Avanti Communications Share Discussion Threads

[tychee100] 27/5/2016 17:59

Yes correct 03b should not be compared to GEO operators , two reasons, firstly to receive 03b you need 2 x motorised 2.4m antennas and secondly if any interference is caused by MEO satellites its down to the MEO satellite operators to either stop the signals or fix the issue as GEO Satellites cannot be affected. And there is also the pending insurance claim on two of their satellites. All information is easily found via google. Have a nice bank holiday.

[weatherman] 27/5/2016 16:41

The next event will be revelation of fresh finance. A 1 for 1 share offer would reduce debt substantially, and risk would fall, which may have a broadly neutral effect on current price. If they could also renegotiate a new finance deal at lower interest payments, under that scenario it would move them towards sustainable profitability.

[seball] 27/5/2016 14:01

Post 2455 great read. Strong Buy here.Good luck

[hpcg] 27/5/2016 13:45

72,000Km round trip to Hylas satellites, 16,000Km to the 03b mid level constellation. Just because they are both ka-band does not mean they are alike. SES getting panned by analysts and the market, down 12% today.

[michaelmouse] 27/5/2016 13:37

"SES has announced its intention to buy the outstanding 49.5% minority in O3b, the medium earth orbit (MEO) Ka-band high throughput satellite (HTS) constellation. SES is paying $2.6bn in EV (including $1.2bn of 9.5% coupon debt) and is to complete the outstanding $600m capex programme to deploy the fleet. The purchase represents an EV/sales multiple of 26x expected FY16 revenues. The valuation has interesting read across to Avanti as it reflects the value the industry is placing on the newer HTS players. The FY16e Avanti EV/sales multiple is just 6x. Our view remains that as the market recognises the ability of Avanti to execute its plan to reach a highly cash generative phase from mid-2018, this value gap should close. That implies substantial upside for Avanti shares."

"The O3b network is a MEO constellation of Ka-band satellites that is being deployed to provide HTS connectivity. SES has announced the deal in the teeth of market concerns over satellite capacity pricing, which we feel relate to the more expensive established Ku-band capacities being disrupted by the new HTS Ka-band entrants such as Avanti. This has led to recent profit warnings and share price weakness for some of the more mature FSS providers. While the ability to more attractively refinance the business is clear, it also suggests SES may regard the timing as a value opportunity following recent sector turbulence and having marginally increased its stake to a majority only in late April. Avanti has established a leading position as the only listed pure Ka-band HTS player with a geostationary earth orbits (GEO) satellite network, with $1.2bn of assets already deployed. A large capacity satellite (HYLAS4) is on track for launch in 2017 completing Avanti’s capex, tripling revenue potential and significantly strengthening cash flow."

[chriscallen] 27/5/2016 10:04

Well that's been a good read after a couple of weeks away. My problem is that neither view has any facts on which to base their case after Q3. All of the ups and downs in the share price are merely based on conjecture. The next time we will actually know something (reliable or not) is the pre close trading update - last year in early July if I remember correctly - which should indicate if they will hit targets.

I do know that AVN has in the last 12 mths reported considerable contract wins. These ought to be feeding through into the sales figures now even allowing for the sale of satellite spaces last year (though it does appear that it will get them into the Nigerian market at least 12 mths ahead of Hylas 3 updated schedule). But given past performance there has to be a doubt.

The nub of the market assessment is does it have enough cash to see it through to positive cashflow pre depreciation and tax? If so, the bulls have it but if not the bears are right. It's clearly very tight. But if the now suppressed Press Release about the 2 Nigerian earth stations is correct AVN management have at least one cash flow measure up their sleeve: a sale and lease back of the earth stations. They are not cheap so a large amount of cash outflow would be saved at the expense of future profits. But if that means that they will get to positive cashflow without any dilution then shareholders will undoubtedly support this. Of course, the bears will gnash their teeth and complain about the accounting tricks but the fact of the matter is that they will have lost the war despite winning many of the battles.

I really don't know how it will turn out but I do know it's only a matter of a month or so before I can make a call on whether AVN will finally fly. I'm glad I'm not a bookie as it's really close but given the fact that they've got to here I think on balance my money is on the AVN management... but I could be wrong.

I do have shares and I'm definitely not taking the risk of shorting.

[hpcg] 27/5/2016 10:01

03b has 12 satellites in orbit and 8 still to be launched. Service began in 2013. They are also medium earth orbit, at 8000km, not geostationary (35800km). This reduces the latency considerably - for reference Singapore is 10800km.

"SES said that as part of the transaction it would recognize a gain of $500 million on its O3b investment."

We've seen this financial engineering a lot recently. SES has bought out the other half of the 03b for more than an IPO or third party sale would raise. Because is is a transaction they have a mark to market and can revalue the 50% they already hold.

[dangersimpson2] 27/5/2016 09:20

Such a good read I hear it's been nominated for the Booker prize for literary fiction! ;-)

[seball] 27/5/2016 08:38

Good read.

427p price target
Avanti has reported Q3 trading that not only allows it to maintain its guidance for revenue growth, delivering a positive EBITDA in Q3, but clearly indicates a path towards free cash generation. With contract momentum building with high quality customers, recurring revenues are growing, satellite capex is almost complete and the financing facilities nearing finalisation appear more than sufficient to execute the plan. As this progress becomes more widely appreciated, we expect the share price to be released from its shackles and start to trend towards cash-based fair values. Our own capped DCF still returns a fair value of 427p per share.

[ipsofacto1] 27/5/2016 07:52

That's just silly, mate. Heard of Amazon?

[jeffian] 27/5/2016 00:40

Revenue is worth nothing. Profit is worth something.

[ipsofacto1] 27/5/2016 00:14

Bit sketchy on the details but SES has bought the 50% of O3B (like AVN, an HTS business, except it seems their satellites have 'dont work issues') that it didn't own

For $1bn

It looks like O3B had revs last year of $50-55m

Call me rosy specs...but AVN's revs are meant to be $85mish this year. I know this is simplistic but if half of $55m is worth $1bn, then what's 100% of $85m worth in today's money?

[rathkum] 27/5/2016 00:11

The is company is being run for the benefit of Directors and management. How can anyone with a slightest bit of common sense remain invested in this POS

[hpcg] 26/5/2016 23:18

bookbroker - they got the best deal they could. Lending money to a company well behind its own targets is high risk, and that means higher interest as recompense. Look at the chart since 2011. That shows 5 years of over promise and under deliver. They desperately need to do what they haven't been able to do in that time, what are the odds 2016 will be any different?

[weatherman] 26/5/2016 16:20

The aim market is very poor at determining value. I watched a software company go from 200p to 15p Touchstone Plc. I bought a shed load at 15p as the company went private, and made 90p per share over subsequent years. I should have held for longer.

[dangersimpson2] 26/5/2016 15:50

Unless they have deferred their previously guided capex, or payments of capex then Y/E cash will be under $50m. $71m debt raise will take it back to c.$120m cash but now with $80m annual interest bill and HYLAS 4 capex to complete.

You can never rule out a takeover but say a buyer offered a generous 50% premium @£1.20/share. Then the buyer would have to find $220m equity + $640m debt +$70m to fund capex = $930m.

Whereas they could offer the bond holders 90c/$ and get the lien over those assets for say $580m and then play hardball over the refinancing to get the assets.

Still reckon a D4E is much more likely than a takeover.

[elrico] 26/5/2016 15:39

JK - You appear to be dancing with joy at the expense of those that's have two left feet...not cricket, these are people that beleive you and I are wrong for whatever reason and they're doing the conkers.

[seball] 26/5/2016 15:22

Yes I agree the likes of Inmarsat must be running the rule over Avanti. Good look.

[seball] 26/5/2016 15:21

Yes I agree the likes of Inmarsat must be running the rule over Avanti. Good look.

[weatherman] 26/5/2016 15:11

In fact we may observe situations were a stock is walked down until a predator comes along and doubles the price making it look like a good deal. CWC was one example.

[weatherman] 26/5/2016 14:57

Instead of inventing scare stories the statement says this. "...Period end cash was $122.4m. Avanti has additional consented credit capacity of $71.0m. As planned, the Group has made good progress towards securing additional liquidity. Several different facilities have been offered and the most attractive is in documentation."

Avanti could become a takeover target at these levels bearing in mind the weaker demand for Ku band - i.e. Imarsat. Even with a doubled premium to the current price, and integrating debt, it would be cheaper to buy Avanti than build the fleet. Not that we really want that outcome.