Satellite operator Avanti Communications (London, UK) disappointed financial markets with preliminary results for the recent financial year that missed expectations.
Having made a July forecast that revenues would come in at £17.8 million ($28.5 million), the company reported a top-line figure of just £15 million.
Although a substantial improvement on the £6.1 million generated the year before, the results triggered a sharp fall in Avanti’s share price in early morning trading.
Conscious of the need to finance future satellite launches through debt, Avanti has also been forced to adopt more conservative accounting practices. Essentially, this means spreading the value of a transaction across the lifetime of the contract, instead of booking all the revenues when the deal is signed.
In the meantime, Avanti’s order backlog was up by 57% over the course of the year to £268 million, although “more back-ended than expected”, according to chief executive David Williams, because customers are growing cautious about signing up for too much bandwidth in the early stages of contracts.
Senior managers were upbeat about the performance over a period in which Avanti expanded coverage with the launch of a new satellite. “The momentum of launching our second satellite in as many years to expand coverage to as many as 53 countries has created very significant demand,” said John Brackenbury, the company’s chairman. “The formal launch of service on HYLAS 2 over Africa and the Middle East gives us access to markets showing high economic and structural growth in demand for telecoms services.”
Avanti targets parts of Europe, the Middle East and Africa where terrestrial broadband coverage is poor.
According to Dow Jones Newswires, brokerage firm Cenkos has revised down its revenue forecasts for Avanti by around 40% as a result of this week’s earnings announcement. The company now expects Avanti to report sales of £34.5 million in 2013 and £68.7 million in 2014.