MANCHESTER, England — Satellite fleet operator Avanti Communications reported a 30% decline in revenue for the three months ending March 31 compared to the same period a year ago, citing continued headwinds in Africa in addition to “Brexit and industry volatility.”
London-based Avanti, whose Ka-band broadband portfolio is heavily focused on Africa, said its current four-satellite fleet was 30-35% full as of March 31, flat from where it was as of Dec. 31, 2016.
In a May 31 note to investors, Avanti said it had booked $25 million in new business in the previous two months, but that these would not flow to the revenue line in the company’s current fiscal year, which ends June 30.
Avanti had been counting on a revenue boost from the two satellites it has on order — the Hylas-4 satellite, under construction at Orbital ATK in the United States; and the Hylas-3, a payload aboard a satellite called EDRS-C being built by OHB SE of Germany.
Both are scheduled for launch by Europe’s Arianespace consortium. Avanti Chief Executive David Williams said in the May 31 statement that “the launch of Hylas-4 is now close, and we expect this to have a strong positive effect on the perception of the business as we complete pan-EMEA coverage.”
Avanti had been planning for the launch of the smaller Hylas-3 payload this year, but the satellite has been delayed and will now not be ready for launch until early 2018:
It is possible the satellite could move from a heavy-lift Ariane 5 to a medium-lift Europeanized Russian Soyuz rocket, also operated by Arianespace, to secure an earlier launch, but that too depends on Soyuz’s availability.
Hylas-4’s launch date, originally set for early 2017 before moving to late this year, is uncertain. It is scheduled to fly in the lower berth of the Ariane 5, with a heavier telecommunications satellite riding in the upper position.
Continued weakness in Africa, and the promise of a turnaround
For the three months ending March 31, Avanti reported $13.6 million in revenue, down 30 percent from the same period a year ago.
Revenue for the nine months ending March 31 was $45.9 million.
“[W]eak macroeconomics, especially in Africa, Brexit and industry volatility created significant challenges for our business in the last 12 months,” Williams said in his statement to investors. “However, we are winning significant contracts again and a degree of optimism is returning, although we will not see significant like-for-like growth in recurring revenues until the next financial year.”
The company did not explain how Britain’s planned exit from the European Union in two years affected Avanti’s 2017 financial results.
Avanti said it had $37.4 million in cash as of March 31. Backlog stood at $233.7 million.
EBITDA, or earnings before interest, taxes, depreciation and amortization, was a negative $11.5 million for the nine months ending March 31.
Debt totaled $788.5 million, which Avanti said had a book value of $545.6 million following a debt exchange in January during which the fair value of the company’s $481.6 million was assessed at $245.6 million because this debt was trading at just 51% of its face value.
“Full face value will be recognized on the balance sheet” at the bonds’ maturity date, the company said.