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WO, since you seem to know the man, I actually rather liked good old Harry F. Bit of a throwback or dinosaur for sure, but quite nostalgic to meet his type once more, bless him. He then left us in the hands of French Nic, poor lamb (I doubt you'll know him), who tried and tried but was allowed to bring nothing new to the table, even when he was told point blank what he needed to match, let alone beat. But as you say, hopefully such days of misplaced arrogance and utterly mistaken thinking that AVN could call all the shots are long gone. Speaking of those in relatively lofty AVN positions, I also happen to have worked alongside Guy W for a couple of years a fair while back in one of his and my previous career incarnations.... it's all too often a surprisingly small world.
Hmmmm....HIS those intransigent pricing policies are often dictats from the very top of organisations. I'm sure you can guess who that approach/attitude came from, which may help explain where he is now. I'm sure future deals will be forthcoming and that we will adopt a far more competitive approach to Sales. The key point, not to be lost though, is that Sales capacity has ramped up considerably, as has senior management relationship building which is so important when it comes to putting pen to paper on the larger deals. My use of the term "We" merely reflects my position as a long term share-holder in AVN. After all it is our company too.
HIS - the reason I asked about the steerable beams is because it was said to me that Inmarsat would need to put 3 satellites up to get what we have up there with H4. I'm not sure I heard correctly but guessing here it refers to this off the AVN site Full Steering Rights � Gives you the ability to move the beam(s) at any time within the agreed term. Initial Pointing Rights � You can nominate a single location where the beam stays fixed for the duration of an agreed term. Guaranteed Capacity � You can request a location at a lower capacity; Avanti will place the beams in locations with the most requests. (Beam placement dictated by aggregated demand and is co-terminus dependant). Is it invention/exaggeration or is there something in it?
Room, steerable beams are as good thing but certainly not unique. GCC, your use of "we" with reference to AVN was interesting? Granted outreach opportunity wasn't large, but then again nor were/are Avanti's revenues. As to senior executive interest, Harry F turned up to the first set of meetings... The core problem was not bandwidth cost, in my view... although AVN came in too high, compared to offers from its direct competition. That's after all just a number to be negotiated. Nope as I've said already, it was the intransigence aand inflexibility of the offered business model which wasn't up for any negotiation - a thing which the same direct competition took gleeful advantage of and got the deal... Anyhow, hopefully current policies are a lot more savvy and market-aware.
Interesting post GCCR - you wrote 'Where Avanti score is that they have a number of clever patented software tools to make that provisioning easier for their retailers.' Would steerable beams be one of their clever patents or are they fairly ubiquitous?
In my last three Telecoms organisations Revenue was the only targeted incentive for sales teams. Decisions on whether the products were priced at a level which generated profit were made at a senior level by Product Managers. Products sold and paid for tended to be based on channels occupied. i.e. Add a customer and you pay for that occupied channel - no more. The common approach for nearly all Wholesalers selling backhaul is to obtain a FORECAST maximum bandwidth requirement for that retailing customer over a given time period and scale your network build or channel reservations to suit this forecast. There would be a token "sign-up to this Forecast" charge but not the cost of all the channels "reserved". Revenue therefore would only flow as bandwidth is occupied by that Retailers customers. However there is nothing to stop the Wholesaler over-selling their capability. i.e. selling more than they are capable of delivering. Contention ratios can easily be increased while the network is expanded. Accepting the temporary drop-off in QOS. This gives a little time for network expansion based on actual not forecast trended take-up. It should not be a surprise therefore to see the rate of revenue generation begin slowly, and accelerate over time as the retailers business grows. Where Avanti score is that they have a number of clever patented software tools to make that provisioning easier for their retailers. Any real negotiations on price are usually restricted to Large Retailing customers or Government organisations for whom that bandwidth forecast is both high / lucrative and perhaps more complex. In these cases Senior managers would meet their Customer counterparts (often!) and thrash out an "In Commercial Confidence" deal that the world will never - or SHOULD never see. All parties would be subject to strict Non-Disclosure agreements - at least they SHOULD BE. HIS - Your experience with Avanti was probably because we viewed your organisation as a standard small scale customer rather than a large operator worthy of senior management intervention. I don't mean to be insulting there because I have no idea of the scale of your operation. I'm just trying to guess at AVN's reasoning for that approach. Accepting that "small operator" categorisation then, the real problem was our pricing which was clearly too high to win your contract. Pitching of our prices too high and depending on our top quality products to clinch sales deals was in retrospect a mistake - as you intimated even selling at smaller margins would be better than running unfilled bandwidth. One of the benefits of our Quality products though is that ability to run at higher prices/higher margins AND attract QUALITY customers, so that the customers we DO have tend to be Defence / Government organisations - especially true of UK/US/EU Defence & African Governments. Rem: who built Hylas 1. Where we have slipped up
Rom, the sales payment plan you mention is not unusual at all. However, paying sales people commission on revenue alone is not the smartest move in my book. If you're doing that, then you'd better have ensured that your sales force has zero control over any pricing or price negotiation capability... or it'll be a race to zero margin. And is that zero control actually what you want them to have? Far better - if you're going to allow field sales to have the ability to weigh up and react to real-world opportunity by having price negotiation room - is to pay commission out on margin, rather than revenue. It keeps sales forces honest, while not making them mindless drones parroting a single message or offer. Revenue for vanity, profit for sanity, as the old cliche goes :)
Interesting views and info HIS. I suppose I kinda worked in Sales (FX money broker) and revenue was everything. It was highly competitive and rules were there to be broken. What I would add is that it was usual to pay a salary which was made up of basic and bonus relating to revenue/sales; something not uncommon in sales. I really hope we have to pay the AVN sales team huge amounts and I am sure the incentives are in place. I cannot compete with you, shaken and WO regarding the satellite business but with the weight of experience now employed by Avanti and a Chairman who knows all about marketing and pricing; there are no more excuses left. Those closest to the action are the bond holders who are now shareholders and board appointed. They aren't usually stupid or delusional. However, you could make a case that the D/E swap was only accepting the inevitable and in a worse case scenario nothing really changed. Fresh money is the new commitment whilst the D/E swap is only an acceptance of reality and money lost? Time for some momentum I think. The share price is in stasis and the amounts traded are so laughably small it is impossible to read anything into them. The RNS from M&G now means there are 2bio shares out there with some probably happy to exit. If there is a future I would expect to see some significant BUYS. Be Lucky.
ah! thanks for heads up :O)
Brad, just for info, the company I work for and the others I referred to weren't and aren't end users.
I think the BUC (see what i did there) stops with the CEO. New CEO new BOD members, hopefully they will review policies and move the business forward.
I did not think AVN were dealing with end-users , preferring to negotiate with middle men who knew their markets and the local trading rituals better than AVN.
People here are pointing out that AVN (obviously) needs more revenues - and fast. Some are blaming the AVN sales teams.. I'm not sure that's entirely fair. Thing is IMO, commerce abhors a vacuum. So if there's a demand for something at a price, supply will fill that if at all possible. Basic common sense... First and foremost, it's always very dangerous to presume that personal experience is a true reflection of the whole damn shooting match. That's very fair comment. However... I and a number of colleagues in the industry I work in have been pitched to more than once by AVN... unsuccessfully. The problem wasn't just the offered cost of data being uncompetitive at that time (although it was, that was potentially negotiable down to levels offered then by AVN direct competitors). Nope it was the other commercial terms that AVN insisted on placing every time in the deal - namely guaranteed and irrevocable revenue commitments that we'd have had to pay, regardless of our actual requirements or usage at the time. Basically AVN would absolutely not budge from such a business model - removing all variability from the proposal and thus placing all commercial risk upon us. Fair enough - nice terms (for AVN) if they can be imposed... but the problem was that both of their direct competitors were far FAR more flexible and offered a fully variable commitment-free arrangement. Hence, no business for AVN from either us or the several other businesses that industry colleagues worked in - their terms were unrealistic. Now okay in the grander scheme of things, the level of business that the company I work for could have done with AVN was pretty small - and even aggregating the opportunities wouldn't have been huge. But I couldn't help thinking that such rigid commercial inflexibility made no sense? AVN had (and has) several dramatically underutilised assets, which cost them several zillions in capex and ongoing millions in opex. It's not like they were in any position to rigidly dictate to potential customers - and surely if you have an underutilised asset that continues to mount up running costs, some revenue is better than none, no? Basicially If you've got an asset with unused capacity, sweat the living bejasus out of it. So maybe it'd be fairer to blame whoever created such an unrealistic and rigid commercial proposal rather than the sales force who were simply ordered to take that to market? And hopefully they're a lot more realistic these days.
I await a tsunami of RNS's announcing large contract wins, more in hope than expectation. GLA
HYLAS 4 is expected to generate revenue from July 2018, largely within the existing fixed cost base, and to have a strong positive effect on the Company�s business as it completes EMEA coverage and greatly increases the amount of capacity available in mature markets in Western Europe and new markets in Africa. The efficient procurement of HYLAS 4 will bring the overall fleet cost per MHz down significantly, mitigating some of the effects of falling global prices for satellite bandwidth. The Company is in discussions with a number of current and new distributors to sign up master partnership distribution agreements to market this new capacity, which is largely over sub-Saharan Africa countries. What ever the price was per MHz its going to drop very shortly ..
Yes my bad was meaning USD, my source was Avanti RNS i was talking about the price from H1 & H2 launches, I know it's changed lot since then but the point was I feel we missed out on large contracts at the very beginning due to this price. Would you know how much they are selling at now? I don't know, could be tricky to find out from non official channels as no doubt NDA will be in place.
I agree they should have focused more on sales, hopefully now the new CEO will address this issue, one point to note, even the best sales teams in the world can't sell if the price is too high and at �2200/2000 per MHZ it was too high. Be nice to see what they are selling at going forward.
They are the crux of the problem. We need more than Bentley Walker based in that hub of satellite innovation, Hayling Island, (although they are handy if you need a new kettle or Hoover at the weekend). It reminded me of the Italian who was fanfared in at the beginning of 2016, Enrico Leonardi as Global Sales Director, and I checked that he was still with us. He is and so too is a certain Svante Stenbom who joined in 2015 and according to LinkedIn is still there. This means they either negotiated a copper bottomed contract or have built up potential sales subject to the company being a going concern and having the latest software up in space. These 2 conditions now seem likely to be met so we only have to worry if there isn't a tsunami of new contract wins. I doubt the bond holders would accept waffle as a reason for non-performance but you would have to accept (imo) that the well documented problems facing Avanti would prevent the closing of most deals other than (say) BH which is a just in case deal and rarely used or some poor sap in outer Cornwall or the like who can't watch Sky. As we are kept in the dark and commercial confidentiality is always a handy excuse the time has come for answers and because of the money and parties now involved, they should be forthcoming. I have a suspicion that one of the strategies is to sell Avanti now it has been valeted. It has been on the forecourt before.
The entire problem all along is that AVN has not utilised their sales team. All the technical details being endlessly ruminated over on this BB are totally irrelevant, it is sales and profits that matter, and AVN have no sales (to speak of) thus no profits. Looking back through the RNS's there have been no contract wins since June last year, and they being nothing to write home about. Either AVN has a useless sales team that is unable to close contract wins, or the product they are attempting to sell does not convince the customers. Either way it does not matter, the PI's as usual will get shafted and some city wide boys will make a killing. Plus ca change.
WO, maybe you're right here, I hope you are and AVN can utilize their sales team and take advantage of the incredible potential H4 has to offer. I see what you mean by the asset and insurances etc and that a different pitch would be given to customers. I also wonder whether the other satellites AVN have will be made to better use in the next few months. Anyway, time will tell and as PIs although we are in a precarious position we have to hope that our continued support will eventually be rewarded..
A short and accurate reply WO. All I would add is that the customers get a different narrative to the one aimed at investors via RNS run past compliance, nomads, lawyers and the TO panel before being released. I'm confident that even a half decent salesperson would reply that even if the worst happened there are precedents and insurances to produce a seamless transfer. My energy supplier went bust & I never noticed the difference. Of course there are still risks but end users rarely worry about the company's future but are concerned about price and reliability. With the latest satellite that shouldn't be too much of a problem.
I would suggest looking at other operators level of debt, granted AVN are a small player but you may be surprised at how good a position AVN is in. Check on google some examples such as Intelsat, SES and Inmarasat level of debt. I doubt very much the UK goverment would have allowed a bust company to sign such a critical contract on the ESN network, even the small part AVN will play on that project IMO.
WO, I don't accept the debt is not an issue when it comes to taking advantage of the potential H4 has. A company riddled with debt with no definitive and strong statement on how this has been dealt with detracts customers regardless of the capabilities of H4. I would not buy from a company that has publicly stated it is a ticking time bomb (unless debt is addressed in 2 months) so why would anyone want a contract until assurances are met. This is why AVN needs to show a strong and credible response to the debt it carries and then H4 will sort itself out. I hope you're right and I am wrong and H4 fills quickly with contracts regardless. I don't see it however. Like you say the major investors themselves will start pulling the plug if they don't see progress with the figures withwth debt and sales .
Typo - I hope Musk is having more success with SpaceX
https://twitter.com/endurojames I hope Tesla is having more success with SpaceX which just authorized a $507 million fundraising round. Perhaps it's not all about profit?. To be fair, in this article about Tesla https://www.bloomberg.com/graphics/2018-tesla-burns-cash/ Musk mentions that 'that you�re not a real company unless you generate a profit' but qualified with 'meaning simply that revenue exceeds cost. It didn�t make sense to do that until reaching economies of scale, but now we are there. Going forward, we will be far more rigorous about expenditures.' He did concede that excessive automation at Tesla was overdone and that humans are underrated. That's nice of him. It's all getting a bit much for me - perhaps I should just buy bit-coins (I don't understand them either).