It takes a brave shareholder to hold onto Avanti Communications shares which on June 9th hit an all-time low in terms of share price at just 8.5p, and at one point during the day’s trading hit 8.2p on London’s Alternative Investment Market (AIM).
There was no particular bad news from London-based Avanti, which is focused on selling capacity over Europe and Africa in the specialty Ka-band, just the drip, drip of poor sentiment as to its trading prospects.
But the collapse in its share price is spectacular. Four years ago its stock was trading at 380p, and even two years ago was standing at 213p, but since then its price has slid ever-lower, and not helped by the company’s statement at the end of May that despite registering $25 million of contracted new business in the previous two months, the new contracts would not generate material revenue growth in this current half-year.
David Williams, Avanti’s CEO, speaking at the end of May, said: “The combination of weak macro-economics, especially in Africa, Brexit and industry volatility created significant challenges for our business in the last 12 months. 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 greater opportunity for Avanti comes with the upcoming launch of Hylas-4, a new batch of capacity for the business, and due for launch (probably) around October time. The challenge, for the company and its shareholders, is staying afloat until then. Its revenues (year-on-year) have tumbled 30 per cent, and it has cash (and cash equivalents) of just $37.4 million at hand – and debts of a massive $788.5 million – and even via a readjustment of value (because its debt is trading at 51 percent of value) this still amounts to a worrying $545.6 million.
On the upside, however, the company’s all-important backlog of contracts amounts to $233.7 million.