PARIS — Broadband satellite fleet operator Avanti Communications on Feb. 5 asked its investors for more patience as the company lines up customers in its Europe, Middle East and African coverage areas and awaits a major revenue boost this year.
London-based Avanti said special circumstances of its telecommunications company customers, especially in Africa, have caused the company to forgo long-term contracts that would add to backlog in favor of nonbinding agreements with cash commitments made over shorter periods.
Announcing financial results for the six months ending Dec. 31, Avanti said nothing about the recent turbulence surrounding its Hylas 3 satellite, which the European Space Agency (ESA) calls EDRS-C. ESA had raised the possibility that if its partnership with Airbus Defence and Space in commercializing a novel laser data relay service for environmental data did not pan out, that EDRS-C might not be built.
Avanti is building its Hylas 3 broadband payload to ride on EDRS-C, with a launch scheduled for 2016. “The Hylas 3 project is on track,” Avanti said in a note to shareholders, without providing more details.
Avanti spokesman James Macey White said the company would have no comment on Hylas 3 beyond the fact that it was pleased the program is on track.
For the six months ending Dec. 31, Avanti reported a loss of $48.1 million on revenue of $31.1 million. Both the loss and the revenue were substantial increases over the same period a year ago, with revenue up 24 percent.
The company said that its EBITDA — or earnings before interest, taxes, depreciation and amortization — loss was $3.5 million, versus a $4.1 million loss a year ago.
Backlog as of Jan. 1 stood at $410 million, down 4.7 percent from where it stood last June 30. Avanti blamed foreign-exchange effects from the rise of the U.S. dollar for part of the decline. But the company said it has determined that many customers are uncomfortable signing long-term commitments but will sign non-binding framework accords allowing them to commit to Avanti’s satellite capacity in smaller increments.
“Backlog does not reflect the growing recurring revenue from framework contracts that are on a rolling contract basis,” the company said.
Avanti Chief Executive David Williams said in a statement to shareholders that the three months ending in March should deliver good news.
“A material increase in revenue in the third quarter is visible following recent contract awards, which will help to underpin our full year expectations,” Williams said. “In the longer-term, we remain confident that Avanti’s infrastructure has the potential to deliver over $500 million of EBITDA annually.”
Avanti operates two Ka-band broadband satellites, launched in 2010 and 2012. In addition to Hylas-3/EDRS-C, a Hylas 4 satellite is under construction and scheduled for launch by mid-2017.
Under construction by Orbital Sciences Corp. of Dulles, Virginia, Hylas 4 is devoted to Africa. Avanti said it has won approval from its shareholders for a $91.5 million capital raise –- with new shares issued at prices near to recent trading levels –- that will help complete the Hylas 4 financial package. The satellite is scheduled for launch aboard a European Ariane 5 rocket.
Avanti has said Hylas 4 would cost around $300 million including the satellite’s manufacture and launch. Its original mid-2014 contract with Orbital and Arianespace stipulated that the company could suspend payments at $81 million if the capital markets were unavailable for additional funding.
The new share issue and $125 million available through a high-yield bond will complete the Hylas 4 financial package.
Avanti had swapped out debt from the U.S. and French export-credit agencies for high-yield bond debt whose effects are now showing up on Avanti’s cash flow. The company said it paid $19.7 million in bond debt for the six months ending Dec. 31.
Avanti should be a company that will profit from any talk of a global satellite-delivered Internet service, even if the most recent talk has centered on proposed constellations of hundreds of satellites covering the globe.
“There is increasing discussion around the provisions of universal Internet acess in Africa by satellite,” the company said.