Avanti reports flat revenue but increased backlog ahead of 2017 launches
PARIS—Satellite broadband provider Avanti Communications Group on Feb. 4 reported flat revenue for the six months ending Dec. 31 compared to a year ago but said backlog had increased and that the next six months should see substantial revenue growth.
London-based Avanti, whose focus is on Ka-band broadband sales in Europe, the Middle East and Africa, said its satellites were filled to an average 25-30 percent toward the end of the calendar year, which is low by industry standards but higher than the 20-25 percent Avanti reported a year ago.
Avanti operates three satellites in geostationary orbit and has two more under construction, both of which the company said were fully funded.
In a presentation to investors, Avanti said it expects revenue to grow by 50 percent for its full fiscal-year 2016, which ends June 30, when measured at constant currency-exchange rates. Avanti’s financial reporting is in U.S. dollars but much of its revenue is booked in euros and British pounds.
In a statement, Avanti Chief Executive David Williams said the company booked more than $30 million in new orders from unnamed military customers during the six months ending Dec. 31.
Avanti reported revenue of $31 million for the six months ending Dec. 31, flat from the $31.1 million a year earlier. The company said currency effects and a large number of low-margin equipment sales partly account for the continued operating loss of $27.9 million, compared to $28.3 million a year ago.
While the revenue performance was less than the company had forecasted, “all the contracts that we expected have indeed been signed, albeit towards the end of the period or into January,” Avanti said. “We expect to catch up in the financial year [ending June 30] to achieve our target.”
EBITDA, or earnings before interest, taxes, depreciation and amortization, was a negative $3.5 million for the six-month period, unchanged from a year ago. Avanti said it expects to be EBITDA-positive in the latter half of this fiscal year.
Avanti’s total debt, mainly in the form of high-yield bonds carrying a 10 percent annual interest rate and due in late 2019, stood at $643.3 million at Dec. 31, up 23 percent from a year ago. The company said it had a cash balance of $162.6 million and an undrawn credit facility of $71 million.
Capital spending, mainly on the Hylas 3 and Hylas 4 satellites to be launched in 2017, is expected to total $105 million for the fiscal year ending June 30.
The company’s order backlog was $409.6 million, up 8 percent from Oct. 1.
In addition to its two satellites to launch in 2017, Avanti struck an agreement in 2015 with competitor SES of Luxembourg with respect to Ka-band frequency access rights, which had been a subject of dispute between them.
One of the results of their agreement was that Avanti would have the use of Ka-band capacity aboard the SES Astra-5B satellite, which Avanti has been marketing as Hylas 2B. The company said it should start generating revenue in the first half of 2016.
The African market is hotly contested among numerous satellite fleet operators, several of which have reported downward pressure on bandwidth prices. A recent capacity-lease agreement between Spacecom of Israel and Eutelsat of Paris was concluded at per-megahertz prices that were far lower than what industry officials had expected.
Avanti did not address the Ka-band pricing environment in Africa but said it would be in a position to report on pre-launch customer commitments for Hylas 4 by mid-year.