Albania Contract Win

Avanti Communications Group plc (AIM: AVN), the satellite operator, announces that it has signed a new wholesale partnership agreement with a prominent satellite telecommunications service provider in Albania, opening its first business in the country.  Albania has an infrastructure that has suffered from under-investment over many years and as it seeks to trade more actively with Europe the opportunity for a satellite operator to deliver broadband services is developing rapidly.  In countries such as Albania, significant Inter-Governmental Organisation investment is being devoted to rural broadband problems, which are considerably greater than in the UK.  Under the agreement, Avanti and its partner will be pursuing immediate contract opportunities for up to 1,000 installed sites with a potential contract value of £1.3 million.   Avanti already has distributors for HYLAS in Scotland, England, Ireland, Spain, Italy, Germany and Serbia.  Market Research UpdateAvanti believes that the available market¹ for satellite broadband has doubled since the HYLAS project began in 2005 and that the markets for satellite broadband (consumer, enterprise and wholesale) within the areas served by HYLAS will be worth up to £4.2bn per annum by 2016.  Avanti will be the first company to launch a Ka band broadband satellite into this market.  In preparation for a marketing launch of HYLAS and in support of its distribution partners, Avanti has recently conducted market research through specialist telecoms market consultants Ovum and Euroconsult and is delighted to conclude that the market for satellite internet broadband has grown considerably since the inception of the HYLAS project in 2005 and also that satellite pricing has risen significantly.  The DTI funded study in 2005 upon which the HYLAS project was based concluded that the total potential demand in Europe for satellite broadband was 12m consumers and SMEs of which 4 million would subscribe to satellite.  New EU Data released this year² shows that the availability of terrestrial broadband is on average much lower in mainland Europe than it is in the UK, averaging 89%.  This is a logical consequence of the rural bias and lower population density of much of Europe as well as the geographical limitations of terrestrial networks.   These figures suggest that there may be an addressable market for satellite broadband in Europe of 21.8m households.  Given current average broadband penetration rates in Europe of 50%, this suggests that satellite broadband may capture 10.9m subscribers in the EU-27.  In fact OFCOM reported in May 2008 that rural broadband household penetration of 59% in the UK now outstrips urban penetration at 57% – so broadband is more important in rural areas than urban.A study by Euroconsult commissioned by Avanti shows that pricing in Europe for the Ku band satellite capacity which is currently used for data services is between $2,500 – $6,000 per MHz per month.  Avanti’s prices and long range assumptions are below the bottom end of this range.  Based on new information on demand, supply and pricing, Avanti concludes that the demand for satellite broadband services by 2016 in the HYLAS regions could consume 92 satellites the size of HYLAS, and is worth £4.2bn per annum.  David Williams, Chief Executive of Avanti, said:“I am pleased with our progress in signing new distribution partners in Europe and it is clear that market participants eagerly await the arrival of HYLAS.  This market sentiment serves to underline the results of our market research which demonstrates that our assumptions on market opportunity were conservative and that our marketplace is large enough to sustain dramatic growth well beyond the first generation of Ka band satellites.”  

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