Avanti Communications Share Discussion Threads

[codhead1] 08/1/2010 20:06

Guys. Got a call about a story today in the Aberdeen press and journal paper going on about a company setting up to provide free calls and high speed broadband to the western isles. This is supplied by satelite. i.e. AVANTI. An example of the beginning of big things to come.Although not mentioned it is clearly Avanti.

[chrissey] 08/1/2010 19:24

I recall it was around £2 a share but I guess that is now diluted so the downside is more than I suggested earlier?

I guess the point is that, most investors don't think on this.

I think everyone has to take their own view but the point I was trying to make was that, while the downside is significant, over £3 a share maybe, the upside is not as great but still there.

I would guess that, at £5, a successful launch would give an immediate £1 gain, a complete catastrophe would give a £3 loss.

Lets take a simple view, £5 down to get either £6 or £2 back, as you get £2 back, whatever, call it a 3/1 on gamble.

What is the likelihood of either a failed launch (satelite destroyed) or operational failure once in the sky?

There are a lot of satelites up there, I'm sure some go wrong, get bumped with Russian space debris, etc. but lets say, at an extreme, it is 1 in 10 chance of failure by whatever means.

I think this makes it a good bet or if you look at it from another perspective, if you want to buy shares and accept some risk, buy before launch.

If you don't have this attitude towards risk, wait till after the satelite is fully operational and then buy.

this is just my view, I'm really interested in what others think plus how the institutions would look at investing in this Co.

maybe some of them are happy to hold positions they bought at below £2 and less inclined to buy in now but after launch, we will maybe see very strong buying pressure and a hike that makes my estimates look pretty tame?

[jimbo55] 08/1/2010 19:24

£90 million insurance, if I've remembered that correctly.

I'm planning to use a short spreadbet, with a guaranteed stoploss, to hedge my gains on the launch day. Hopefully, I'll be shutting it down very quickly! ;)

[qs9] 08/1/2010 19:10

what sort of insurance does it have for blowing up on launch?!

[chrissey] 08/1/2010 18:50

based on share price based uninsured risk at over £2, this is almost certainly the case that, following a successful launch and implementation into service, we will see 15-25% price hike.

I can't see that all the loss risk is in the price so I assume maybe 50% and that is still pretty significant.

If it does go bang on the launchpad we all get burned to some extent, that would be some significant downside buying at current prices but lets see this as a possible but very unlikely outcome.

be nice if it were launched from VAFB in CA, I'm just up the road, I can wave to it!

I'm happy to hold and add on dips and prior to launch is the time to take advantage of this, it has to be?

[qs9] 08/1/2010 18:12

Interesting seeing the TP from latest broker note at £11, am I right? that is signficantly higher to today's price, what has prompted the massive upgrade? Yours in ignorance! thanks.

[terryebby] 08/1/2010 17:44

market makers on my screen are Cenkos Winterflood and KBC

[jonnyno1] 08/1/2010 16:15

thanks TC, hny to you to. i really like this stock and long may it continue! our old friend seems to be moving a bit! nuff said.

j.

[melody9999] 08/1/2010 15:04

a bit of press this weekend wouldn't do any harm

[cestnous] 08/1/2010 13:37

What a beautiful chart. Now my largest holding and a mainstay in my sipp. Great stuff

[the count] 08/1/2010 13:24

--->JONNYNO1

Thanks to you highlighting this little gem to me a while back, I now own 10k shares. I liked what I read....a lot!

Happy new year to you.

Regards,

THE COUNT!

[togo2] 08/1/2010 12:15

Any idea how many MM,s dealing in this stock?

[dolores123] 08/1/2010 12:07

The Questor article in the Daily Telegraph today has raised our profile and the Cenkos reference to £13 + is a great boost!!

[dil] 08/1/2010 12:03

Cheers Tango.

[altom] 08/1/2010 11:15

I agree that Cenkos, the house broker, is probably biased but on the other hand they will not want to look stupid. With other companies I have taken company broker's forcast x.75 and often had reasonable result. 1358p x .75 = 1018 just double where we are at the moment. I can live with that.

[jonnyno1] 08/1/2010 10:13

just keeps on trucking!

[melody9999] 08/1/2010 10:12

Cancun - I think you are right re Cenkos. My initial target is only 680p ie 50% of their NPV estimate. Thats about a 35% uplift on a 500p share price Mind you thats a short term target.

[cancun tango] 08/1/2010 10:04

Dil

My other shareholding is in Afren (AFR). They've recently moved from AIM to main list and are looking to move into FTSE 250 in the next re-shuffle in March. Their Market Cap is c£700m.

Re: Cenkos, they are Avanti's broker, and while it could be argued they know the business well, they might equally be acused of having a bias.

[dil] 08/1/2010 09:40

At what price roughly would these be a contender for the FTSE 250 ?

Cheers

[melody9999] 08/1/2010 09:10

and TIPS reaction

The announcement of HYLAS 2 adds tangible and intangible value to the investment case for Avanti. The provision of finance by EXIM and CoFace adds credibility in terms of the business plan and organisational integrity of Avanti. In addition, HYLAS 2 has significantly reduced the risk profile of the Group by simple virtue of portfolio theory. On a discounted cash flow basis the addition of HYLAS 2 lifts the NPV to 1358p per share, 197% upside on the current price. This is supported by relative valuations of other European operators. BUY.

[melody9999] 08/1/2010 09:07

so I've just bagged another 800 at 508p

[melody9999] 08/1/2010 09:03

Questor says BUY 7/1/10

The Prince argued that this made it difficult to promote goods and services produced by businesses in the country, concluding that it was imperative that broadband services should be extended to even the most remote areas of the country to prevent them becoming nothing more than a reservoir of second homes.

One company is helping to make this happen - and funding news this week means now is a good time to buy.

The cost of building infrastructure for fixed-line or mobile internet access in isolated areas is prohibitively expensive; some have calculated that it would cost about £1,800 per home just to make the connection in the first place.

The answer to this is to receive broadband services from satellites in geo-stationary orbit.

This is the service that Avanti Communications currently has on trial. It is providing satellite broadband services in 14 European countries using rented satellite capacity.

However, to make it economic, the company needs its own satellites. This week it secured funding for the second of these.

Avanti raised £280m through a placing which will fund the purchase and launch of satellite number two. The first one, which will cover Europe, will be launched in spring this year. The second is expected to be launched in 2012 and complete coverage in the Europe, Middle East and Africa region.

David Williams, the company's chief executive and an ex-telecoms banker, told Questor that further launches will be funded through cashflow and not via placings. This is good news because dilution is always a risk in loss-making companies that are investing in large projects. Management hope future satellite launches could cover areas in South Asia or Latin America.

The company's satellite exploits new technology that will enable Avanti to offer speeds of between 2Mb and 50Mb at comparable prices to other broadband providers to any location in the UK. The company will manage the technology and sell its capacity to broadband providers, who will then manage the customer-facing part of the business. Avanti itself will just operate the technical aspects and will not face individual consumers.

There is no doubt that demand for broadband is accelerating at a rapid rate. Video applications in particular are data hungry – and their use is rising all the time.

The company has had some revenues from its trial services and historical consulting activities, but these should start to rise significantly from 2011, with profitability being achieved in 2012, following the launch of the second satellite.

The company's business model looks sound and it is addressing a real need. The Government has an aspiration that all rural areas in the UK will have access to 2Mb broadband by 2012. Avanti is part of that ambitious plan – and the Government provided £24m in funding for the company's first satellite.

Despite the lack of a dividend and the current loss-making nature of the business, Questor likes the company and its medium-term prospects. Buy.

[wraggo] 08/1/2010 08:59

I also would like to get my hands on a copy if thats ok?

[melody9999] 08/1/2010 08:54

Hi Terry - don't suppose you have a copy? If so, I would post my e-mail address for a few mins if you would send it to me.