Avanti Communications Group PLC (LON:AVN) (LSE:AVN.L) has released an update on its strategic review. In order to address the short term liquidity requirements of the company Avanti has begun the process of issuing additional senior secured notes due in 2019. This is in order to pay the $32.25 million October 2016 coupon. Bondholders owing around 60% of senior secured notes have provided support.
Avanti has also commenced work on a long term funding solution. Further updates will be provided on this in future. As of 9 September Avanti had cash of $56 million on its balance sheet.
A contract win was also announced by Avanti today. It has been awarded a new contract with the European Space Agency through its ARTES Partner programme. This will provide affordable satellite broadband connectivity to 1400 community sites across Sub-Saharan Africa between now and 2019. It will utilise Avanti’s new ECO Wi-Fi hotspot initiative, which has been launched today.
2016 has been a difficult year for Avanti and it initiated a strategic review in July. Its revenue is forecast to grow by 35-40% annually over the next 2-3 years. Even so, its shares have fallen by 80% since the start of the year.
This is behind the performance of tech/telecom peers such as Vodafone Group plc (LON:VOD), BT Group plc (LON:BT.A), Micro Focus International plc (LON:MCRO) and Talktalk Telecom Group PLC (LON:TALK) in the same time period. Vodafone is flat year to date, BT has declined by 20%, Talktalk is down by 11% and Micro Focus has risen by 35% in 2016.
In my view, Avanti has long term growth potential. However, it faces an uncertain future in my opinion thanks to it being in the process of a strategic view. There are also concerns about its funding position. Therefore, I believe that it lacks investment appeal when compared to other tech/telecom shares.