Avanti Communications Share Discussion Threads

[yorgi] 23/3/2012 10:12

I'm sure they can Rimmy. I understand 4G is fast, much faster than anything our satellites produce but that is no good if you can't receive it and I would expect the costs to be less for 4G as well but if one has no choice then AVN it is.

[rimmy2000] 23/3/2012 09:46

yorgi. I agree. initial installations of 4g rollout would be to areas of high population density, urban areas and presumably the cost of service would make it more attractive to affluent/business customers.

Appreciate your comments, what I am keen on is a comparison. Maybe it a job for my weekend. I am thinking estimated speeds for 4g, costs, latency rates, initial coverage.

edit: presume its the kind of question the company can handle if I email them?

[yorgi] 23/3/2012 09:35

Rimmy,

I guess some still doubt it that is why the share price is so low at present.

[yorgi] 23/3/2012 09:34

Rimmy,

Have you seen the battles the mobile companies have to erect masts in the country the first point ?

If you travel around the country to area away from towns and cities there are plenty of areas where you can't get 3G at present so why are they going to have 4G ?

There is plenty of people out there who will have no alternative but satellite in my view apart from the other lines of business AVN are targetting.

[rimmy2000] 23/3/2012 09:29

my only concern here (and I am not completely up to date with telecoms industry knowledge) is that technologies like 4G will be present in the next 2-5 years. Could this be a major risk to AVN?

My assertion being the spec' of 4G will be comparable, if not superior, to what satellite broadband can deliver on?

Is there anyone here who can put beyond doubt this risk ?

TIA

[mechanical trader] 23/3/2012 09:03

AVN Avanti Communications

Think some have missed this....

AVN


Avanti launched HYLAS 1 in November 2010, it will launch HYLAS 2 in July, and it recently
announced that HYLAS 3 would be launched in 2015. The valuation of Avanti's shares depends upon
a number of things: the cost of building, launching and running these satellites; the revenues that
each satellite can deliver through sales of transmission capacity; the timing of costs and revenues; the
method and terms of financing; and finally, the value that is placed today upon future profits.
Let me review the progress of the three satellites.
HYLAS 1 was launched in November 2010 and covers Europe. The launch was a success, HYLAS 1
has been performing well and Avanti is on track to sell out the 3GHz of capacity by April 2014, defying
some critics who argued that it would not be able to compete effectively with the big incumbent
satellite operator Eutelsat.
Eutelsat's Chief Executive believes that the European market is at least six times as large as the
current combined capacity of both itself and Avanti. Eutelsat has the advantage of greater capacity,
though Avanti's more advanced Ka-Band technology compensates somewhat for this. While attention
has been focussed upon the delivery of broadband services to customers in remote locations, Avanti has
also been developing other markets, for instance for corporate data, as an emergency backup to existing
broadband networks, the mobile backhaul market and satellite distribution of films to cinemas.
New contracts and better contracts
The attractions of Avanti's services have been the subject of much debate, but we now have firm
evidence. Avanti says that a full HYLAS 1 should generate approximately £50m in annual revenue
when it reaches 'full saturation' at the end of the third year in service (i.e. by April 2014). This is in
line with original budgets (when I first tipped Avanti in March 2008, I suggested that annual revenues
would be £34m, based on prices being achieved at the time).
Thanks to contracts already in the bag, Avanti expects to achieve sales of £17m in its first full year
of sales, to June 2012, with the possibility that this could be exceeded if other significant contracts are
signed in time.
With £23m of new contract wins announced in the last two months for HYLAS 1 and HYLAS 2, sales
momentum has been increasing and Avanti has reduced the length of time within which it expects to
achieve full capacity utilization for HYLAS 2 from five years to four. Although the original five-year
figure included some contingency, this is an expression of confidence.
With capacity of 8.3GHz, compared to the 3GHz of HYLAS 1, HYLAS 2 covers the Middle East
and North Africa although it could also be used as an overflow capacity for HYLAS 1. Its steerable
antenna is attracting attention from the military while HYLAS 2's qualities of resilience, encryption,
security and quality are enabling it to sell on the basis of quality and technology fe atures and benefits
rather than just merely on price. Accordingly, Avanti is 'confident that our capacity can be filled at the
expected prices'.
Avanti's cracking deal on its next satellite
Clearly, the forthcoming July launch of HYLAS 2 carries some level of risk, but all being well Avanti
should soon have two operating satellites. A third, HYLAS 3, is now scheduled for launch in 2015.
Originally Avanti had planned to launch a third large satellite financed by bank borrowings secured
against advance sales. However, the tightening of lending criteria by the banks has made this option
increasingly unattractive and so Avanti has jumped at the chance to pursue an alternative.
At the end of 2011, however, the opportunity arose for it to launch HYLAS 3 on board a new
European Space Agency (ESA) satellite scheduled for 2015. The 4GHz capacity of this third satellite is
less than the capacity that Avanti had originally envisaged for HYLAS 3, the launch will be later, and to
secure this arrangement Avanti has had to raise £75m of cash through a share issue.
The deal is nonetheless very attractive to Avanti though. The sharing of costs with the ESA means
that for each additional GHz of capacity Avanti will pay just £18.8m on HYLAS 3, compared to £41.1m
for HYLAS 1 and £33.7m for HYLAS2. Besides that, the ESA is responsible for any cost overruns. As with HYLAS 2, HYLAS 3 will be aimed at emerging markets with a fully steerable cluster of beams that can be deployed anywhere in Africa or the Middle East.
How to price a space-age company
Assuming they all go successfully into operation, how much money might Avanti make from these three satellites?
At full capacity, which should be achieved by mid-2014, HYLAS 1 should be producing annual revenues of c.£50m. After deducting the operating and other costs, and the depreciation charge of c.£7.5m, HYLAS 1 should be generating a profit before interest and tax of c.£30m. This level of profitability is expected to stay fairly constant over HYLAS 1's expected life of 15 years and, discounting these future cash flows at a rate of 8.5% broker Daniel Stewart calculates a value today of £310m, which is worth c.278p per share.
On the same basis, Daniel Stewart values the larger HYLAS 2 at £684m, equivalent to 612p per share and HYLAS 3 at £551m, or 493p per share. That makes a total of £13.83p per share to which Daniel Stewart adds the discounted value of Avanti's projected 2031 cash balance of £784m – to arrive at a total of £20.17 per share.
Another calculation that we can make is of Avanti's net asset value, a figure that simply looks at Avanti's assets less liabilities today and ignores any future profits. At 30 September Avanti had net assets (excluding intangibles) of £195.2m, to which we can add the £75m raised in the recent share issue. Dividing the total of £270m by the 111.7m issued shares gives a number of c.242p per share, to which we can add the value of Avanti's orbital slots. That this space real estate has a value was demonstrated last October when Brazil held an auction of orbital slots and reportedly received a bid of $88.3m for a single slot.
So the share price looks very well supported by net assets while the future profit projections are, in my view, not especially risky. Satellites are built and launched under fixed price contracts, and operating costs thereafter are low and unlikely to be subject to significant change.
So the big swing factor is revenues. There is little risk that the sky will become oversupplied with satellites and despite some fantasies about other, wireless, means of transmitting data to remote locations there is unlikely to be a genuinely competing technology at least within the 15-year life of Avanti's satellites.
We also have some circumstantial evidence. HYLAS 2 was funded by the USA Export-Import Bank and the French agency Coface, two government bodies that are notoriously rigorous and cautious. Avanti's directors have been regular buyers of the shares and would hardly have done so if they had any serious doubts about the business. Paul Walsh, the Chief Executive of Diageo, has joined the Avanti Board. Avanti has stated its intention of moving from AIM to the Main List of the Stock Exchange. And in October Avanti's Chairman John Brackenbury, alluding to 'some short-term speculators who have attacked the share price' said:
"It is clear that Avanti owns scarce and valuable resources in one of the few lightly competed sub-sectors of the global telecoms industry which should see us create very significant value. I see great opportunity in emerging markets telecoms and our advantages in these markets are significant. I am grateful for the resolute support of our core long-term investors. Patience and confidence in the quite exceptional and unique advantages Avanti has will be rewarded. Our pipeline of new business gives us confidence in our ability to meet expectations."

RHPS Verdict: None of these statements and actions are consistent with a business that is failing to deliver. In my view, the case for Avanti is as strong as ever. I am looking forward to the launch of HYLAS 2 in July and to this time next year when Avanti should be earning good money from two operating satellites. My share price target remains £15, so BUY UP TO 750p.

[mechanical trader] 23/3/2012 08:42

Contract win......

[blue forever] 23/3/2012 08:40

It makes a change to open up and then carry on with another rise as opposed to an immediate fall back.....

[yorgi] 23/3/2012 08:32

Well we are making a strong start is today going to be the turning point at last after so many false dawns.

[mechanical trader] 23/3/2012 08:09

Good to see the contract win.

[codhead1] 23/3/2012 07:42

We await the famous shorters comments.

[bump3r] 23/3/2012 07:32

Nice to have a another new customer.
Whats better is the growth opportunity of some of our new customers.

Their businesses grow, they increase their allowance with us .

Start of the fiscal year shortly may see more contract wins as new budgets are approved in line with customers growth plans.

[philo124] 23/3/2012 07:29

If this is a Buy up to £7.50 then with the current share price a leveraged
Buy Out now at under £5 looks a no brainer.This would be a shame as some would prefer to wait for £10 plus.

[someuwin] 23/3/2012 07:29

Good to see its a HYLAS 1 contract win.

[ttnyw] 23/3/2012 07:23

Yet another contract win; should be good for a 10p drop today and if we get another director buy, who knows, maybe good for 20p.

LOL

[volvo] 23/3/2012 07:15

Another contract, and show of confidence.

Looked strong lately........ie the sellers and buyers being matched around 245p.

This is now the base.

[yorgi] 22/3/2012 21:57

Thanks for posting that Newsweller......we have not had it posted here before and I'm quite sure it will be appreciated by all AVN holders.....and potential holders as well.

[honiton] 22/3/2012 21:43

jennis2002

Just curious, why didnt you sell when price hit £3.20??

I think its always worth having a stoploss because you can either wirte it off as a bad experinec or buy back at a lower price.

I've been stopped out quite a few times and just refine my technique, hnec im still in the market.

[newswseller] 22/3/2012 21:43

Probably already posted but a good read


alternative iae thread - TIAE
CHART TRADER - 09 Mar 2012 - 18:52:36 - 29562 of 29944

AVN


Avanti launched HYLAS 1 in November 2010, it will launch HYLAS 2 in July, and it recently
announced that HYLAS 3 would be launched in 2015. The valuation of Avanti's shares depends upon
a number of things: the cost of building, launching and running these satellites; the revenues that
each satellite can deliver through sales of transmission capacity; the timing of costs and revenues; the
method and terms of financing; and finally, the value that is placed today upon future profits.
Let me review the progress of the three satellites.
HYLAS 1 was launched in November 2010 and covers Europe. The launch was a success, HYLAS 1
has been performing well and Avanti is on track to sell out the 3GHz of capacity by April 2014, defying
some critics who argued that it would not be able to compete effectively with the big incumbent
satellite operator Eutelsat.
Eutelsat's Chief Executive believes that the European market is at least six times as large as the
current combined capacity of both itself and Avanti. Eutelsat has the advantage of greater capacity,
though Avanti's more advanced Ka-Band technology compensates somewhat for this. While attention
has been focussed upon the delivery of broadband services to customers in remote locations, Avanti has
also been developing other markets, for instance for corporate data, as an emergency backup to existing
broadband networks, the mobile backhaul market and satellite distribution of films to cinemas.
New contracts and better contracts
The attractions of Avanti's services have been the subject of much debate, but we now have firm
evidence. Avanti says that a full HYLAS 1 should generate approximately £50m in annual revenue
when it reaches 'full saturation' at the end of the third year in service (i.e. by April 2014). This is in
line with original budgets (when I first tipped Avanti in March 2008, I suggested that annual revenues
would be £34m, based on prices being achieved at the time).
Thanks to contracts already in the bag, Avanti expects to achieve sales of £17m in its first full year
of sales, to June 2012, with the possibility that this could be exceeded if other significant contracts are
signed in time.
With £23m of new contract wins announced in the last two months for HYLAS 1 and HYLAS 2, sales
momentum has been increasing and Avanti has reduced the length of time within which it expects to
achieve full capacity utilization for HYLAS 2 from five years to four. Although the original five-year
figure included some contingency, this is an expression of confidence.
With capacity of 8.3GHz, compared to the 3GHz of HYLAS 1, HYLAS 2 covers the Middle East
and North Africa although it could also be used as an overflow capacity for HYLAS 1. Its steerable
antenna is attracting attention from the military while HYLAS 2's qualities of resilience, encryption,
security and quality are enabling it to sell on the basis of quality and technology fe atures and benefits
rather than just merely on price. Accordingly, Avanti is 'confident that our capacity can be filled at the
expected prices'.
Avanti's cracking deal on its next satellite
Clearly, the forthcoming July launch of HYLAS 2 carries some level of risk, but all being well Avanti
should soon have two operating satellites. A third, HYLAS 3, is now scheduled for launch in 2015.
Originally Avanti had planned to launch a third large satellite financed by bank borrowings secured
against advance sales. However, the tightening of lending criteria by the banks has made this option
increasingly unattractive and so Avanti has jumped at the chance to pursue an alternative.
At the end of 2011, however, the opportunity arose for it to launch HYLAS 3 on board a new
European Space Agency (ESA) satellite scheduled for 2015. The 4GHz capacity of this third satellite is
less than the capacity that Avanti had originally envisaged for HYLAS 3, the launch will be later, and to
secure this arrangement Avanti has had to raise £75m of cash through a share issue.
The deal is nonetheless very attractive to Avanti though. The sharing of costs with the ESA means
that for each additional GHz of capacity Avanti will pay just £18.8m on HYLAS 3, compared to £41.1m
for HYLAS 1 and £33.7m for HYLAS2. Besides that, the ESA is responsible for any cost overruns. As with HYLAS 2, HYLAS 3 will be aimed at emerging markets with a fully steerable cluster of beams that can be deployed anywhere in Africa or the Middle East.
How to price a space-age company
Assuming they all go successfully into operation, how much money might Avanti make from these three satellites?
At full capacity, which should be achieved by mid-2014, HYLAS 1 should be producing annual revenues of c.£50m. After deducting the operating and other costs, and the depreciation charge of c.£7.5m, HYLAS 1 should be generating a profit before interest and tax of c.£30m. This level of profitability is expected to stay fairly constant over HYLAS 1's expected life of 15 years and, discounting these future cash flows at a rate of 8.5% broker Daniel Stewart calculates a value today of £310m, which is worth c.278p per share.
On the same basis, Daniel Stewart values the larger HYLAS 2 at £684m, equivalent to 612p per share and HYLAS 3 at £551m, or 493p per share. That makes a total of £13.83p per share to which Daniel Stewart adds the discounted value of Avanti's projected 2031 cash balance of £784m – to arrive at a total of £20.17 per share.
Another calculation that we can make is of Avanti's net asset value, a figure that simply looks at Avanti's assets less liabilities today and ignores any future profits. At 30 September Avanti had net assets (excluding intangibles) of £195.2m, to which we can add the £75m raised in the recent share issue. Dividing the total of £270m by the 111.7m issued shares gives a number of c.242p per share, to which we can add the value of Avanti's orbital slots. That this space real estate has a value was demonstrated last October when Brazil held an auction of orbital slots and reportedly received a bid of $88.3m for a single slot.
So the share price looks very well supported by net assets while the future profit projections are, in my view, not especially risky. Satellites are built and launched under fixed price contracts, and operating costs thereafter are low and unlikely to be subject to significant change.
So the big swing factor is revenues. There is little risk that the sky will become oversupplied with satellites and despite some fantasies about other, wireless, means of transmitting data to remote locations there is unlikely to be a genuinely competing technology at least within the 15-year life of Avanti's satellites.
We also have some circumstantial evidence. HYLAS 2 was funded by the USA Export-Import Bank and the French agency Coface, two government bodies that are notoriously rigorous and cautious. Avanti's directors have been regular buyers of the shares and would hardly have done so if they had any serious doubts about the business. Paul Walsh, the Chief Executive of Diageo, has joined the Avanti Board. Avanti has stated its intention of moving from AIM to the Main List of the Stock Exchange. And in October Avanti's Chairman John Brackenbury, alluding to 'some short-term speculators who have attacked the share price' said:
"It is clear that Avanti owns scarce and valuable resources in one of the few lightly competed sub-sectors of the global telecoms industry which should see us create very significant value. I see great opportunity in emerging markets telecoms and our advantages in these markets are significant. I am grateful for the resolute support of our core long-term investors. Patience and confidence in the quite exceptional and unique advantages Avanti has will be rewarded. Our pipeline of new business gives us confidence in our ability to meet expectations."

RHPS Verdict: None of these statements and actions are consistent with a business that is failing to deliver. In my view, the case for Avanti is as strong as ever. I am looking forward to the launch of HYLAS 2 in July and to this time next year when Avanti should be earning good money from two operating satellites. My share price target remains £15, so BUY UP TO 750p.

[jennis2002] 22/3/2012 21:36

jennis2002 - 23 Feb'12 - 23:15 - 7668 of 8116 edit


so we have a market cap of 225m, 75m just raised ...they have what 40m cash?... plus the business and the support at 2.80, sounds good. i bought at 3.70, may top up now!

have topped at at 2.48... i am extremely confident with directors buying and mainly the government of singapores stake. hylas 2 soon to be launched, shame the stock has been hammered by shorters..

[honiton] 22/3/2012 21:31

Is this not the ultimate "jam tomorrow" stock.

Lots of contract wins and RNSs but very little to show for it.

Intereting to compare with the likes of BKG.

BKG have appalling few RNS's but price has gone up steadily for pasdt 2 years!!!

[newswseller] 22/3/2012 21:11

Anyone adding at these levels? I can't see any gaps down that need filling. Could possibly go for a double bottom at 235p?

I do wonder if it stays around this price for some time there could be a paper offer from Inmarsat.

[johncsimpson] 22/3/2012 14:55

cancun tango

That's an interesting overview and the same financial constraints will obviously apply this side of the pond. I suspect when push comes to shove Governments and the military will find the funds from somewhere; they always do. Nor must we forget that military use is but a facet of Hylas's capabilities.

What am I like eh; here's me (a trader) talking about fundamentals . . .