Avanti Communications Share Discussion Threads

[hpcg] 16/5/2016 14:54

Ignoring the house broker and paid for research GIC are getting out as soon as they can. So that is another 3% for the market to absorb.

Below is an extract from the equivalent release in 2014. Revenue has gone up by $11mm and EBITDA by a lot less (9 month below, 3 month in latest statement so difficult to compare). This whilst being apparently super competitive in the market.

Avanti is trying to borrow money just to be in a position to pay its interest bill in 2017. EBITDA need to go up to $60mm for EBTDA to get to 0.

Financial highlights


• 9 month revenues of $39million

• 9 month EBITDA of $(2) million

• Cash at period end of $65 million

• Net Debt at period end of $299 million

• Backlog at 31 March 2014 of $458 million

[elrico] 16/5/2016 14:45

As for Cenkos...Shareprophets have a few kind word on those wonderful upright financial wizards.

[elrico] 16/5/2016 14:43

Estienne - You can thank AVN lawyers for my volume going off the scale. It has nothing to do with my best friend TW ;-) Speaking of which, he makes the same point I made earlier, just more eloquently, that's saying something, ain't it.

Institutional investors continue to sell. But Avanti Communications (AVN) directors hope that piffling share purchases by themselves will persuade mug punters to follow suit. Do I care that David Williams (total package last year $1,154,445 after another year of mega cashburn) has bought 5,434 shares at 91.5p taking his holding to 1,709,144. Seriously? A guy who earns c$20,000 a week for trainwrecking this company has bought £5,000 of shares? And that is meant to show he has faith in the company? If anything it shows he has none. Now to the Q3 trading update. - See more at:

[michaelmouse] 16/5/2016 14:03

"Avanti has reported Q3 trading that not only allows it to maintain its guidance for revenue growth, delivering a positive EBITDA in Q3, but clearly indicates a path towards free cash generation. With contract momentum building with high quality customers, recurring revenues are growing, satellite capex is almost complete and the financing facilities nearing finalisation appear more than sufficient to execute the plan. As this progress becomes more widely appreciated, we expect the share price to be released from its shackles and start to trend towards cash-based fair values. Our own capped DCF still returns a fair value of 427p per share."

[bwakem] 16/5/2016 13:41

Paul Scott: "This is probably the worst share on the UK market, and that's saying something."

[estienne] 16/5/2016 13:30

The Cenkos note makes the point that Avanti are causing major problems to other major satellite providers who themselves are currently building Ka band payloads which won't enter service until long after Hylas IV.

These other providers have good reason to fund a smear campaign against Avanti in a an attempt to bring the company down. TW even made ludicrous claims that Avanti were funded by ISIS.

No one posts every five minutes unless they have an agenda and this is clearly the case on this site

[estienne] 16/5/2016 13:17

Then Stay on Share Prophets elrico with your mate JK.

We know your game and it certainly isn't to help private investors.

Those who want to listen to your constant carping can do so at Share Prophets.

[ipsofacto1] 16/5/2016 13:14

Agree wi Elrico's point re share price. Can't be denied.
But yes I am an optimist. Got this off a mate. Cenkos are house and their target is seven quid! Anyway..

Avanti Communications Group Plc (AVN LN, 86p, £126m, BUY)
Q3 momentum

Avanti’s Q3 statement has reconfirmed guidance for the year to June. Revenues were up 15% and continuing business revenue for its top twenty customers saw growth of 59%. A continuation of these trends will see cash flow improve materially because of the fixed cost nature of the business. Avanti is on the right side of both the technology and pricing shifts in the marketplace and we remain Buyers.
n Q3 revenues +15%. Revenues in the third quarter of $19.5m increased 15% sequentially. Avanti generated a small positive earnings contribution (EBITDA $0.4m) on higher revenues despite significant higher investment in sales and other headcount over the year.
n $122m gross cash. Capital expenditure on Hylas-4 led to cash consumption of $40m cash in the quarter. The development of Hylas-3 and 4 is fully funded and their expected launches next year will see capex then revert to a maintenance level only of low single digit millions.
n Contract wins. The recent $29m contract win with BT/EE was won against competition from the major players in the industry. The win was secured on pricing terms consistent with Avanti’s targets and the contract helps support the unchanged guidance for the current fiscal period. Avanti has become a provider of critical infrastructure to the emergency services in the UK and the level of due diligence behind this contract should provide great comfort to investors as to the sustainability of Avanti’s business model.
n Industry backdrop. Recent warnings from Eutelsat and Inmarsat have not provided a favourable backdrop for Avanti. Eutelsat lowered its guidance last week to reflect hard comps, lower broadcasting demand and regional weakness in LatAm. Inmarsat warned prior to that on lower aviation, maritime and energy sector demand. None of these service lines provide read-across for Avanti’s segmental offering of data services.
n Price disrupter. New Ka band services such as that from Avanti are dragging average pricing for the industry down. Legacy Ku band pricing of over $4,000 per Mhz is twice the level Avanti charges for its data services. Avanti is the price and quality of service disrupter in the marketplace.
n Operational leverage. Rising revenues, static operating costs and falling capex will see cash flow soon begin to accelerate. We remain Buyers on this basis.

[elrico] 16/5/2016 13:13

I read somewhere Williams bought £98k WORTH at £7, what wasn't so clear, Williams sold 400,000 shares before he bought and 3 days after he said they were worth £25. If management believe their own spin, spin backed by a brilliant piece of financial reporting by Edison (chuckle)Walsh and Williams would be filling their boots with AVN shares.

[elrico] 16/5/2016 13:06

edison note produced by AVN?

[thomasthetank1] 16/5/2016 13:03

Read Edison's note on AVANTI COMMUNICATIONS GROUP (AVN), out this morning, by visiting hxxps://www.research-tree.com/company/GB00B1VCNQ84

"Avanti has reported Q3 trading that not only allows it to maintain its guidance for revenue growth, delivering a positive EBITDA in Q3, but clearly indicates a path towards free cash generation. With contract momentum building with high quality customers, recurring revenues are growing, satellite capex is almost complete and the financing facilities nearing finalisation appear more than sufficient to execute the plan. As this progress becomes more widely appreciated, we expect the share price to be released from its shackles ..."

[elrico] 16/5/2016 13:01

JK - In truth, I was being generous. I know certain bloggers agree with you on this, which raises another issue for AVN shareholders.

[extrader] 16/5/2016 12:47

Hi all,

Today's RNS's :Paul Walsh (Chair) buys 25K today, Williams buys 5K today, GIC Simgapore sells 1 million, goes below 4%.

ATB

[elrico] 16/5/2016 12:39

Estienne - Shareprophets have called it correct from somewhere near 300p, which makes your comment look rather foolish.

[elrico] 16/5/2016 12:36

bs76 - Institutions called back loan stock to sell, Borrow is difficult.

[nw99] 16/5/2016 12:08

Cash burn is heavy not good

[bs76] 16/5/2016 12:00

If this is going to 0 in next 12 months then why there is no declared short interest over 0.5%?

I mean why JP, Ennismore and GSA got out of their short positions?

[elrico] 16/5/2016 11:29

The $71 facility has been agreed in principal, but at what percentage rates? Once again, smoke and mirrors. The bonds are telling you equity has no value. There was no reference to the sliding margins being charged for satellite packages, even Williams has been quoted, but no official announcement to a material impact on the share price.

The EE contract is a prime example of how AVN work...they have given a figure, but over what time frame? 5 years, 10 years?

[dangersimpson2] 16/5/2016 11:05

I still think they need a cash raise before Y/E.

Even if we assume all Q3's $40.2m cash burn was capex then in Q4 we have:

-$32m debt interest payment
-$23.4m remaining capex based on low end $100m guidance for FY
-$17.3m working capital normalisation from H1
-$0.4m EBITDA (since cashburn was net of +ve EBITDA)

= -$73.1m

Which leaves $49.3m cash plus Q4 OCF.

Even if they do their planned Q4 revenue of $39.7m without resorting to any non-cash swap agreements etc this is unlikely to generate any OCF in Q4 since their DSO is around 260 days. That sort of growth all in 1 quarter tends to suck in working capital not generate free cash flow.

Which means even under this best case scenario their Y/E cash level is short of next year's debt interest/capex.

[bwakem] 16/5/2016 09:46

So in the 3 months to 31/03 they burned through $40m? That is amazing. Maybe they have incurred some of the costs involved in the transaction they booked as $25m revenue that really is minus $14m revenue.

Now they want to triple the capacity of their 30% subscribed service that they are really struggling to sell at a 60%-80% discount. And they want to take on more debt in the process.

Target price 0p within 12-18 months.

[hpcg] 16/5/2016 08:18

Revenue on a forward 12 month is about 4/3 the interest bill. Cash burn another 40 million. 0.4 million of operational profit. 0.4 million. 400000 dollars, before interest.

Michael - yes, new finance critical to survival but it does not make the EV of the company higher. Any debt raised should decrease the equity component.

[ipsofacto1] 16/5/2016 08:13

Presume that's why they are confident of Q4 numbers. Maybe that was the EE contract, signed post Q3 close?