Avanti Communications Share Discussion Threads

[currypasty] 01/6/2007 11:06

RNS Number:5869X
Avanti Communications Group Plc
01 June 2007

Avanti Communications Group Plc


Satellite Bandwidth Contract



Avanti Communications Group plc (AIM: AVN) has signed a contract to provide
satellite bandwidth to STM Norway for an initial period of 2.5 years from
September 2007. The value of the contract to Avanti Communications is $1,708,000
(#875,000).



STM Norway is part of STM Group which is a global telecommunications group of
companies headquartered in California, USA specializing in VSAT and Wireless
products and services for Broadband, VoIP, Rural Telephony and Cellular
solutions. It has offices in US, Latin America, Europe, Asia, Africa, and the
Middle East along with a number of channel partners worldwide.

[anusol] 01/6/2007 07:16

Small contract win, but hopefully will put a little life back into the share price Howeve, it says the service is being provided from Sept 2007 so can't be part of the new HYLAS satelite? I plan to increase me stake over summer & autumn in AVN on the expectation that the share price will provide good action in the 12 months run in to launch. Be very interesting to see the share price movements the day before launch!

[mallet3] 26/5/2007 19:02

I think that because the launch is not till end of 2008 there are enough people who know about the story but are waiting until nearer the time to start buying. I am pretty sure there is going to news out in the next few weeks which should liven the share price up a bit in the short term. Avanti like to keep in touch with its shareholders and we are surely due an update soonish. This stock is not about the short term though. Mgmt have a very long term vision which i am looking forward to watching unfold. Sure there will be hitches along the way but it would be no fun if there werent.

As far as signing new customers up for Hylas many will prob want to wait for it to be in orbit before signing on the dotted line, others are very keen to get there slice of the capacity early.

What this stock needs is more private investors on board. I know of institutions that want to get on board but there is not enough stock out there for them unless there is another placing which i feel is extremely unlikely. Suits me just fine as it stops dilutions in the foreseeable future to accomodate them.

Continued patience required i feel. The share price is just that its the price of the shares, it does not currently reflect the potential or the value of the business that is being developed.

Good luck to all...

[rhtshah2] 22/5/2007 14:37

Downward trend reversed.... just need a few buyers in to start the upward trend.

[anusol] 21/5/2007 08:46

more market uncertainty on the Avanti shares - both screenmedia and networks now well below thier demerger values. More news please! Update on progress!

[anusol] 16/5/2007 18:56

Not sure that £10,000 of director buys is going to do much to recover the share price. Nice to see thouhg , and hopefully similar will happen on Screenmedia too.

[woozle1] 16/5/2007 11:34

Mallet

Interesting take on the screen networks business, which is essentially tradiing at option value. Just one contract and this will fly. That being said, it does consume a fair amount of cash in working capital and it may need to raise more cash.

As regards AVN, at some point this will fly but knowing when is going hard to predict so in the meantime I'm just sitting tight.

W

[hindsight] 15/5/2007 16:45

ISAT trades on 45x which is eqivalent of AVN making £1.85m pretax

[alan russell] 15/5/2007 13:05

From today's Indy....... paints a healthy backdrop.

Inmarsat

Our view: Buy

Current price: 424p (+12.5p)

It may sound odd for such new technology but the satellite sector is enjoying something of a resurgence. A number of big-name mobile satellite-services providers such as Iridium and Globalstar have returned from the brink of collapse, while demand for satellite services has never been higher.

UK-based Inmarsat has launched two new geosynchronous satellites over recent years, with a third now also built and waiting for lift-off. These satellites orbit the earth, as opposed to legacy satellites that hold a constant atmospheric position, and are much cheaper to launch than rival low-earth orbiting satellites. Inmarsat's satellites cover 85 per cent of the earth's surface - "everything but the polar bears" according to the company.

First-quarter results were outstanding, with revenue up 16 per cent to $141m and pre-tax profit almost doubling to $38.3m, and analysts were drooling over the numbers. Revenue from its maritime business rose 13 per cent, and its BGAN land-based mobile broadband service also made progress after attracting nearly 10,000 subscribers.

Inmarsat remains confident that it can match market expectations for growth this year, although it cautioned that there is still a long way to go before it beats current forecasts. The company's valuation is in the stratosphere, but demand for satellite services should continue to rocket as more devices come on to the market. With the European Alphasat project also set to be awarded to either Inmarsat or Eurelsat shortly, the shares are worth a punt.

[sirlurkalot] 07/5/2007 22:06

Yes, that seems a pretty clear answer!

[extrader] 01/5/2007 17:44

Many thanks Mallet 3 - esp the ´non-technical´conclusion !

[mallet3] 01/5/2007 14:33

I have just spoken to DW on the insurance query. this is what he said, i hope it helps.

"It will cover all launch risks plus the risk of component failure in orbit. Basically if it does not work for any reason, we get paid."

[extrader] 30/4/2007 18:31

...¨"a diversified portfolio will deliver good steady returns....."

My approach exactly, Sir L !

Which prompts the question : given the split in businesses (and subsequent ASG share price movement), I´m starting to wonder whether a reinvestment there might now contribute to useful diversification ! Esp given the upcoming deal with Setanta.

[sirlurkalot] 30/4/2007 12:10

Yes, I suppose if the insurance premium were a correct reflection of the risks and outcomes involved plus some profit for the insurer, I'd be happy for Avanti to self-insure the launch, given that my Avanti holding is small in a diversified portfolio. You could think of the launch as a key event with probabilities associated with the differing outcomes, rather like an oil well, and if the price is attractive enough for the probabilities and outcomes, a diversified portfolio will deliver good steady returns.

[extrader] 25/4/2007 17:16

Sir L

It was certainly the case when I was looking at the financing of Thoraya´s firat satellite (about a decade ago...) that in the risk disclosures to the Info Memo, the point was made that the Hughes - built satellite was covered for shipment to the launch site, whilst being located on the launcher etc....but that cover was suspended from ignition until the start of successful launch, defined as being once a certain altitude had been reached.

I remember being told at the time that the premium for this period was so near to ´replacement cost´as to be an effective ¨no´. Of course, success rates for commercial launches may well have improved since then, and cover may now be available. But I´ve moved on and no longer have access to those sources of info !

[sirlurkalot] 25/4/2007 16:51

Interesting articles, Piedro. Thanks for posting the links.

[piedro] 23/4/2007 14:43

Anyone interested in space news try this one.......

[piedro] 23/4/2007 13:53

Just found this...... - may have already been posted

[sirlurkalot] 23/4/2007 12:46

ET,

Is it true that it's impossible to insure a satellite over the launch period? I thought all satellite launches were fully insured.

[mallet3] 21/4/2007 14:25

A few of my thoughts if i may be so bold..

I have followed and owned shares in Avanti ScreenMedia since its floatation.

In my opinion AVN is an essential tuck away for the next few years. The demerger is going to provide a real platform for growth in AVN over the next 5-8 years. Now that the demerger is out of the way DW will be able to start concentrating more time to growing the satelitte business. This really is the start of an exciting journey, which will no doubt have its own problems along the way but one which will prove to be a very very worthwhile investment.

I also believe that the, apparantly unloved, Screen Media business will end up with a market capitalisation significantly in excess of the current 7 or 8 million. This is innovative advdertising proven to boost sales of those companys bright enough to give it a go. Any increased roll out from the remainder of the SPAR estate, successful trials at WLW, and discussions with other large high street retailers continuing, could significantly increase revenue in the next couple of years. IMO none of this is currently discounted by current share price after a very poor end to the week. However i believe there will be sellers for some time and that in due course it may well be possible to pick up stock at even cheaper levels. Keep selling please!!!

[cestnous] 20/4/2007 17:16

HYWEL
Thanks for that. Iwas in at 253

[extrader] 20/4/2007 17:02

Hi Sir L,

Many thanks for forwarding the brokers notes. They tell a good story (naturally !). And I was personally pleased to see that HYLAS's footprint will include rural Spain....

The 2 big risks as I see them are (1)'key man' David Bestwick, who seems to be the driver, both of this project and the consultancy; and (2) the 'moment of truth' at launch : unless the market has changed, the insurer will be 'off cover' from the moment the rocket main engine is ignited until it's an agreed time into flight.....(and they say rude things about bankers and umbrellas !).

Have you seen anything addressing either of these points ?

In any event, thanks again for sharing the results of your research.

[hywel] 20/4/2007 15:43

I'm sure you've all received this but i'll post it for those who haven't:

Avanti Communications Group – Buy at 252.5p

Argues the IPO specialists at Allnewissues.com

Background: Avanti Communications (AVN) is a company created as a result of the demerger from AIM listed Avanti Screen Media. Its shares were listed on AIM on Monday 16 April and since then, have traded between 252.5p and 232p. At the higher price (today's price) the equity is valued at £65 million. The document of listing particulars and information shows that the business in the six months to 31 December 2006, (on an unaudited basis) had turnover of £1.54 million on which it produced a gross loss £119,000.There was an operating loss of £1.7 million and a net loss of £1.46 million. Despite that, again on an unaudited basis, the company was cash positive in that six months. Operations generated £8.4 million of cash which after capital expenditure costs, became £6.87 million before financing and a £6.43 million increase in net cash for the period. There is a 'pro forma' (indicative) balance sheet of the company's assets and liabilities after de merger, indicating that the company had net tangible assets attributable to ordinary shareholders of £34.5 million, including £19.2 million of cash.

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Operations: Avanti Communications is a new technology driven company planning to provide satellite communication services in Europe. Its target customer base is large telecommunication and network operators to whom the company seeks to sell 15 year transponder (combined digital signal receiver, frequency converter and transmitter) leases as a wholesale provider. It has an Ofcom regulatory licence to carry on this business. Such regulation creates a barrier to market entry. The company's business divides into six areas of operation. a) Leasing transponders on a wholesale basis; b) Managed Satellite Telecommunication services including broadband, corporate data networks and video use; c) Broadband internet access in 'bespoke' packages; d) Secure dedicated networks for the transmission of data; e) Video services including a facility for outside broadcasters wishing to return video footage to television broadcasting studios; f ) a consulting business providing technology and service development information and advice to governments and government agencies in Europe.



The company operates in markets where the shortage of satellite capacity leads to high prices for transponders. Capacity is constrained by the physical limits of satellite "spectrum" from which transmit and receive signals. There is in Europe very little unused 'spectrum' available and this is competed for intensely for both existing communication applications and new ones like high definition television, which is growing strongly in Europe. There is also demand for potential satellite provision of broadband to European rural populations. Corporate data networks are another stream of growing demand. In short, there is a demand for more satellite transponder capacity that is more efficient and provided at lower cost.

Business Development: Avanti, has designed and is building a new satellite (called HYLAS) to use a relatively large number of transponders. Innovative in design, it offers claimed economic and financial advantages. In short, a commercially and technically more versatile satellite product that is less costly and gives greater efficiency in power use. HYLAS is planned to be delivered by late 2008 for launch sometime after delivery. No launch contract has be signed at this stage. Meanwhile, the company is making the market aware of what it plans to make available; although so far, that has not lead to the announcement of potential new customers. The EU will fund half of the £50 million cost of building and launching this satellite with a grant. Avanti can fund the rest from its resources and from pre-sales of capacity.

The value of investments can go down as well as up. Investing in equities can lose you part or all of your capital. Smaller company shares can be relatively illiquid and thus hard to trade. And that makes such investments more of a high risk than larger company shares. Allnewissues.com is owned by t1ps.com Ltd which is regulated by the FSA and can be contacted at 5-11 Worship Street, London EC2A 2BH.


Management: The Board has two executive directors:

David Williams (37) Executive Director. A founder of Screenmedia he was an investment banker, specialising in media and telecommunication finance at Chase Manhattan Bank and CIBC. He is a member of the UK government's Space Advisory Council and was named Entrepreneur of the Year at the 2006 Quoted Companies Awards.

David Bestwick (41) Technical Director and founder of the Avanti Communications business in 1996. He holds a first degree in physics and astrophysics and spent three years working at the Marconi Research Centre. At VEDGA Group he worked on a wide range of satellite applications and projects. He is responsible for all company's technology and project development as well as running the consultancy business
There are three non executive directors including the Chairman John Brackenbury whop collectively offer serious industrial and board experience.

Conclusion: Although Avanti appears to be creating a competitive product in a tight and highly lucrative market where there would seem to be some robust barrier to new entrants, everything depends on its technology being delivered on time and accepted by large, highly discriminating and price conscious corporations. Pre-sales suggest that it can deliver. Avanti is of course a new company, with a novel technological product not yet tried out by the market and unlikely to be so for a year or two. It is too early to make concrete judgments about its operational performance at this stage. However, based on current market rates for transponders the 15 year lifetime value of the capacity at HYLAS is at least £450 million and rates are increasing. With strong asset backing limiting the downside and with an experienced management team in place, the upside is large enough to merit an investment. Buy.