Carlsbad-based Viasat disclosed that its newly launched ViaSat-3 Americas satellite has a problem with deployment of its large antenna that “may materially impact” its performance.
The company announced the news Wednesday after markets closed. Its stock dropped 28 percent from $42.98 to $30.74 by the end of trading Thursday.
The ViaSat-3 satellite, which cost roughly $700 million in total, including ground infrastructure and launch expenses, blasted into space on April 30. It climbed to its orbital slot some 22,000 miles above Earth and was expected to undergo testing before beginning to beam bandwidth to customers this summer.
The launch marked a milestone for the Carlsbad company as the first terabit-class communications satellite in space. It aimed to add massive capacity to Viasat’s network through a combination of 25 kilowatts of power and its very large antenna — also known as a reflector.
The antenna design was the first of its kind on an Internet satellite and one of the distinguishing features of ViaSat-3. It was supposed to act like an amplifier to help give the satellite 1,000 gigabits per second capacity.
The company described the problem as an unexpected event that occurred during the antenna’s deployment. It is conducting a review to determine its impact and potential remedial measures to mitigate the damage.
“We’re disappointed by the recent developments,” said Mark Dankberg, chairman and chief executive of Viasat. “We’re working closely with the reflector’s manufacturer to try to resolve the issue. We sincerely appreciate their focused efforts and commitment.”
A company spokesperson declined to name the antenna supplier other than to say it is a large aerospace and defense company with experience in big antennas.
Louie DiPalma, an analyst with William Blair, said the stock sell-off is likely driven by emotion, and there are several things that could happen to soften the blow.
Even so, “the setback is particularly frustrating for Viasat employees, suppliers, customers and investors as this satellite was eight long years in the making, with the original launch targeted for 2019,” said DiPalma.
Viasat noted that contingency plans are being developed to minimize the economic impact to the company. Potential options include redeploying satellites from Viasat’s current fleet to get the most effective global coverage, or possibly re-directing ViaSat-3 class satellites earmarked for Europe and Asia to provide additional bandwidth over the Americas.
Viasat plans to launch three satellites in its ViaSat-3 constellation — with this first one covering the Americas. A second sister satellite will cover Europe, the Middle East and Africa, and a final satellite will target the Asia-Pacific region.
ViaSat-3 for Europe, the Middle East and Africa was forecast to launch this fall or winter, with ViaSat-3 Asia-Pacific set to launch sometime in 2024.
The company said there will be no disruption to customers from this event, and no impact on coverage or capacity for the Viasat and Inmarsat satellites currently in service.
Viasat acquired Inmarsat, based in the United Kingdom, earlier this year, adding satellites to its fleet. It now has 12 Ka-band satellites in space — not counting ViaSat-3 Americas — with eight additional satellites under construction.
With the addition of Inmarsat and the ViaSat-3 constellation, Viasat aimed to position itself as a top competitor to SpaceX’s fast-growing Starlink satellite Internet service.
The company is particularly focused on broadband markets such as in-flight Wi-Fi for airlines and business jets, shipping and other maritime s, defense, remote oil and gas operations and other hard-to-reach places. Viasat supplies in-flight connectivity to Delta, JetBlue, American, United, Southwest and other airlines. It also supplies on-board connectivity for Air Force One.
Viasat has experienced troubles with antenna deployments before. Its ViaSat-2 satellite, launched in 2017, had a problem that resulted in a $188 million insurance claim, according to published reports.
“Viasat will again likely receive a hefty insurance claim” for the ViaSat-3 Americas malfunction, said DiPalma. “Viasat has said that it purchased all the insurance it could, and that its insurance covers substantially all the replacement cost.”
The company said it will provide an update on the status of the ViaSat-3 Americas satellite, along with plans going forward, during its earnings call, which is planned for Aug. 9.
