With the infusion of new cash coming as part of the Intelsat deal Gogo is well-positioned to invest in its updated air-to-ground (ATG) network, branded “Gogo 5G.” And the company has high hopes for increased revenue that network will deliver, both from its Business Aviation customers and from Intelsat. The latter secured a 10-year exclusive contract to resell Gogo’s ATG connectivity to commercial airlines and the (mostly) regional jets flying with the system installed as part of the deal to acquire the Commercial Aviation business.
As of 30 June 2020 Gogo had 1,531 planes equipped with the ATG system across North America. As those transition to the new Intelsat venture they will remain online, with the Gogo Business Aviation unit selling wholesale capacity to Intelsat. That deal is exclusive in the commercial aviation market but is also dependent on reaching annual minimum revenue guarantees to the tune of $177.5 million over 10 years. The structure of those guarantees suggests that Gogo expects either significantly higher rates or data volumes to be consumed by the commercial aircraft as the Gogo 5G network comes online.
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Dave says
Hello Seth, You imply (or I infer from what you wrote) that it is $177million over a 10 year period, which would be $17.7million per year for an exclusive contract. 2019 EOY showed 1577 ATG AC at an ARPA of $122K that would not make sense . To me that would make $192mm rev for ATG fleet, and to settle for $17.7 ?? Is the $177mm per year for 10 years ?, that makes more sense
Best Regards
and appreciate any feedback,
Dave
Seth Miller says
The $122k ARPA is for all CA-NA, not just the ATG planes. The number skews higher for satellite and lower for ATG.
The details on the breakdown of the rates per year are included in the additional content for PaxEx.Aero Premium subscribers. But I did not make an error in writing it the way I did.