Avanti Communications Group Plc (LON:AVN) is a satellite broadband service company that sells bandwidth capacity to telecoms companies who sell services to residential, commercial and government users.  Residential services will include broadband, VOIP and TV, whilst commercial opportunities exist for business continuity products.  Government uses include military applications and train stock tracking. http://www.avantiplc.com/

Rural TV users are likely to require a satellite service in the future as the analogue TV signal is due to be phased out over the next two years. 

Avanti’s model will see them launch satellites that use the latest Ka-band technology to deliver high speed, two-way data services across Europe.  Ka-band technology is 4 times more powerful than traditional Ku-bandsatellites. Lending confidence to the strategic importance of Ka-band is news from Inmarsat (LON:ISAT) in August of the planned purchase of three Ka-band satellites from Boeing at a cost of $1.2bn, with a target annual revenue of $500m five years after a 2014 launch.

Avanti's state-of-the-art Ka-band earth stations are located at Goonhilly and Lands End in Cornwall.  Both sites are equipped with Hughes Network Systems hubs, building upon the extensive Ka-band experience gained by Hughes from its American operations.

Investment Opportunity

The company is worth flagging as an investment with near-term potential for a re-rating as it is due to put its first satellite (HYLAS 1) into orbit on or around 15 November.  This launch slot has been confirmed by Arianespace, the world leader in putting satellites into geostationary transfer orbit, which will use the Ariane 5 launch vehicle in French Guyana.

So as long as the launch is successful and Arianespace get the bird up into orbit, Avanti should enjoy a re-rating. So in the short-term (next two months) forget trying to apply valuation methods to the stock –  this is just a play on the launch. It may have a £500m market cap, and be loss-making, but put that aside for the moment. Assuming stock markets globally are not falling back to earth in November, I suspect that the story surrounding a British company putting satellites up into orbit will attract high volumes of buying. Here’s a recent article from the BBC Tech blog showing the interest Avanti is attracting

In the medium-term,…

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