Following its successful refinancing in January, Avanti is gathering momentum once again. It has today announced a very significant partnership for sub-Saharan Africa connectivity with Millicom, a top three player in the African telecom market. Avanti is not only to provide 4G backhaul services via its satellite network to improve access in remote and rural areas, but is also to build a new Gateway Earth Station in Senegal to enhance performance across the region. The site is to be co-located with Millicom operations and will service existing HYLAS 2 coverage as well as those from HYLAS 4. We await confirmation of a launch date in H217 for the new satellite, but today’s announcement appears to confirm Avanti’s Ka-band technology remains at the forefront of satellite connectivity.
Written by
Avanti Communications |
Calling ground control |
New infrastructure investment in Africa |
Fixed satellite services |
29 March 2017 |
Share price performance
Business description
Analysts
Avanti Communications is a research client of Edison Investment Research Limited |
||||||||||||||||||||||||||||||
Following its successful refinancing in January, Avanti is gathering momentum once again. It has today announced a very significant partnership for sub-Saharan Africa connectivity with Millicom, a top three player in the African telecom market. Avanti is not only to provide 4G backhaul services via its satellite network to improve access in remote and rural areas, but is also to build a new Gateway Earth Station in Senegal to enhance performance across the region. The site is to be co-located with Millicom operations and will service existing HYLAS 2 coverage as well as those from HYLAS 4. We await confirmation of a launch date in H217 for the new satellite, but today’s announcement appears to confirm Avanti’s Ka-band technology remains at the forefront of satellite connectivity.
Year end |
Revenue ($m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
06/15 |
85.2 |
(73.3) |
(61.4) |
0.0 |
N/A |
N/A |
06/16 |
82.8 |
(67.0) |
(49.3) |
0.0 |
N/A |
N/A |
06/17e |
84.2 |
(85.9) |
(55.6) |
0.0 |
N/A |
N/A |
06/18e |
127.4 |
(92.5) |
(56.7) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles and exceptional items
The newsflow so far in 2017 has been encouraging, and today’s infrastructure development appears to confirm renewed confidence at Avanti about its prospects in Africa and the sub-Saharan region in particular. The every child online (ECO) initiative together with the partnerships with major telcos such as BT/EE, Orange Kenya Telecom and Millicom appear to verify Avanti’s technology proposition.
HYLAS 4’s successful launch would double network capacity. Management will then need to adequately fill the overall network to deliver the required returns that verify the business model. Equity holders will have to wait for the cashflow development to provide value following the refinancing (see Preparing for launch), but today’s news should start to boost sentiment. As Avanti’s commercial position has been re-established by the refinancing, further positive newsflow over the coming months should ensure confidence continues to improve.
|
Disclaimer
|
|
Disclaimer
|
Research: TMT
Ebiquity’s FY16 results reflect a continuation of trends seen at H116 and the early stages of the Growth Acceleration Plan. With additional services due to launch in FY17, we retain our forecasts for an acceleration of revenue growth in FY17 and introduce FY18 estimates. The transition to a more sustainable margin translates to a lower EPS figure overall but improves the quality of the earnings base and the sustainability of revenue growth. The c 12x P/E rating is unchallenging versus peers.