Viasat’s Hidden Defense Gem: Carronade’s Strategic Unlock

Carronade Capital, a hedge fund with ties to Elliott Management, has called for Viasat to separate its Defense and Advanced Technologies (DAT) division through a spin-off or IPO. The activist investor argues that Viasat’s stock slump—down over 50% in three years—stems from market misperception, as investors focus too heavily on its declining broadband segment while overlooking DAT’s robust growth. This hidden gem boasts 28% EBITDA margins and specializes in cutting-edge defense tech like drone systems, next-gen encryption, and direct-to-device satellite connectivity.

Despite Starlink’s disruptive reputation, Carronade contends Viasat’s inflight communications (IFC) business remains secure due to long-term airline contracts and high switching costs. With 4,120 active aircraft and 1,600 in backlog, IFC revenue grows at 22% annually. Meanwhile, DAT’s $1.22B revenue stream—featuring dual-use military technologies—is buried under negative sentiment around Viasat’s legacy operations. Peer comparisons suggest DAT alone could command higher valuations if standalone.

Viasat’s strategic pivot away from low-margin broadband toward high-growth segments aligns with Carronade’s push. The firm highlights DAT’s potential in emerging markets like smartphone satellite links, where Viasat’s tech could enable global IoT connectivity. A separation, Carronade asserts, would let investors properly value these ’next-generation defense’ assets currently overshadowed by satellite industry headwinds.

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