Gogo‘s legal victory at the end of September allows the company to continue selling its new Gogo 5G network, even as SmartSky believes it will succeed with an appeal to have the injunction reinstated. The ruling also saved the company a few million dollars.
Along with reporting record quarterly revenue in Q3 2022, Gogo also revised its full year Adjusted EBITDA forecast, with litigation and Global Broadband (i.e. the OneWeb LEO solution) now expected to cost the company $6 million. At the end of Q2 that number was $9 million. VP Investor Relations Will Davis confirmed to PaxEx.Aero that the $3 million trimmed comes from reduced litigation costs associated with the temporary injunction ruling.
Ultimately, the company now expects to spend approximately $3 million this year defending itself against the patent infringement suit brought by SmartSky.
Trimming 5G spending
Gogo will further trim spending on the 5G program this year, to the tune of $10 million in CapEx and $5 million in OpEx. The company recently completely deployment of all the towers, so CapEx costs will come from other portions of the network provisioning. OpEx savings likely can be attributed to reduced backhaul and other expenses while awaiting activation of service.
Read more: A make or break situation for SmartSky, Gogo in patent showdown
Gogo still expects the 5G chipsets to begin rolling out no earlier than Summer 2023, as it reworks the design to address issues discovered during the QA process.
Investing in LEO
Gogo’s investment in what it is calling Global Broadband also continues to grow, with entry in service – or at least customers paying for it – still targeting 2025. Gogo spent $1.8 million in Q3, after spending $1.2 million on the efforts in Q2 as the partnership with OneWeb launched. Davis advised that the $3 million spent in 2022 so far aligns with the total expected outflow for the program this year. That number is expected to grow to $10 million in 2023 and ~$35 million in 2024 as marketing and terminal hardware investments ramp up to support aircraft equipage.
FCC funds remain pending
As reported over the summer, Gogo is also in line for up to $132 million in reimbursement from the FCC to replace the ZTE hardware currently in use for the 3G/4G network. The allocation is less than half of what Gogo requested and the funds must still be delivered. But it would be a strong boost for the company’s bottom line.
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