Good morning, and welcome to the Iridium Communications Fourth Quarter 2019 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions]. After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to your host today, Ken Levy. Please go ahead, sir.

Thank you, Keith. Good morning, and welcome to Iridium's fourth quarter 2019 earnings call. Joining me on this morning’s call are our CEO, Matt Desch; and our CFO, Tom Fitzpatrick. Today's call will begin with a discussion of our fourth quarter results followed by Q&A. I trust you've had an opportunity to review this morning's earnings release which is available on the Investor Relations section of Iridium's Web site. Before I turn things over to Matt, I'd like to caution all participants that our call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts and include statements about our future expectations, plans, and prospects. Such forward-looking statements are based upon our current beliefs and expectations and are subject to risks which could cause actual results to differ from forward-looking statements. Such risks are more fully discussed in our filings with the Securities and Exchange Commission. Our remarks today should be considered in light of such risks. Any forward-looking statements represent our views only as of today and while we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so even if our views and expectations have changed. During the call, we'll also be referring to certain non-GAAP financial measures, including operational EBITDA and pro forma free cash flow, free cash flow yield and free cash flow conversion. These non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles. Please refer to today's earnings release and the Investor Relations’ Web site for a further explanation and cover non-GAAP financial measures and reconciliation of the most directly comparable GAAP measures. With that, let me turn things over to Matt.

Thanks, Ken. Good morning, everyone. So it was only a bit more than a year ago that we were toasting the eighth and final launch of our Iridium NEXT satellites and celebrating the completion of our new constellation. And of course that was just the start of a milestone year filled with many accomplishments. As far as those satellites go, we continue to be very happy with our new network and all its new capabilities. Tom will go into detail on 2019’s numbers and our 2020 outlook, but a few trends really stood out to me particularly in context of our recent performance. Obviously beating 2019 guidance on operational EBITDA was noteworthy as was achieving another year of strong subscriber and service revenue growth. In 2019, Iridium delivered a 16% increase in net billable subscribers as well as double-digit revenue growth in IoT, government and hosted payload. Not bad for a transition year. To put this in context, even as we were building our new satellite network over the last five years, we grew our operational EBITDA at a 9% CAGR, which is really outstanding for the satellite industry and we’re excited about our opportunities for growth in the future. Perhaps a more meaningful stat for our investors was that we generated 168 million in pro forma free cash flow in 2019. This is a dramatic flip from prior years when we were spending significant capital on our network built. As you know, we believe investors should increasingly be focused on our cash flow going forward; metrics like free cash flow, cash conversion, cash flow yield and the like and evaluating us on it. We think we stack up particularly well on these measures versus other firms in the communications infrastructure space, many of whom enjoy higher valuation multiples in…

Thanks, Matt, and good morning, everyone. Having just wrapped up another great year for Iridium, I’d like to start with a recap of our 2019 financial results and provide some color on our fourth quarter performance. I'll then walk through the key components supporting our 2020 outlook, discuss the refinancing activities we’ve executed in recent months and conclude with a review of Iridium’s free cash flow and valuation metrics which we believe are compelling. We made steady progress executing on Iridium's financial transformation in 2019. As Matt noted, we achieved another year of strong growth in billable subscribers, service revenue and operational EBITDA. Beyond these metrics, Iridium also generated 168 million in pro forma free cash flow which marked our return to positive free cash flow in 2019 and drove additional balance sheet deleveraging. In fiscal 2019, total service revenue and operational EBIDTA both grew 10%. This strong performance was driven by continued momentum in our commercial business, highlighted by meaningful ramp in hosted payload revenue and IoT. In the fourth quarter, Iridium reported total revenue of 138.9 million which was up 5% from last year's comparable period. This growth was attributable to strong trends in commercial voice and commercial IoT and new long-term contracts with the U.S. government which drove incremental service revenue and engineering and support work this quarter. Operational EBIDTA rose 6% from the prior year's quarter to 80.1 million. The commercial side of our business remains strong and generated revenue of 88.6 million in the fourth quarter. Revenue from commercial voice and data increased 5% in the prior year period, reflecting demand for Iridium's new broadband offering and increased access in roaming revenue. In commercial IoT, personal communication devices continued to fuel new subscriber and revenue growth. IoT subs rose 24% from the prior year's quarter…

Yes. Thank you. We will now begin the question-and-answer session. [Operator Instructions]. And the first question comes from Ric Prentiss with Raymond James.

Thanks. Good morning, guys.

Good morning, Ric.

Hi. Tom, I appreciate that color on the guidance. I did have a couple of extra questions there. First, on the hosted payload, the 47 million full run rate, there’s also a hosted payload and other. Are you still expecting that other’s going to run maybe in that 14 million a year that we saw in 2019 as we go into 2020?

No, there’s – that was in '19.

Sorry, yes.

Hold on. Let me look into that, Ric.

Okay. Because I think total hosted and payload in the quarter was just over 12 million, but now you’re up to a better run rate. You guys can look at that. While you’re looking up that number, you had also previously thought that the exit of 21 for the new revenue from the broadband service would be 75 million. Is that still the thoughts? And I appreciate you guys are going to start providing actually financial breaking out that in 1Q '20.

On that one, it’s still – we just provided that guidance pretty recently ago and there’s nothing really changed much in terms of our optimism about the service and it’s way too early to even think about making that higher or lower. It was fairly backend loaded anyway. We’re now introducing the full speed of 704 kilobytes per second this quarter and GMDSS just got approved and new terminals are coming online and I think we’re finally at full strength in terms of all the partners like fully selling it. So full speed ahead right now and I’d say we’re still optimistic about those – those are good numbers really, but overall we’re still excited about sort of the market position of the service.

Perfect. Okay. And you mentioned the new LEOs. We get a lot of questions from investors about the Billionaire Space Club going on out there with SpaceX Starlink and Amazon potentially and OneWeb and Boeing, lots of questions about the new LEOs. Can you talk a little bit about how you see those – they’re in your same neighborhood I think you’ve used in the past but not the same source. What markets do you see these new LEOs attacking and entering? Is it aeronautical, is it maritime, is it consumer broadband? And how does their spectrum or equipment cost kind of compare to what you’re trying to deliver?

Those are good questions that whole conferences are right now addressing. I’ve talked to all of those guys here in the last 6, 12 months and so every one of them is a little bit different. I say there’s a same neighborhood, but I mean the same neighborhood in space. They’re low Earth orbit, but they’re really completely different business models and frequencies and approaches much more closer to what the existing fixed satellite services market is offering today versus what any kind of highly mobile personal communication kind of services that we offer today or IoT. So they’re all Ka and Ku-band. I would say that they’re mostly focused on what I would call the commodity broadband space trying to provide services that compete almost more with existing VSAT and fixed satellite services space. But even going beyond that to someone like Starlink or maybe someday Amazon Web Services I would say that they’re even going after what I could call the core fixed market, particularly consumer kind of markets that maybe are served by Hughes and Viasat today or even by fiber and other kinds of solutions. Those were completely different markets than what Iridium is interested in or has been addressing. We’ve stayed away from those. Those are extremely competitive markets with very complex distribution issues. Some of them by the way are going direct, some of them are going through existing market channels it appears. It’s quite interesting to watch them all develop, particularly from our historical vantage points of 30 years in satellite and knowing all the challenges they have to go through. I’m rooting them on overall because I think it’s interesting and good for the industry. I think there’s a lot of challenges ahead in building a lot of those businesses, you well…

Makes sense.

Ric, just coming back here to answer your question. The other’s around 10. It was 10 in '19 and we see it around 10 in 2020.

Okay, great. And then just a bigger picture, obviously coronavirus is grabbing a lot of attention in the marketplace and the news cycle. How are you feeling about the heavy equipment market, any other global economy items, any early indications that coronavirus is affecting supply or demand?

Yes, obviously I’m watching it with as much interest as you are. It’s capturing everybody and it’s going to clearly have sort of a global economic effect. I’ve seen like the early projections from your lines and others about less travel and that sort of thing. So it’s certainly of interest and concern to every company. We’re not I’m sure totally immune to it, but I can you I haven’t really seen the latter action from any partners. Certainly our supply chains are in good shape. We don’t have a lot of exposure, for example, to China. Our inventories are good. We’re not really seeing a big change in any kind of demand today. And I think it’s helpful that our business is so diverse in so many businesses and areas, some of which by the way are related to emergency and would be on the other side of say supporting a coronavirus. So I won’t say that I don’t think it will have any impact. Certainly it must have an impact for every company at some point if it gets bad enough. But we’re not really seeing any impact or projecting any impact right now on what we’re talking about for 2020.

Great. Thanks. See you in a couple of weeks in DC for the SATELLITE Show where those conversations will probably all continue.

Keep your mask on when you come, okay.

Thanks. Have a good day.

Thanks.

Thank you. And the next question comes from Greg Burns with Sidoti & Company.

Good morning.

Good morning, Greg.

Good morning, Greg.

I’m just wondering if maybe you could give us a little bit of an update on the activity around Certus adoption. I know at the onset it was maybe a little bit slower than you were expecting. But can you just talk about the pace of activations? Have you seen that pick up? Maybe if we just start there. Thanks.

We have, but it’s only been a few months really since we even provided that update. So it’s really still too early to say it’s faster or slower than expectations. I would say with so many positive things sort of happening around the product, with partners, with new terminals, with GMDSS certification, with the faster speed, which is a firmware upgrade to existing terminals, all those things are coming and sort of affecting it and are coming into the channel and going out there. So it’s going to take I think a few months before we can start all like looking and saying, I can see that we’re on track, ahead of track or behind track. So I’d say we’re feeling pretty good about where we are right now, certainly good about the product and the channels and the interest in it and all the things that we’ve seen so far. But it’s really too early to kind of call out any changes to 2021 or anything here.

Okay. And I guess there’s a little bit of optic in your ARPU and I know you’re going to start breaking it out next quarter with Certus specifically. But can you just help us frame what your typically ARPU was maybe with OpenPort and what we can expect from Certus terminal going forward?

Yes, I think you’ll end up seeing that sort of with – at roughly on the order of 10,000 subscribers kind of with our first generation service and I’ve already given you some idea about how far we’ve done in the last year, but I think more than 10% to that number. And I think the ARPUs were in the 200s kind of range with the OpenPort service. They’ve gone up 150% to 200% depending upon – it’s kind of a wide range, but you’ll see the average will step up quite a bit with the higher speeds and the higher functionality of the Certus services. So we’re seeing both new builds both on new ships but also on sort of new installations of standalone Certus, but we’re also seeing a lot of companion applications and of course those ARPUs vary between whether they are companion application a little lower versus a standalone application which can be quite a bit higher. So that all still averages considerably above where we were before and kind of bodes well for the future in terms of how much each of those incremental terminals will add to our bottom line.

Okay. Thanks. And then lastly, the equipment cost – the gross margin on the equipment this quarter was a little bit lower than I guess what it’s typically been. Is that what we can expect for next year? And then lastly on the engineering and support revenue, is this a good level to kind of model out or do you expect it to moderate in 2020? Thanks.

On the engineering and support, I think it’s going to be about this level – is up materially, it’s going to be about this level in 2020.

Yes, this feels like sort of the new run rate for a while. We really have stepped up the activity with our government partner. There’s an awful lot of activity around – almost in some ways we’re resource constrained in terms of being able to handle sort of all the things that we’re doing around new activities. So this seems like a good level for us right now. And I know equipment, it was a issue of mix more than anything else. It all depends on exactly what we’re selling in the year.

The margin was light in the fourth quarter, but in the full year we’re flirting with 40 and that’s where we see ourselves in 2020.

Okay, perfect. Thanks.

Thank you. And the next question comes from Anthony Klarman with Deutsche Bank.

Hi. Thanks. Earlier in the month you put out an 8-K that indicated that Aireon had met some milestones in its operating agreement that it has with you that was going to trigger some additional increases in the data billing that would you collect. I’m wondering if the timing of that is that you’re recognizing that immediately or if there’s some ramp to that that happens throughout 2020. I think you indicated that the annualized impact was about 10 million. I guess I’m just trying to capture if that entire 10 million is baked into the guidance. And then as an add-on to that, maybe Tom or Matt if you could remind us are there any other important milestones in the agreement you have with Aireon such that if they continue to scale relatively quickly could accelerate the timing of either cash payments or the buyback that I think is out there at some point in the future?

Aireon’s ability to pay off the hosting fee, right, is going to be driven by their contracts that they sign. And we’ve said that we see that in late 2021 or 2022 depending on their rate of adoptions. They’ve been doing very well this year in terms of signing up new customers and we expect them to continue to do that. So that’s the driver on when we get the hosting payment and then buyback of the shares comes after that, I think 2023. And yes, Anthony, the step up in 800 a month, so there’s your 10 million a year. So it’s out of the gate.

And that happened right off the bat really in the beginning of the year, so you’d expect that to be that level through the year and that was all put into our guidance now. So we have good visibility to exactly what Aireon is going to deliver this year.

Yes, got it. Thank you. And then maybe Tom, now that the recapitalization is complete and you’ve taken out the high-yield notes and you have an all term loan structure, I guess could you just remind us a little bit about your financial policy. I think you had previously indicated a long-term leverage target of 2.5x to 3.5x over the long term. Your guidance has you only a half a turn above that at 4x net leverage at the end of '20. How do you think about uses of free cash flow here? And do you have any sort of update to your financial policy about how you prioritize cash here?

We still think leverage between 2.5x and 3.5x is right and we see ourselves – obviously we would delever below that in 2021. And so we delever into that range in 2021 and so shareholder friendly actions are on the table once we get in that range.

But we should assume that for 2020 you’re sort of sticking to the core of kind of the operating business and that as we think about other uses for the free cash flow, I guess your expectation is that the cash would just sort of build to the balance sheet as you get towards that leverage target?

Yes, as we see the world today, yes, that’s our expectation.

Okay. Thank you.

Thank you. And the next question comes from Hamed Khorsand with BWS Financial.

Good morning. This is Zaheed [ph] for Hamed. Just a few questions. Have you been able to address your manufacturing needs for Certus equipment? And do you need more partners or just the ability to make more equipment?

Yes. So we have – just to understand how our Certus product works, we build the core transceiver module which kind of is at least for most terminals, though we will even license that technology if desired to some to make it themselves. We’ve made those, shipped many more out in our terminals in the market. Those then get turned into terminals by our terminal VAMs which we’ve announced a number and have some more potentially coming. They then create the terminals. People like Collins and Thales in particular are the primary ones in the maritime market today. And we’ve given some guidance in the past about sort of the additional terminals that they have made then even or have been activated. So the channel seems to have a good supply of terminals right now to support the growth in 2020. They’ll be augmented by I think we’ve discussed it, Intellian is coming onboard, a really strong Asian manufacturer. They should be delivering their product in the first half of this year and I’m sure they’ll also address particularly they have a fan base kind of cord in Asia, but really all of the world as well and that will add product as well. In addition, we see some other – even lower cost terminals coming on the market in 2020 that provide different levels of service. We also see aviation terminals which are under test right now that will hit more later in the year. And there’s some other sort of visibility to other things that are coming in the market as we license additional people to make terminals. So supply of terminals is good. The diversity of applications that they can support is growing. And competitive nature seems healthy in terms of sort of the kinds and price points of the terminals that are out there, so we feel good about the supply of Certus terminals for the market.

Thank you. And then one more question with regards to IoT, is Garmin still your main source of subscriber growth or are you seeing any new customer trends develop?

Well, Garmin certainly is putting some big numbers up because – being a consumer player and having such a broad first of all global scope in terms of who they support but also a growing product – number of products that they’re delivering to the market and expanding sort of the base of the applications that they’re supporting. That’s certainly I think going to continue to be a driver of just raw subscriber numbers on the future. It’s kind of hard to expect others will match them, though we are having discussions with others who certainly have the potential long term of being able to add good numbers too there also in sort of broader segments. We are seeing some new consumer products coming online. We’re really pleased to see sort of others entering the market as well. There’s only more than a handful right now of really nice looking products and different market segments going from consumer to enterprise to government and others that are also addressing this personal communication space, plus we’re seeing that midband’s technology that we’re deploying this year. We’re in trials with a number of – beta trials really with a number of our partners on new applications using higher speed services and we see that entering into the consumer and enterprise space, especially into 2021 and '22, and I think those will also add some interesting numbers as well. But yes, definitely Garmin is definitely the winner in terms of subscriber growth short to medium term.

Thank you.

Thanks.

Thank you. And the next question comes from Louie DiPalma with William Blair.

Matt, Tom and Ken, good morning.

Good morning, Louie.

Good morning, Louie.

Matt, Iridium shares are near their all-time high and it seems as though you have a lot of new products in the pipeline, particularly in IoT. Meanwhile your closely IoT competitor Orbcomm has seen its shares near their all-time low. At a high level, can you discuss the competitive dynamics in the IoT market from the various sources of competition, whether it’s Orbcomm, cellular and even future LEO IoT services and the differences in system architecture that has thus far allowed your team to prevail?

Yes. So we have – our competitive position on the IoT space has only sort of improved as we develop more unique devices made it easier to get into service, provided more competitive pricing plans and brought on more partners who put us into more applications. And all that has been sort of an engine of growth as I said that has delivered consistently high-performing subscriber growth. And it all is due to the unique nature of our global result. There is no – no one has to have reservations about where the coverage is on any device, the latency is consistent to everywhere in the world. It’s just a very high-performing, reliable application. So partners I think have been drawn to really our service versus others over time. And really in some ways I think anybody knew who really wants to go into market around sort of the applications we support are really being drawn to us. I’ve said in the past, I still agree. We’ve never lost a partner to any other satellite player. Once they come to us, they stay. We have taken a lot of share from others who were in the market earlier. You mentioned one, but there have been others as well and we seem to be migrating their applications over to our network as well especially with the new Iridium NEXT network that we’ve built, everyone sees the long-term future and potential of the capabilities we can provide versus anybody else. So when it comes to what I call one-to-one premium satellite IoT, I don’t think we have a lot of competition compared to the past. And you’re right. It is more about doing nothing would be a competitor or cellular being good enough in the 10% of the world if it works.…

Got you. And Tom, I think you provided an unofficial pro forma free cash flow guidance of 208 million and that amount of free cash flow generation is fairly unique in this industry. I was also wondering related to that, can you provide a little color in terms of the difference between that pro forma 208 million number and the change in net debt that’s implied by your deleveraging forecast?

Well, so the pro forma for 2020 is pro forma for our new capital structure which was implemented in February this year. So we think that – what’s important here is what’s the run rate of cash flow, right? And so that’s why we provide that pro forma statistic because we think that the growth rate, which is more than double the rate of growth in EBITDA, is unique and that’s why we highlight it. And so we have a detailed calculation, Louie, for you to kind of have at. It’s on our webpage and we’ve footnoted every calculation there. And so rather than take the time here, I would just direct you to the Web site and then we can have a follow up as appropriate.

Okay. And do you expect – I know you expect to average $35 million for CapEx per year I think for roughly the next 10 years. Do you expect to already hit that mark for 2020?

Yes. 35 is our guide for 2020.

Great. Thanks.

And you’ll see in the Web site – that’s evident on the exhibit we posted to our Web site. There’s a 35 million deduct and arriving to the 208.

Thank you. [Operator Instructions]. And the next question comes from the line of Chris Quilty with Quilty Analytics.

Hi, guys. Congratulations on finally, finally getting the GMDSS certification. Can you answer two questions? Number one, do you have any other terminal manufacturers besides Lars Thrane at this point? And I guess how large would all this Certus providers eventually be certified for GMDSS? And the second of all, maybe this is more qualitative, can you give us a sense of how you think that’s going to impact the market and competition going forward now that you finally have that in pocket?

Yes. So Lars Thrane got that terminal, which is a great terminal by the way. It’s the first terminal, but there are others that are under development and we’ll expect to see those coming later in the year or into '21. I’ll let them announce them when they’re available, but there will be multiple choices. And the Certus suppliers are also going to be certifying their terminals for GMDSS as well. Again, you’re right. It was a long process to get there. Getting full authorization is a big deal because we kind of broke a monopoly of 30 plus years. I would say too I should tell you our GMDSS service is truly going to be the best in just about every front and coverage to start with, but really the fact that that Lars Thrane terminal can do all services including voice and data as well as all the information services and it’s a really attractive package I think we’re going to get equally great new terminals when they’re available going forward. The most important aspect about it isn’t the revenues necessarily that it will generate. Technically GMDSS services are free certainly in the early term. Where those terminals can generate revenue-generating services that Lars Thrane service can be used for ship more data and that sort of thing which will generate revenues on top of it. But I think what’s the most important thing is that the distribution chain not only has an alternative to offer but they do not have to offer a mixed solution. They can offer a completely non-competitive solution to what they offer. And they’ve obviously been looking for an Iridium solution to be able to offer their customers so that they don’t have to mix it with their primary competitor on the leisure [ph] market onto a new ship or new service. So our goal isn’t to replace all the existing GMDSS terminals out there. There will probably be a lot more new devices going forward, because I don’t know if there’s a business case for necessary changing out the GMDSS terminal, but certainly if you’re going to put a new system on a ship I think we’re going to be an extremely attractive offering not just because it’s lower cost and provides more services and works in places the other solution doesn’t, but because it’s really much more friendly from a competitive perspective.

Got you. And on Aireon, obviously you or Aireon tripped the recognition due to their rollout of that service with the FAA. But what is the next step and expected timing of the next step for Aireon in terms of brokering a broader, more global agreement with the FAA?

Yes. So they’re starting now with what I would call a small straightforward step to be able to serve the surveillance needs in the Caribbean where – it’s a fairly straightforward step for them to implement Aireon and I think it will be a great confidence booster as they get comfortable. It’s easy to integrate into their existing sort of back office software systems that they use to control traffic. So it was the obvious first step. The big growth is in the oceanic space where the airlines really want them to deploy it where there’s a lot of value to be added. The software systems that they have that will ingest that data are being updated now and I think that they’ll be available to use later in the year in 2021. I think there’s an awful lot of discussions right now at the FAA about their phase plan and exactly how fast do they go and I think we’ll leave that to Aireon and FAA to work that out. But I’m encouraged that I think that they see the benefits of space-based ADS-B. I think they’re seeing the value of the efficiency but also the safety improvements it’s had. There’s been some really high profile, by the way, saves that have been underway in the last few months as the FAA and others have called Aireon to find out where downed aircraft are. I think you’re going to see more stories about that. That’s certainly just the visibility to a lot of areas that they’ve never had visibility to is really attractive to controllers, the pilots, the airlines, to everybody who’s involved in the aviation system. So our hope is it moves faster. Obviously the faster the move, the better it is for Aireon, the better it is for us who’s travelling public. I think there’s a lot of good reasons for that. Obviously financially Aireon – not just the FAA but they have a pretty long pipeline and I think you’re going to see a lot of new customers come onboard in 2020 and 2021 as they adopt it beyond the existing 35 countries or so that have adopted initially. And I think that’s going to continue to drive revenues. It will allow them to refinance their debt. That will allow them to pay their hosting and dividends and all kinds of the other financial benefits that happen out, as Tom said, when they happen in the next few years.

It’s really just – the model is just add customers of which the FAA is a big one. And the more they add, then the sequencing is hosting first, then buyback of certain of our interest for 120 million, then dividends and we’ve laid that out in our Investor Day and that’s how we saw it this time last year and it’s how we continue to see it. They just continue to prosecute and add new customers.

Well, maybe let me ask this in a more direct way. Are there – the issues that are throttling a final agreement, are they technical in nature or is it budget related? They haven’t yet been allocated the money they need to sign a broader agreement?

I don’t think I can characterize as one thing. Obviously the other countries and people have moved along faster than the U.S. has in terms of deploying space-based ADS-B. I’m just happy they’re moving forward right now and starting to see some progress. For a long time there they had been acting as if maybe it wasn’t even part of the solution or something that they may only consider for long into the future. Now they seem to have be moving on a phase introduction plan that sort of is going to move forward. I think you know agencies where the size and scope and the traffic that they have to support have to move at certain rates for a lots of different reasons, and I’m sure that Aireon and they will move through that. I just like the momentum I’m seeing right now.

Understand. Shifting gears with Certus and your government customer, are you engaged currently in negotiations to provide that service and any sort of update on timing of when there might be a contract in place?

Actually we have contracted already to COMSAT with a take-or-pay contract that in there the primary supplier of L-Band services to the U.S. government. And so they have already kind of committed to a revenue stream for us from the U.S. government. In addition, the U.S. government has already committed and is spending money and working through the process of implementing the Certus equipment at the government gateway, so they have already spending money and working on implementing a secure Iridium service capability. That’s moving along well and takes longer than I always think it would, but it should be available I think probably at 2021. In the meantime they have procured services via the commercial gateway. So particularly on the land-based side, already have a number of terminals activated and are liking what they’re seeing from the service and are having discussions around a number of areas from aviation, maritime and land to deploy it. So I don’t think you’re going to see a direct contract per se from us. It will be more through their procurement through COMSAT. So the channel’s all set up, the revenues will flow, they’ll just accelerate more when they have a secured capability is implemented fully at their gateway and can deploy it more rapidly.

So, Tom, where would COMSAT – to the degree they were successful with the government, where would those revenues flow? Would they still come through your government reported line or --?

We see – and there’s not much of them now, but we see that being reported in our broadband segment. When we introduced that broadband target, we had – if you remember the slide, there’s a slice for government on that slide. So we see that as part of our broadband target. So it would not be on the government line. The government line we see that as the contract with DESA [ph].

Yes. Primarily the narrowband existing fixed price services and then we’ll move sort of the government line into the broadband section for the broadband area.

Okay. And final question, commercial IoT net adds were sort of flat year-over-year at 35,000. I would have expected that might have been up given you’ve got more products and Garmin’s been at this longer. Was there anything about the fourth quarter that you saw as one-time in nature either that benefitted last year or might have created a headwind for you this year on the commercial side?

No, there were no headwinds. There’s some puts and takes. I remember there was a cleanup from one partner from some kind of nonproductive customers and they weren’t – they didn’t have much ARPU associated with them. And I don’t remember how many there were, but it was a significant kind of number that was sort of unexpected. That’s happens occasionally. Some people seem to do that and yet we don’t really know when it’s going to happen. So it depends on what quarter it hits. I wouldn’t read anything into it. The nature of it being flat, that was sort of – it has been running ahead for quite a while from expectations. And then I think there’s a bit of clean up in the fourth quarter from some people. But really the ARPU stayed strong, the momentum stayed strong and nothing really happened around any business changes or anything. I don’t think it had anything to do with economics or anything else right now. I don’t see any issues with our IoT.

No. As we said in our prepared remarks, we had visibility into the personal communication partners and feel real good about our prospects in 2020, so we’re not fussed about the fourth quarter net adds, Chris.

Perfect. Congrats and good luck on 2020.

Thanks, Chris.

Thank you. And this concludes the question-and-answer session. I would now like to turn the conference back over to management for any closing comments.

Well, obviously this is a good year. We’re off and running. We’re going to see very soon in the first quarter, but there’s also a number of conferences I think we’d probably see some of you at here, the big SATELLITE Show is in a couple of weeks here in Washington and I know some of you will be here then. There will be a lot to talk about I think in 2020. We look forward to seeing all of you each quarter going forward. Thanks.

Thank you. The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect your lines.