Avanti Communications Share Discussion Threads

[colva] 07/2/2012 14:44

sg31 ,

I missed your post at 12:57 , i started my post and then got distracted by something else , when i eventually got round to submitting it i found that you had already made the point .
Like you say , H3 being smaller than originally planed is not a problem , they get more capacity where they need it for relatively little cost .

[sg31] 07/2/2012 13:50

H1 was designed as 15 years but they saved fuel on the launch which should extend the life by a few months. Sometimes they do continue working after the expected life.

[waterloo01] 07/2/2012 13:47

What's the life of HI and H2?

[sg31] 07/2/2012 13:46

Colva, you confirm what I had thought. I don't see any problem in H3 being smaller. It looks like it will be a relatively cost effective project.
ISTM that they are being flexible by adapting to opportunites when they arise.

[geheimnis2] 07/2/2012 13:45

remember DW has stated an ambition to launch 12 satellites

(just not at these prices for raising equity!)

looking forward to being a main market listed, cash generating company next year - with at least £6 sp!

[colva] 07/2/2012 13:26

From what i remember i think H3 was supposed to have the same capacity as H2 but it now looks like it'll have about half that of H2, but the JV with ESA has meant a large reduction in costs , i can see what Avanti get out of this deal but can someone tell me whats in it for ESA ?

DW said yesterday that a full H1 would generate about GBP 50m in revenue so all 3 at full capacity would be about GBP 250m , those sorts of numbers are several years away but once H2 is up and running it's going to be very difficult for the market to ignore the potential . A re-rating is on the cards , sooner rather than later.

[geheimnis2] 07/2/2012 13:13

RA

do you have the DS broker note/update

[someuwin] 07/2/2012 13:12

Hylas 1 - 3 GHz
Hylas 2 - 8 GHz
Hylas 3 - 4 GHz

[restassured] 07/2/2012 13:01

"Bringing forward the revenues from Hylas 2 is very important as it shows a lot of confidence,"said Mike Jeremy, head of research at broker Daniel Stewart.

[sg31] 07/2/2012 12:57

I had thought that Hylas 3 would be the same size as Hylas 2. I don't know where I got that idea (I think it was related to projected costs) but it is definately wrong. Hylas 3 looks to have similar capacity to H1.

[davyofthecity] 07/2/2012 12:38

Thanks for your replies to my question last week.

[garymott] 07/2/2012 11:51

Good research/points backmarker. Regarding your comment about whether as a result of the deal with ESA the HYLAS 3 launch will be later than otherwise intended is, I think, academic only.

HYLAS 2 launches this summer and is now expected to be full in 4 years (not 5 as previously stated) which takes us to summer 2016. HYLAS 3 will launch in 2015 and "will address the emerging telecommunications markets of Africa and the Middle East" which is the same markets as HYLAS 2. Therefore there is no great need to launch HYLAS 3 any sooner as there will still be capacity on HYLAS 2 for the same markets.

In 2014/2015, Avanti can pre-sell capacity on HYLAS 3 more cheaply if competition demands because "The advantage of entering into a joint venture agreement with ESA is that Avanti reduces costs relating to the satellite platform, launch vehicle, insurance and project management. These savings would mean that Avanti would benefit from a satellite project cost per GHz that is over 40 per cent. cheaper than HYLAS 2".

So Avanti gets its 3rd satellite funded fully with all the benefits of significantly lower costs, shared risk and no loss of opportunity due to the timescale - I think it's a great, win , win, win strategy!!!

[someuwin] 07/2/2012 11:29

With only 5 months untill launch of Hylas-2 and a 280p underpinned as placing price, this will surely be moving up soon.

[backmarker] 07/2/2012 11:29

nobody has yet remarked that the £75m placing increases AVN's mcap by almost a third ! given the small 2% discount that the shares were placed at that's quite an impressive achievement.

M&G Limited ("M&G") and Caledonia Investments plc ("Caledonia"), which own Existing Ordinary Shares representing approximately 14.72 and 14.99 per cent. respectively of the existing issued share capital of the Company, have committed to subscribe for 9,282,833 and 2,425,000 New Ordinary Shares respectively under the Placing.

that represents about 40% (£30m) of the new shares, so these instis at least don't have any doubt about AVN's prospects.

in fact, with AVN's mcap moving to £300m they only need to reach 500p for the mcap to be over £500m. FTSE350 beckons, and I suspect a knighthood for Williams in a few years if he's a good boy.

[jonnyno1] 07/2/2012 10:25

that's good reasoning backmarker, off to do some digging.

j.

[backmarker] 07/2/2012 10:17

The decision to finance HYLAS-3 by a placing came as a bit of a surprise, as I had believed the board was looking to debt finance.
from Interim Report for the 6 months ended 31 December 2010 (
We previously described our strategy to seek efficient ways to finance the HYLAS 3 satellite. The debt finance secured from export credit agencies for HYLAS 2 provided relatively high leverage, thus minimising equity dilution for shareholders, and also bears a comparatively low coupon of below 6%. In order to repeat this success, we decided to seek pre sales contracts from customers on the HYLAS 3 satellite, which can then be used to finance the satellite in the debt market, protecting shareholders interest. Such financings are time consuming and complex, but well suited to a business like Avanti which has very long term assets and aspirations. I am pleased to report that we are in advanced negotiations on several significant pre-sales contracts which should enable us access efficient capital and we hope to update the market soon.
------------------
from Preliminary Report for the Year ended 30 June 2011(
During the year we raised GBP70 million in an equity placing to refinance an expensive PIK bond and fund the early stage design work for HYLAS 3.
and
We have announced our intention to construct our third HYLAS satellite and have already completed the first phase of design and long lead time item work. We have received a preferred offer of highly efficient debt financing to complete the construction of HYLAS 3. The financing offer rests upon the successful pre-sale of significant capacity. We have conditionally contracted pre-sales of $120m, and are close to finalising the balance. In the satellite industry, the long term planning cycles and construction schedules can often be frustrating I know, but this is a business which should produce extraordinary cash flows over the long term and it is important that Avanti makes decisions which maximise shareholders' returns rather than jumping into expensive financing or poorly priced sales deals for the purpose of short term momentum. We hope to update the market on HYLAS 3 very soon.
-------------------
it would appear that the change of tack is linked with the decision to go with ESA which makes HYLAS-3 cheaper. [I imagine they would have needed a lot more than £75m].
however the point on which I am unclear is whether as a result of the deal with ESA the launch of HYLAS-3 will be later than otherwise intended.

does anyone know what previous estimates for HYLAS-3 launch-date and total costs were ?

[colva] 07/2/2012 08:47

Orado

Thanks for the advice , iv been a T1ps subscriber for many years and have got used to making allowances for TW's "optimistic" forecasts , though to be fair not many tipsters covered themselves in glory last year , most of them were standing too close to the fan and got covered in something else.

[orado] 07/2/2012 07:26

colva

please, please take anything TW says with a pinch of salt.

[restassured] 07/2/2012 06:33

Many times in my investing career,the most frustrating holdings have become the biggest winners.
It is a case of sit back and wait.The transformational news, is the company is fully funded for the build and launch of all three satellites.One already up and running,the second to be launched in a couple of months.Also that orders and filling capacity are both way ahead of schedule.

[nightspot] 07/2/2012 00:36

summarising lost part of 7521:

In the 6 mths to 31/12/11, Hylas 1 would have been operating at less than 30% capacity, but the accounts bear the full depreciation charge for the period. This completely skews the figures. The pipeline growth is very impressive, from £473m on 3rd Oct 2011 to £530m at 6th Feb 2012, which will lead to accelerated sales and very quickly each additional sale will feed straight through to the bottom line once costs are covered. Very soon the market will appreciate this and there will no longer be the opportunity to buy anywhere near these prices. The placing at negligible discount also clears a major potential hurdle with regard to Hylas3 costs, keeping the Balance Sheet strong and also demonstrating strong institutional confidence. All imho.

[count chris] 06/2/2012 22:42

Mostly good news:

[nightspot] 06/2/2012 21:02

Half my post above vanished. I will re-post later.

[nightspot] 06/2/2012 20:51

Backmarker, a quick look at the numbers shows Op expenses for 6mths to 31/12/10 at
£6.27m , and for 6mths to 31/12/11 at £6.21m - basically unchanged. Hylas 1 was in service from 03/10/11 so the unchanged figures above must mean that the depreciation charge for Hylas 1 of c£4.87m is carried in the cost of sales figures for the 6mths to 31/12/11, whereas the corresponding period for the previous year had none of this charge.
Clearly as during the period Hylas1 was operating at