Q1 2016 Trading Update

12 November, 2015

RNS

Avanti Communications delivers strong sequential growth

Avanti Communications Group plc (“Avanti” or “the Group”), a leading provider of satellite data communications services in Europe, the Middle East and Africa, issues the following trading update for the period ended 30 September 2015.

Highlights

  • Revenue was $13.7m, representing 23.4% sequential growth over the previous quarter on a constant currency continuing business basis
  • Top-20 Customer Bandwidth Revenue Growth increased 57.5% a constant currency basis
  • Average Fleet Utilisation was at the upper end of the 20% to 25% range during the period
  • Strong growth is expected to continue throughout the remainder of 2016
  • Period end cash balance was $219.3m

Year to date trading

Avanti made good progress during the first quarter. Revenue was $13.7m, representing sequential growth over the previous quarter of 23.4% on a continuing business basis, assuming constant currency. On the same basis, revenue was flat versus Q1 2015. This was lower than Avanti’s prevailing run rate of growth, due to a larger amount of equipment and government revenue in the previous year, which, although recurring, tends to be recognised on a non-linear basis. Q1 2016 EBITDA was negative $2.9m.

Top-20 Customer Bandwidth Revenue Growth increased 57.5% on a constant currency basis. This metric helps to track Avanti’s growth trajectory from core service sales, excluding non-recurring items. It is calculated by comparing the revenues from Avanti’s current leading customers on a last 12 month basis to the 12 months preceding that.

Average Fleet Utilisation also showed a positive trend. It was at the upper end of the 20% to 25% range during the first quarter and utilisation was above that range by the end of the quarter. This metric helps to track capacity uptake and gives an indication of revenue potential when Avanti’s fleet is mature. It is calculated by dividing average utilised forward capacity by total available capacity for the fleet of in-service satellites.

Avanti’s average pricing remained stable.

Contracted backlog was $379.7m. This metric does not capture the expected growth from framework contracts.

Distribution platform development

Avanti provides connectivity to end users through service providers across the EMEA region. Service providers take time to adopt the product as they test and negotiate, and then prepare marketing and launch plans. Once fully engaged, almost all service providers grow swiftly.

Avanti has made strong progress in developing its distribution platform in recent months.

Following the win of a contract to provide broadband throughout South Africa with Telkom SA, Avanti’s service providers now include all of the national carriers in its core African markets.

Some of Avanti’s other customers in Africa include Tanzania Telecommunications, TelOne, Orange Telkom Kenya, SENTECH, Dimension Data, Wananchi, Raha and Facebook.

The Group is gathering momentum in its Government and Defence business, having demonstrated a trusted and proven technology platform.

There are a range of substantial opportunities in the pipeline. Several of these are at an advanced stage, having already progressed through the sales cycle, which can be long for large new customer wins, often involving lengthy technical trials.

Looking to the longer-term, Avanti’s salesforce is working on pre-sales in new markets ahead of the launches of HYLAS 3 and 4.

Fleet expansion

Construction of the key 28GHz HYLAS 4 satellite is progressing well. The launch remains on-track for early calendar 2017. Work on the smaller 4GHz HYLAS 3 satellite, which is a hosted payload on a European Space Agency space craft, is also progressing in-line with expectations.

After an analysis of the most appropriate commercial opportunities in terms of demand and pricing, the new steerable HYLAS 2-B beam is expected to enter into service and begin contributing to Group revenue during the second half of the current financial year.

Balance sheet

Period end cash was $219.3m. The Group has sufficient cash balances to comfortably meet all of its medium-term financial commitments and management expects cash generation to grow swiftly as revenues exceed Avanti’s largely fixed cost base.

Current trading and outlook

Current trading remains strong. Management expects the growth rate in constant currency revenues before the effect of non-recurring business to continue, as existing customers increase their usage and distribution through new customers grows. There are a range of substantial opportunities in the pipeline that could further augment the core growth levels.

David William’s Avanti’s CEO said: “We have established an industry leading technology platform and in recent months have made accelerated progress in developing our distribution platform. We expect Avanti’s growth to compound as our existing customers continue to grow and the new customers that we continue to win drive further growth.”

 

–ENDS–

 

For further information please contact:

Avanti: Matthew Springett, +44 (0)207 749 6703

Cenkos Securities: Max Hartley (Nomad) / Julian Morse, +44 (0)207 397 8900

Montfort: Nick Miles / James Olley, +44 (0)203 770 7909

Redleaf: Hannah Nicolas, +44 (0)207 382 4734

 

Notes to editors

Avanti connects people wherever they are – in their homes, businesses, in government and on mobiles. Through the HYLAS satellite fleet and more than 160 partners in 118 countries, the network provides ubiquitous internet service to a quarter of the world’s population. Avanti delivers the level of quality and flexibility that the most demanding telecoms customers in the world seek.

Avanti is the first mover in high throughput satellite data communications in EMEA. It has rights to orbital slots and Ka band spectrum in perpetuity that covers an end market of over 1.7bn people.

The Group has invested $1.2bn in a network that incorporates satellites, gateway earth stations, datacentres and a fibre ring.

Avanti has a unique Cloud based customer interface that is protected by patented technology.

The Group has three satellites in orbit and a further two fully funded satellites under construction.

Avanti Communications is listed in London on AIM (AVN:LSE).

www.avantiplc.com