Activist Carronade spots a hidden gem in Viasat’s business. How the firm may unlock value
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The activist investor appreciates Viasat's Defense and Advanced Technologies business, dubbing it a 'crown jewel' that may be due for a spinoff or IPO.
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August 9, 2025
11:57 AM
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Viasat offices are shown at the company's headquarters in Carlsbad, California, on March 9, 2022.Mike Blake | ReutersCompany: Viasat Inc (VSAT): Viasat is a global communications and defense nology company that operates at the intersection of secure communications, global connectivity, as well as aerospace and defense nology
The company operates in two segments: Communication Services and Defense and Advanced nologies (DAT)
The Communications Services segment encompasses Viasat's fixed broadband, government, maritime and inflight communications services
The DAT segment offers defense-nology platforms for information security and cyber defense, space and mission systems, tactical networking and advanced nologies.Stock Market Value: $3.44B ($25.62 per )Stock Chart IconStock chart iconViasat in 2025Activist: Carronade Capital Management LPOwnership: 2.60%Average Cost: n/aActivist ary: Carronade Capital is a multi-strategy investment firm that focuses on cess-driven investments in catalyst-rich situations
Carronade was founded in 2019 by Dan Gropper as primarily a credit investor
But, four people on the firm's seven-person investment team, including Gropper, have spent considerable time working at Elliott Management: They have experience with holder activism and are not afraid to use it.What's happeningOn July 31, Carronade sent a letter calling on Viasat to separate its Defense and Advanced nologies ("DAT") through a spin-off or initial public offering.Behind the scenesViasat operates in two es segments: Communications (73% of revenue and 80% of earnings before interest, taxes, depreciation and amortization) and Defense and Advanced nologies ("DAT") (27% of revenue and 20% of EBITDA)
Communications is Viasat's legacy satellite , with offerings of fixed broadband, government, maritime and inflight communications (IFC)
DAT offers defense-nology platforms for information security and cyber defense, space and mission systems, tactical networking and other advanced nologies
This is a newer but rapidly growing , with high to mid-teens revenue growth
Despite the company's strong strategic positioning, prior to Carronade's engagement, Viasat's price had significantly underperformed, down 21.12%, 51.56%, and 57.98% over the past 1-,3-, and 5-year periods, respectively.As Carronade describes in its letter, this is a "materially misunderstood"
Carronade believes that the reason why this company is trading down is simple: Viasat has been treated by the market as a small-cap legacy satellite company that has been marked for death due to new high-file entrants Starlink
This narrative is two nged: (i) that Starlink and similar entrants will make Viasat's Broadband obsolete and (ii) that they are encroaching on Viasat's IFC market dominance
It is true that the broadband is declining, as revenue is down over 27% year over year, but this is only a piece of the Communications and the worst piece with the lowest margins
The Communications segment also has three other es: (i) Government, which is growing apximately 25% year over year; (ii) IFC, with 22% growth; and (iii) Maritime, which is growing at 11%
The second part of this narrative – the market threat in IFC – is greatly exaggerated
Viasat's IFC is not going anywhere
The company's customers have long-term contracts (five to 10 years) and face high switching costs as they would need to replace their entire connectivity systems
Viasat presently has customers with 4,120 planes and a backlog of another 1,600 planes from just those existing customers
And this is a very nascent market with only apximately one third of airplanes globally having Wi-Fi, so there is a huge untapped market, which Viasat should get a large piece of despite competition from Starlink and other competitors
Additionally, Viasat is aware of the Broadband drag and is actively pivoting out of it to double down on the growth es with better margins
Exiting the broadband over time while the other es continue to grow could be a plus for the company as it will no longer be viewed as a sleepy broadband communications .But that isn't even the biggest misunderstanding of Viasat's
The DAT has been buried under the legacy and its accompanying negative sentiment
DAT is a hidden gem, with best-in-class EBITDA margins of 28%, double-digit revenue growth, and significant exposure to hot button next-generation defense and dual-use nologies such as the Golden Dome, next-generation encryption, drones, device-to-device (D2D) and low Earth orbit
While Carronade highlights how each of these translates into mising growth avenues, perhaps the best illustration of DAT's mis-valuation lies in its D2D platform services, which is designed to enable global connectivity directly to unmodified smartphones and other Internet of Things devices
DAT has $1.22 billion of revenue and $285 million of EBITDA
The peer comps to DAT – companies AeroVironment, Kratos, Mercury Systems and Redwire all have lower margins and weaker growth files, yet trade at multiples ranging between the mid-20s to above 80-times EBITDA
Viasat currently trades at apximately six-times EBITDA.Carronade's posed solution is simple but compelling: spin-off or IPO the DAT to unlock this intrinsic value and eliminate the drag caused by the narratives orbiting the satellite
Carronade models 20-times to 51-times (comp median) valuations for this giving it a value of $6.3 billion to $16.2 billion, versus a present enterprise value for the entire company of apximately $8 billion
This leaves the Communications segment with $3.3 billion of revenue and $1.2 billion of EBITDA
Applying a conservative 4-times value to this creates another $4.9 billion of value, and there is another $1 billion of value from the upfront and long-term annual payments pursuant to a recent legal settlement with Ligado Networks
According to the Carronade analysis, this gives Viasat a total valuation of anywhere from $48.93 per to $112.49 per or a 76% to 304% return.Carronade is a multi-strategy firm that focuses on in non-traditional, undervalued debt instruments
Viasat is highly levered, and its investment base is filled with creditors, so we imagine Carronade ly entered its position (currently apximately 2.6% of s outstanding) in a similar fashion
The firm's analysis almost seems too good to be true, but there is not a lot of focus on small-cap companies in today's market and this lack of focus is exacerbated when you have companies Starlink greatly winning the PR battle against companies Viasat
This is how a company can go from $34 per to $16 per (prior to Carronade's engagement) over two years despite revenue increasing from $2.6 billion to $4.5 billion and EBITDA growing from $344 million to $1.4 billion
Fortunately for Viasat holders, Carronade's involvement should help bring the market's attention to this strong value case
While Carronade is not known for confrontational activism, that is OK, because this is a situation where no more than a nudge should be needed and Carronade's best weapon is the power of the argument
Moreover, management has already signaled that they have been considering selling some of the DAT , suggesting that they may already recognize Carronade's value position and are headed in the right direction.Ken Squire is the founder and president of 13D Monitor, an institutional re service on holder activism, and the founder and portfolio manager of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist 13D investments
Viasat is owned in the fund.
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