Mobile network operators and governments have struggled to keep up with surging demand for high-speed broadband and wireless connectivity. Increasing numbers are turning to Avanti Communications (AVN) for support in managing the load, helping the satellite operator more than double its sales and register a maiden full-year cash profit.
Avanti’s satellite fleet covers 27 per cent of the global population, with a particular focus on sub-Saharan Africa, where it expects wireless demand to explode in the coming years. The group continues to expand its coverage - it bought a satellite called Artemis in December and successfully financed its fifth satellite, HYLAS 4, which it expects to launch in early 2017.
The group recently deployed superfast ‘4G’ network services for the UK government. It also signed long-term contracts with mobile operators Vodafone (VOD) and Smart and says that several other large operators are piloting its technology. In total it signed 92 new contracts, which contributed $24m (£15m) to its $430m order book.
Broker Cenkos believes Avanti could generate over $500m in cash profits once it utilises most of its satellites’ capacity, valuing the business at up to 1,000p a share. It forecasts a pre-tax loss of $76.1m next year, giving a loss per share of 39.6¢, against losses of $87m and 45.5¢ last year.
| AVANTI COMMUNICATIONS (AVN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 187p | MARKET VALUE: | £209m | |
| TOUCH: | 187-189p | 12-MONTH HIGH: | 329p | LOW: 163p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 279¢ | NET DEBT: | 104% | |
| Year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 5.8 | -2.0 | -3.7 | nil |
| 2011 | 5.5 | -12.7 | -12.1 | nil |
| 2012 | 12.5 | -16.0 | -14.9 | nil |
| ($m) | ($m) | (¢) | (¢) | |
| 2013 (restated) | 32.1 | -58.9 | -44.5 | nil |
| 2014 | 65.6 | -87.7 | -81.2 | nil |
| % change | +104 | - | - | - |
£1=$1.62 | ||||
