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By Tom Winnifrith, The Sheriff of AIM | Monday 29 February 2016
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
You just cannot make this stuff up. The difference between Avanti Communications (AVN) PR hype and reality is chasmous. With a hat tip to reader BlueFrew, let us have a quick look at the £60 million programme announced in December by the Government in partnership with Avanti to roll out broadband access to 300,000 rural homes across the UK. You want the internet Mr Crofter on a remote Scottish Island so you can download some sheep porn? To hell with cutting the deficit, the ever grateful taxpayer & Avanti are here to help.
Here is what Avanti said on 7 December:
Avanti Communications Group plc announces a new contract with BT, to be part of BT's supply of wholesale consumer broadband services which will be sold onwards to consumers in the UK through a network of satellite resellers under the auspices of the British Government's Universal Service Commitment.
Under this plan directed by Broadband Delivery UK ("BDUK"), up to 300,000 homes which cannot access greater than 2Mbps from terrestrial networks will be eligible to receive a contribution from government to fund the installation of satellite broadband services, with the consumer then paying monthly service charges. The scheme is expected to go live during December.
Okay so how is it going? I refer you to an article from The Register as at 25 January:
"Poor advertising and expensiveness have been blamed for the woeful uptake of the government's subsided satellite broadband scheme, with just 24 people having so far signed up.
The £60m scheme was launched in early December, with an estimated 300,000 properties across the UK eligible for assistance. The contract was between satellite company Avanti and BT. Under the scheme the government will cover a large part of the installation cost for users unable to obtain an affordable broadband service of at least 2 Mbps. The user will then be responsible for paying the monthly subscription for the service they selected.
However, Labour MP Chi Onwurah last week revealed that so far just £8,000 of the pot has been spent, which she called "provision for those failed by [Ed Vaizey's] super-slow broadband crawl-out." Costs for satellite broadband vary, but can be more than £100 per month as it depends on how much data you use.
Dan Bieler, analyst at research company Forrester, noted that satellite broadband remains an expensive option. "It tends to be a technology of last resort. Every container ship will have it, but general public usage is low," he said. Steven Hartley, analyst at Ovum, agreed. He added: "It's also worth noting the marketing around this scheme has been very poor - it's doubtful many people know this exists."
Hmmmmm, £100 a month for my sheep porn? said the crofter on a remote Scottish Island, perhaps not.
Now just how much in the way of revenue from this whizzo scheme is factored into forecasts for Avanti showing dramatic H2 sales growth?
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