Sat Sol Share Discussion Threads

[tightfist] 02/8/2016 09:23

Hi Matis,Yes, I too am now fully-loaded, at least until I see some interesting numbers and then I may add a final tranche or two.I want to knuckle-down soon and build a spreadsheet model of the base business, all the acquisitions, ARPU, organic growth, gross margins, economies of scale in overheads, etc. Have you attempted such an analysis? It would provide a framework to review each 6-monthly results. Maybe we will see a broker's note later this month after the H1 results.All the best, tightfist

[matis0906] 01/8/2016 17:16

Joined you today and topped up at 6.16.

Don't need any more for now happy to sit back and watch now. Also looking forward to seeing the H1 results. All the best.

[tightfist] 01/8/2016 11:17

Yes Matis, all looks good to me too, Oz always seemed intuitively atteactive. However, I am thoughtful about what mischief is sometimes hidden within a trail of acquisitions, not that I have any reason to be sceptical of management at SAT.

I am keen to examine the H1 numbers, though I could not resist a top-up just now at 6.09p.

Cheers, tightfist

[matis0906] 30/7/2016 10:04

Morning Tightfist, looks like our thoughts about Australia a few months ago were correct. All looks very positive Have a good day.

[tightfist] 30/7/2016 08:35

At first sight I was concerned about the astronomic pace and global spread of acquisitions over the past 14 months, and SSW's ability to successfully integrate them into a cohesive business. In the short term the retentions should help....The Australian acquisition looks particularly attractive to me, with potential for stellar growth over the coming months.The background trading overview info (ARPU, gross margin, overheads) also looks rather encouraging in advance if the H1 results. It would be nice to see the organic growth figures by region; for me this is the icing on the cake. It's reassuring to see that management are stressing the need to now focus on integrating acquisitions, rather than chasing yet more of them. Subjectively this looks to be a good business getting better; I would now like to see a research note that actually adds-up all the parts!Cheers, tightfist

[hydrus] 29/7/2016 20:28

£25k each rather than £125k.I wasn't expecting them to go for broke so quickly. Presumably they realised there was an opportunity to scale up the business quickly and so went for it. The fact there will be 500m shares is a negative for me. I prefer self funding growth which doesn't dilute shareholders and I was expecting mainly that approach, perhaps with a small placing at some point for an acquisition. There are of course risks in relation to merging these larger organisations with their own functions although the fact the previous acquisitions are all growing organically is positive and may provide some insight into how well they are combining businesses in the roll up strategy.I'll continue to hold as there certainly could be a growing, highly profitable business here which could mean a much higher share price in due course.

[dirty75] 29/7/2016 16:38

nice to see the directors backing their company to the tune of £125,000 each, they know what they're up to. Nick Candy buys another huge chunk.

going to smash their target on users, and users = profit

[ayl30] 29/7/2016 16:08

Placing completed

[ayl30] 29/7/2016 13:12

Interesting RNS today re aquisition. Good to hear core business continues to prosper and that new enlarged group will have significant market share

[vatnabrekk] 18/7/2016 22:04

I must admit I haven't looked into AVN in any detail but I just noticed that their revenue has increased quite dramatically over the past couple of years yet they continue to make substantial losses. So I figure that there must be something fundamentally wrong with their business model. Of course I could be wrong.

But then as you suggest, surely an Administrator could do something to ensure that the assets were taken over and could be kept working.

[tightfist] 17/7/2016 21:55

Surely AVN would be treated as a going concern (revenue forecast ~£68m pa) and an Administrator would dispose of it (or re-finance it?) as such, with the existing shareholders and bondholders taking a major bath?

I am not an AVN holder and havn't looked at the balance sheet, however.

[vatnabrekk] 14/7/2016 19:06

I understand that SAT uses the services of AVN (i.e. AVN's satellite systems) to provide communications services to its customers. Does anyone know what SAT's situation would be (with regard to being able to continue to provide services to its customers) if AVN went into administration?

[matis0906] 12/7/2016 22:22

Tightfist what's your take on the effect on Sat regarding the Avanti issues and their share price freefall. Do you think it is holding back Sat or having a detrimental effect?

[hutch_pod] 12/7/2016 18:42

thanks tightfist, missed both those. CEO comes across well. Be good to see what IC think when they update.

[tightfist] 12/7/2016 09:05

And here is the link to the video:hXXp://www.proactiveinvestors.co.uk/companies/stocktube/5248/satellite-solutions-firmly-in-top-spot-after-avonline-deal-5248.htmlThere is possibly a clue regarding margin differences between the two businesses. Apparently Avonline predominantly sell Direct, SSW though Distributors - do they receive some type of trail commission? It will be interesting to see how SAT reconcile the two business models.Cheers, tightfist

[tightfist] 12/7/2016 08:49

Here is another attempt at the link, with a concise summary of the Avonline deal, and business aspirations:.hxxp://www.proactiveinvestors.co.uk/companies/news/127949/satellite-solutions-beams-higher-with-transformational-10mln-acquisition-127949.htmlI mentioned Synergy Savings/Opportunities arising from the acquisition. There should be a lot of scope with Avonline having considerably higher gross margins and also possibly eliminating duplicated back-office overhead costs? Hopefully SAT management have good experience in executing that style of acquisition.Cheers, tightfist

[dirty75] 11/7/2016 22:04

wouldnt allow the link , you need to google proactive investors title of article and podcast Satellite Solutions firmly in top spot after Avonline deal

[dirty75] 11/7/2016 22:02

And naturally buying a bigger number of users is better too and making SAT the biggest provider in the UK at the time of BDUK rolling out there subs is not a bad place to be.

this is worth a listen, i highlight 2.20 mins in - "self funding company now".

[...]

[hutch_pod] 11/7/2016 15:20

I guess the Avonline customers are higher margin than IC projected, although out of the £2.5m EBITDA will come a £1m interest bill (10% of £10m) - a relatively higher chunk of profit due to the higher acquisition cost.

I agree there must be faster top line growth envisaged although i wonder what the additional platform costs might be, given Aurora is "a scalable customer servicing platform".

[tightfist] 11/7/2016 13:10

Hi Dirty,I too trust these guys to run the business, but I am also interested in tracking progress and particularly retaining the attractive margins and cash flow characteristics, whilst achieving stratospheric growth projections.On the face of it (before the final £500k and extra incentive payments) SAT are paying £9,5m upfront to obtain ~9,500 subscribers, that equates to £1,000+ per direct subscriber. Naturally we are looking forward to accelerated truly organic (word-of-mouth?) growth and substantially more share of the BDUK business.Referring back to the IC article on 24th March they foresaw the implied "the acquisition of around 64,000 customers over the next 21 months at a cost of £20m based on a subscriber acquisition cost of £300.". What I am flagging is that we so far have visibility of recently acquiring around 11,900 immediate customers for (reading between the lines a little) about £10.5m. That is a large gap in the investment case to fill with Accelerated Top Line Growth (beyond the acquired subscribers) and Synergy Savings. We certainly need to start seeing Management Confirmation that the BDUK scheme is gaining traction if they are to deliver the IC projection.Cheers, tightfist

[matis0906] 10/7/2016 18:08

hxxps://www.insidermedia.com/insider/southwest/broadband-provider-bought-in-bgf-backed-deal

[hutch_pod] 08/7/2016 13:28

I recall IC mentioned 10k new customers would add around £1m cash profits, and £300-£400 client acquistion cost.

So simplistically, if these 10k can generate £2.5m EBITDA, £1000 acquisition cost actually seems to align.

I know earlier acquisitions were paying much less than £300-£400 per customer..

[dirty75] 08/7/2016 12:44

My thinking is..... That number of c£1000/user isn't correct. There's no doubt more to this deal than meets the (our)eyes. They probably don't really want to advertise what they're paying per user, it does take the ability of strong negotiating a decent price out of there hands if everyone in the market knows the price. I trust these chaps running this Co (they've shed loads of shares), they know what they're doing and no doubt the BGF do too.

The Gov have to keep the BDUK scheme going, basic right to have the internet.