SECTOR – AIM RECOMMENDATION – BUY Share Price: 243.25p Market Capitalisation: £272m 2012/13 Share Price Range: 419p/134p Website: www.avantiplc.com Year Ending 30 June Turnover (£m) Adjusted Pre-Tax Profit (£m) Adjusted Earnings Per Share (p) P/E Ratio Dividend Per Share (p) Net Yield (%) 2013 20.8 (40.7) - - - - 2014 (est) 50.0 (20.1) - - - - 2015 (est) 74.2 3.1 2.8 86.9 - - For anyone who watched coverage of Nelson Mandela’s funeral over the weekend, it is likely that the broadcaster will have used Avanti’s satellite technology. The funeral took place in Qunu, a rural town in Africa, where the use of satellites for broadcasting was the only option for providing good quality coverage. All of the major media players such as the BBC, CNN and Reuters used Avanti’s technology and this is a trend that the company is increasingly observing as blue chip clients migrate to its technology. Investing in satellite broadcasting requires a level of patience from investors as it involves substantial upfront investment, design and build time and then a build-up of sales. However, it is an industry with huge barriers to entry and limited competition which makes the rewards significant for successful operators. In the past, Avanti has been a jam tomorrow story but we met up with the management recently and we got the impression that 2014 could be an exciting year and a significant turning point for the group. Avanti Technology was founded in 2002 and floated on AIM in 2007. The group currently has a fleet of four satellites with three in orbit and one under construction. The group is a leading provider of Ka-band data communications services which have a number of applications. The group’s satellites are focussed on Europe, the Middle East and Africa. The first fully financed Ka-band satellite HYLAS-1 (covering Europe) was successfully launched in November 2010 and HYLAS-2 (covering the Middle East and Africa) was launched in August 2012. The group raised £73.8m through a share placing on 6 February 2012 to fund the design, build and launch of its third satellite HYLAS-3. The group has also recently announced the acquisition of a fourth satellite from The European Space Agency and this is already in orbit. Ka-band has several significant advantages over lower spectrum bands. These include higher data carrying capacity, high efficiency as many spot beams are used to cover the same territory and frequency re-use enables depth of coverage. It is also cost effective compared with competing offerings as lower spectrum offerings are often more expensive and yet slower. There is a large addressable market place due to its cost effectiveness and efficiency, making it attractive to traditional lower spectrum broadcasters who are migrating to the technology. The group trades in four main markets; Carrier Services, Enterprise Data, Government and Broadband with its customer base b
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