By Tom Winnifrith, The Sheriff of AIM | Sunday 30 October 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.
Surely it is only a matter of time before cash burning and downing in debt satellites group Avanti Communications (AVN) calls in the receivers? Keen to assist and bring forward that great ouzo o'clock day for we members of the global shorting conspiracy, I have some more bad news today. Oh dear. Oh dear.
Avanti shareholders' great hope has been that that Eutelsat and Facebook would come to Avanti to buy its expensive capacity over Africa following the launch pad blow-up of the Amos satellite. That has come to naught. On Thursday, Eutelsat announced that it had entered into a multi year agreement with another operator, Yahsat, to fill this capacity:
So Avanti wasn't even the 2nd best option over Africa, despite there being only 3 choices. Maybe this is because of the cost of Avanti's capacity and what's happening with prices:
Avanti tells anyone who's listening that it is selling at $2,000 per megabit of capacity. Respected satellite expert, Chris Quilty, said that Facebook was paying just $100 per Mb per month. So it was paying just 1/20th what Avanti needs. More details on this can be found HERE. But it is clear that Avanti is just not price competitive which explians why it just cannot sell capacity.
We know that prices for satellite capacity are plummeting. The uber bombastic fat cat CEO David Williams admitted as much at an industry event last year when he said that pricing was down by 60% to 80% - as we revealed HERE
How much further has it fallen by now and is there any hope of value left for shareholders?
Finally, I note that Avanti's satellite, Artemis is now positioned over Indonesia not Africa at all as you can see HERE
That's a long way from Avanti's markets of Africa and Europe. It must be operating on someone else's behalf. Why hasn't this contract been announced or is this because it was a one-off and a big contributor to the step up in revenue and profits in Q4? The underline is mine.
Meanwhile the cash is running out fast. In the wings the Fat Lady is warming up for a duet with the administrator.
Never miss a story.
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