Gogo Inc. GOGO recently inked a partnership with Brazilian mobile provider TIM, which will enable the latter’s PRA MIM Elite Black customers access discounted Wi-Fi on Brazilian airlines, GOL Linhas Aereas.

The offer is valid from Sep 3 to Oct 3. TIM PRA MIM members will get a 30% discount on Wi-Fi passes on the airline. GOL will offer this promotion on all aircraft that features Gogo’s 2Ku service.

Notably, GOL was the first airline to offer Gogo’s IPTV service supported by the 2Ku Wi-Fi system.

2Ku Installed Base Continues to Expand

Gogo installed 2Ku service in 139 aircraft in second-quarter 2018. Of these, 89 were in aircraft under the Commercial Aviation – North America (CA-NA) segment and the remaining were under the Commercial Aviation – Rest of the World (CA-ROW) segment.

CA-NA ended the quarter with 2,809 aircraft online, up 18 aircraft year over year but down 31 sequentially.

Gogo Inc. Price and Consensus


Gogo Inc. Price and Consensus | Gogo Inc. Quote

Gogo expects to install more than 250 2Kus for 2018, which will increase the installed base to 600 2Ku aircraft in the CA-ROW segment by year-end.

International airlines like Air Canada, Aeromexico, Cathay Pacific and LATAM Airlines Brazil have selected Gogo’s 2Ku to provide better in-flight experience. We believe the promotion with TIM will definitely boost demand for the 2Ku service globally.

2020 Vision Focuses on Cost Reduction

By the end of 2020, Gogo plans to reduce total operating spending on CA business (excluding satellite costs) by almost 20%. Most of these reductions are expected to come from the CA-NA segment.

Management also expects to lower cash burn by more than $100 million in 2019 over the estimated 2018 figure and by a further $100 million in 2020. Gogo believes lower gross and cash capital expenditure (CapEx) will help it achieve the cash burn target.

For 2018, Gogo projects CapEx and cash CapEx in the range of $150-$170 million and $110-$130 million, respectively.

Zacks Rank & Stocks to Consider

Currently, Gogo has a Zacks Rank #3 (Hold).

Telenav TNAV, AT&T T and United States Cellular USM with Zacks Rank #2 (Buy) are stocks worth considering in the same sector. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth rate for Telenav, AT&T and United States Cellular is currently pegged at 25%, 3.57% and 1%, respectively.

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