what we're doing is... We are going to be emphasizing, especially with BISAT 3, but in the run-up to BISAT 3, we're going to start being able to offer plans that offer a lot more bandwidth for specific streaming services. We have one really exciting partner in that that we'll be launching. We've been doing beta tests, and I think probably early in. offering more of that. That's one. And I think now it's looking like the speeds that we're offering are going to be really competitive. And we think that will, especially for those people that do a lot of streaming, I think our volume consumption will be very competitive. So I think that I would say depending on when VICEF3 comes into service, that's when I think you'll And then the other thing just on the margins and the EBITDA is, you know, we are getting hit by those infrastructure, the ground segment costs, because as we get really close to launching the satellite, we're activating more and more of that ground network infrastructure. And it's extensive because it's intended to offer, you know, hundreds of gigabits to a terabit of capacity.

I'll ask about business aviation. As well. Opportunity longer term. This is aviation longer term.

Yes, this is aviation. You know that. We we really started with K band in earnest. No over, you know, probably the last year or so we had a focus on. distribution with OEMs and then increasing our distribution. And that's been working. So it's growing. It's growing pretty fast, both in terms of we want to migrate people from least bandwidth to our own KA bandwidth. So the number of KA terminals is growing as a proportion of our total terminals. But the number of KA terminals is growing pretty well. I think that the – and I think that the very competitive. We're, you know, yeah, we still think that's a completely fine market for us.

Hey, Landon.

How many cars do you have today?

Hey, Landon, this is Shawn. I just wanted to add one quick thing to that. Just keep in mind that even though we kind of moved the, you know, satellite timing a little bit, we're not taking our foot off the gas with respect to the ground. We want to be ready. So, you know, all of those ramp up costs this year, up in the tune of $50-plus million.

That's on an annualized basis, Shawn, or in the year?

Yes, annualized.

Mark, are you able to say how many BA tails you guys have between KA and KU today? On the commercial IFC, you guys had targeted 2,400. Previously, is it still that?

Yes. The commercial target is what we gave last quarter was $2,400 by the end of the year. Commercial business aviation is low hundreds, and I don't try to be evasive. I think it's low hundreds, $2,300 in that range. It's getting to be majority K, I think.

Great. Really appreciate you taking the questions. Sure. Thank you.

Mike Crawford with the Riley Securities. Your line is open.

Thank you. So, Inmarsat just received a nice $410 million Blue Force Tracking Extension Award award. Can you talk at all about any changes between your planned constellation build, assuming that you're able to consummate this transaction?

So, you know, one of the things we still need more information on is the exact status of the payment schedules for the satellites that didn't They've launched one. There's another one coming up in about a year. I think those are their newest L-band satellites. I think they will probably be planning more replenishments for L-band satellites. What we think is that there's an opportunity, which is what we've been doing in the broadband sense, in the broadband market, which is probably... more sophisticated satellites that represent a much, much greater value in terms of available bandwidth per dollar, capital dollar. And what we see with the, I'd say the direct to handset market being a little bit of an extreme is that we think there's quite a bit of elasticity for mobile satellite demand with see a substantial improvement in bandwidth delivered from MSS per airtime dollar. And I think that's going to pay off in government, maritime, aviation, and a lot of these new markets as well.

Okay, thank you. And I think related, could you say like kind of percent complete of investment CapEx that you've put into, say, VS3 EMEA, VS3 APAC, and VS4, those three satellites?

Yeah, Mike. So the way we kind of look at it is across the Biosat 3 stack as a whole. By the end of Q2, we're probably, you know, 74-ish percent complete, right around there.

That's on Biostat 3, but is that including the first Biostat 4 satellite, which I think you've started to invest in?

That's excluding that. And, yes, we are making some investments and some traction there. You know, we're metering it at this point, but, yeah, there are some spend there as well.

Okay. And right now it's just one of those satellites that you've started or more of that's an R&D – investment that would be applicable to similar other 5SAT-4 class satellites?

Two parts. We have a satellite. We have a construction contract for the satellite. But the main driver that we've been working on is the payload, which we'll do. And the payload is a more highly integrated version of 5SAT. of those under, you know, that started. I'd say most of the expenses so far have been in the payload part. And as Sean says, we're going to be, you know, we're just managing the capex spend rate to achieve our overall balance sheet and growth of JetBits. And so that, you know, right now it's floating a little bit, but it's kind of, Sean, you know the target launch date. Do you want to add?

No, I think we're still, I think we should talk about that in a little, in a future call, right? But we are making progress.

Okay, thank you. I have two other quick questions. One, can you remind us of the time period covered for the Acacia verdict? And then how much time and counting has accumulated where Cisco willfully continues to infringe on your IP?

Hey, Mike, this is Rob and Claire. So the first case went through sales made through 2019, so those damages were through 2019. So any damages that were after that time frame for their use of our intellectual property would be for any time on the products that were at issue in that case from January 1st, 2024, and would continue to this day any sales they made on those products. We have an additional case that relates to their use of intellectual property on different products that is just getting started. So following the appeal, it's just getting restarted. So that case is at its onset.

Okay, thank you. And that period that ended through 2019, when did that period start?

I don't recall when the agreement started. I want to say about 2014 or 2015.

You can't draw a direct line, though, Mike. So you can't just say, well, that time period represents the same amount of stuff. So you can't take the due time periods and just draw a linear line in terms of product deliverance.

Okay, well, I certainly wouldn't want to be in their position. And then the final question is, you talked about resolution of a transient supply chain and certification biotech, and is that happening, or do you expect that to happen, or what can you further add regarding that?

You know, the supply chain issues are a little bit like whack-a-mole. You know, they tend to surface, you know, fairly suddenly. The kind of main way we've been dealing with them is resorting to spot markets to fill in any gaps. I think we've done reasonably well, but I think overall our situation is not much different than others that depend on especially, well for us it's more often in I was going to say more often in high-end semiconductors, but that's not really the case. We can have shortages of commodity components that just show up as well. In the cases where we can, we're basically paying the higher spot market prices and

declare an end to it okay thanks very much thanks Ryan Koontz with Needleman company your line is open thanks for the question just quick follow-up on your IFC commentary there and you know how should we think about your share opportunity moving forward you know beyond this fiscal year It sounds like you're really executing well there and onboarding new customers and planes. And at what point do you think that the commercial business starts to saturate a bit in the U.S.? And talk briefly about the international opportunity for you. Great. Thank you. Okay.

You know, the IFC market, you know, it's very dynamic. I think that... The airlines are trying to respond to what they perceive as what their passengers want. And lots of different airlines are testing different things. In some cases, what they're really looking for is passenger satisfaction. They're trying to figure out if they do that by curating onboard content, by giving them a meal or a better meal. or making connectivity available or giving connectivity away. There's just lots of different strategies. I think U.S. is a market that's pretty well connected on the ground, and airline competition is pretty fierce. So I think that market is ahead of most. I think there's going to be good growth total number of planes connected. There's long-term growth in number of planes. And I think we're going to compete well. I think what we've tended to do well is kind of try to help the airlines to come up with ways to use IFC that hit kind of with their overall market, go-to-market strategies. And we're also pretty flexible in the ways in which we'll offer the in-flight connectivity. We don't have a single mode there. And in our willingness to integrate with the in-flight entertainment part. And that's a funny situation because by far, But I think that most of the analysts expect the market's going to grow pretty substantially in the next seven years, and I think we'll compete well based on the types of services that we can offer. And I think the other thing that we've been pushing on a lot is that the airlines have... a measure of service availability, service reliability, what we call service level agreement, that that's important. And I'll give you one example. One way to tell how the in-flight connectivity is working is you pick some plane that's flying somewhere and you do a speed test on it and see what the fastest speed you can get to the airplane is. Another way would be, well, you have an airplane full of people, and what you look at is what speed does each passenger get? And that's the one that we've really been focused on, because I think ultimately what the passengers really want is whatever it is that they're doing to work well. They're less concerned about what the speed is to the airplane. They're more concerned about being able to do whatever their objective is kind of throughout the flight.

Super interesting. Thanks for that, Mark. And just a quick follow-up on the streaming technology you talked about. Is this like a CDN software stack you've licensed, you're going to productize as part of the offering, or how should we think about that new development, if you can talk at all about it?

Can't too much, but the basic idea is, which is I think is there's some standards around this, which is really to push CDNs out even farther to the edge so that more of the content can be delivered directly to end users. And the real trick there is doing that economically, and that's the part that goes beyond what the standards say, is using the standards to accomplish that goal. And that's To the extent that that is done well, it's a big, big multiplier to the usage that's available to subscribers that are streaming content users. That's 80% of all the bandwidth that's delivered over consumer broadband networks, so there's a big opportunity in there.

Yeah, sounds really great. Look forward to hearing more. Thanks for the insights. Appreciate it. Thanks, Ron.

Chris Quilty with Quilty Analytics. Your line is open.

Thanks. Just wanted to follow up. Southwest, is that still scheduled for a Q3 rollout? And should we expect, I think when you guys initially launched on American, you went from like, you know, a dozen aircraft to over 100 a quarter, you know, the following quarter. Is that the sort of ramp we should be expecting?

So Southwest right now, our agreement with them is for their new aircraft deliveries. So that's going to be, you know, the pace is going to be metered by the deliveries of those planes from Boeing. So that won't be steady. And I think, you know, there's, I think it's up to 700-ish total that's covered by that agreement. offer them a service that's so attractive that they want to outfit their whole fleet. What they've said is right now their plan is to work with Anubu to improve the service on their existing fleet. So our immediate target is to do a really good job on these new planes. But for other airlines, we do have a mix of retrofits and new plane deliveries. And I think in the next couple quarters, we'll see a big ramp because of the number of retrofits we have.

Gotcha. You know, as the Viasat-3 coverage expands, and you probably move from more narrow band to wide body, are there any product developments that are needed to make that transition, or is it pretty seamless to go after the larger aircraft?

So, it's pretty seamless to go with KA and KAKU, and we do now have some transatlantic widebodies in service as well. So I think we're well prepared for that.

Great. Final question. This one's just a little bit subjective, and you've talked about the supply chain issues, and it sounds like sort of a whack-a-mole type issue. That said, I mean, if I were to force you to throw out a number, Are we, is the supply chain issue back to 80% of where it was pre-pandemic or some number like that? And I guess the more important question is, are you seeing forward progress or are we stalling out in terms of some of these supply chain issues? Because I keep hearing them quarter after quarter now.

Hey Chris, this is Kevin Harkinrider. Overall, the number of supply chain issues are declining. There are fewer this quarter than the last quarter. Unfortunately, when you have a component shortage, you've got to get 100% of them in so Instead of having 10 short, you have two short, it's 80 percent better, but you still can't deliver. But in general, as the markets in terms of demand worldwide decline for integrated circuits, we are benefiting from it. So, Q4 will be better than Q3. I can expect that trend to continue in the global macroeconomic sense. But to look at it from merely quantitative means like you are, it's hard because it depends on the product. The sum may be pervasive,

The other thing, Kevin, you can talk about this, but one of the things we've certainly seen is brokers or hoarders, they are a pretty significant contributor to these supply chain issues. And what they do is bad for the manufacturers and it's bad for us. So I think one of the things you'll see happening near the end of this is that all of a sudden there's not going to be any market for brokers and then a lot of parts shortages will get will get solved pretty quickly. And I think we're getting closer to that, but a lot of it is driving the brokers out of the market.

I think you probably know it, but I think the hoarders are backed by the trial lawyers.

Louis DiPomo with William Blair. Your line is open.

Mark, Rick, Sean, and Peter, good afternoon. What is the timeline for the UK CMA Phase 2 investigation, and what's the expected new timing for the close of the Inmarsat merger if the investigation goes in your favor?

Phase two has a basic period, which would be completed by March 30th. It can be extended if need be, but it's intended to close by March 30th. What we had said when we announced the transaction was 12 to 18 months, which would be in May. So that would be that. That's kind of what our expectation was. So we're working to get it done within that time frame, that March 30 time frame.

There's an opportunity, Louie, that they could not go the entire phase two period, so there's a couple milestones in there. We go to talk to them next week to give our kind of view of this thing getting started. There's another milestone in December and a couple early in next year, so I think we'll know more by January, February.

Great. And previously when you announced the Inmarsat merger, I think you were targeting a pro forma net leverage of five times on the deal close. And now you are divesting L3 Harris and you just provided a new potential timing for the close. So I was wondering what the new pro forma net leverage should look like.

Louis, Sean. So I think what we told you guys is if you kind of have both deals together, we'd expect the pro forma leverage to be about 70 basis points improved to what it was on just MRSAT alone.

Okay, so 4.3 times?

I think that's, yeah, we had originally said that 5x, so that's a good estimate.

Great. And for Mark or Rick, it seems that many of the big four U.S. airlines are moving forward with free Wi-Fi, though it may be contingent upon the activation of your Viasat 3 satellite. A few years ago, Mark, you conjectured that the economics of free Wi-Fi may look something to the effect of $1 to $2 per passenger. as a cost to the airlines, do you still think that range is appropriate? And how do you think about how certain third parties, such as T-Mobile or others like Amazon, may want to subsidize that cost for marketing purposes or to benefit their own subscriber base?

Okay. Okay. So just to review, I think one of the things that we had said in the past is that the total revenue opportunity was in the range of $1 to $2 per boarded passenger. And that's a little bit different than the price that we would charge the airline. different passengers may use the Internet in different ways under different terms. These are not representative of any particular airline, but airlines may decide that certain classes of passengers, like business class or premium economy, might get the Internet for free, or they might do it for certain classes of frequent flyers, or as we've done in the past, We've had sponsorship deals with entertainment or streaming companies, and we're doing more of those things. So I think that kind of the revenue opportunity is in that ballpark, $1 to $2.

Great. Yeah, that makes sense. Another question, do you view any other defense assets as non-strategic or along those lines, are you satisfied with your liquidity following the divestiture of L3 Harris and the close of the Inmarsat deal? Or do more steps need to be taken to improve the leverage and liquidity?

So we don't plan any other divestitures. I think that the main thing we're doing to improve our leverage and liquidity is we want to drive up our earnings by performing well in the markets that we're going after. I think that's the main thing. In terms of the kind of the synergies that we get in our business, you know, the link 16 business was, and still is, it's a little bit complicated because, you know, if a data link and other participants in the data link market have synergies with other data links, so L3Hare, So other participants in that ecosystem had synergies that we didn't, which obviously we're still doing well. We've been winning awards. But long term, it was an investment stream that didn't really leverage the rest of what we were doing. So we're now becoming more satellite-centric The one other area we have on the government side is really cryptography and cyber. But those are very, very relevant to the space business. So we don't see, you know, we're not planning any divestiture there. You know, I don't take any of this as this.

Great. And following on the smartphone line of questions, you addressed this a little bit, but Inmarsat has 68 megahertz of global L-band spectrum rights, which is significantly more bandwidth than Iridium and GlobalStar combined. And both of those satellite operators are pursuing smartphone partnerships. What greater capabilities does Inmarsat or potentially you and Inmarsat have with that excess spectrum? And the answer to one of the questions, you mentioned potential partnerships. So I was wondering if you can elaborate, like, what do you mean by partnerships with that L-band spectrum?

Okay. So one is... So basically, one of the things is when we did our analysis around the Inmarsat acquisition, it was based on the existing business portfolios that we each had. We anticipated that there would be an opportunity in the direct-to-handset market, and we're still really interested in that. I think that the combination of the... The spectrum that Inmarsat has and the technology that we have is, you know, and when I talk about the technology that we have, you look at what we've done in ground-based beamforming for, you know, SkyTerra. We still work, you know, we work very closely with Legato on the use of their existing satellite. And then you look at the technology that went into Viasat 3. There's a lot of opportunity there. as well. And some of those technologies that we did, they're applicable to non-Geo as well. And so combining some of our technology with the things that MRS has been working on for orchestra, those are really good opportunities for us. We do think that in the long run, that that market is, you know, there's going to be a lot of them. opportunity seems to be playing out as well, better than we hoped it would when we announced the transaction.

Gotcha. And final one, is Viasat-4 supposed to be a MEO, as in a medium Earth orbit satellite, or have you said what orbit it's supposed to be in?

So Viasat-4 is Just to recap, what we expect the BICEP for is a 7 terabit per second geosatellite that would be America's focus and would really give us a lot more really good economics, really good bandwidth, we think super competitive in those markets. We do have a filing for a small meal constellation, which we're working on as well. That's not going to be in the multi-terabits range. But I think we should have an opportunity to get value out of that as well.

Sounds good. That's it for me. Thanks, everyone.

OK. Thanks, Louie. I think that's our last question. Just give a quick summary. Satellite construction is pretty close to done, but we've got to work the launch schedule with SpaceX for the first quarter. That delay and the supply chain issues for us and for the airlines is impacting our outlook a little bit, as we described in the letter in the near term. But long term, things still seem really good. Our awards were really, really strong. We're very happy with that. I think the TDL transaction is progressing, and that will greatly improve our balance sheet, reduce debt, improve leverage and liquidity. And I think we've got a good approach to working the UK CMA approval for the in-margin transaction. So thanks a lot, everybody, for joining us. I look forward to speaking again next quarter.

This concludes today's call. Thank you for your participation. You may now disconnect.