Avanti CEO Previews Upcoming LEO Partnership, Multi-Orbit Outlook

Avanti CEO Kyle Whitehill. Photo: Avanti

In November, Avanti Communications made an announcement out of the blue that it would look to pursue a multi-orbit strategy. Avanti operates four Ka-band satellites, and now looks to embark on a new phase to invest in its managed services capabilities. So, why now? What has changed?

Via Satellite caught up with Avanti CEO Kyle Whitehill, who talks candidly about the industry’s “obsession” with Starlink, and why moving to a multi-orbit strategy is a necessary evolution. Whitehill says a deal with a Low-Earth Orbit (LEO) operator is imminent and will likely be announced early next year. It promises to be an exciting time for the operator.

VIA SATELLITE: Why is the timing right for Avanti to adopt a multi-orbit strategy? What led you to this conclusion?

Whitehill: Two things led us to this conclusion. You know the cycles we go on. My cycle is Washington in March, Paris in September, and Cape Town in November. From AfricaCom in 2022, through to Washington and Paris, everyone was obsessed with Starlink. It is a genuine obsession. You come away from these events with the thinking that operators are buying into this ‘multi-orbit’ thing and we are not doing anything material about it. 

Secondly, as soon as you started talking to the end customer they would say ‘What is your LEO strategy?’ Everyone would ask what your LEO strategy is. There was a lot of customer noise around this. It was quite overwhelming. We sat down after Paris and came to the conclusion it didn’t make sense for us to be opinionated about something without taking responsibility for what it actually means. After Paris we decided to change two particular things. We don’t want to talk about being a regional operator any more. Most people ask if we have capability somewhere outside of our footprint. We can provide that through partnerships with Turksat and Spacecom. Secondly, we wanted to inform customers what multi-orbit actually means. What you can actually buy from LEO today is incredibly limited. We want to inform people by being close to what the next generation of networks look like and then help customers go on a journey together. 

VIA SATELLITE: Are you looking to partner with a LEO operator in the near future? Do you expect a deal to conclude in the next 12 months?

Whitehill: Definitely. Starlink is available but with a very limited customer set. OneWeb is going to be 2024. Telesat will be 2026-2027. I think I could sign a contract in the next few months with one of them but realistically deploying enterprise services is going to be 2025 and beyond. I am not quite sure what to do with SES MEO [Medium-Earth Orbit] because I think they have a bit of a delay. I would sign with everybody if I could, but right now there is no practical solution you can deliver to an enterprise customer. 

VIA SATELLITE: Will you sign more than one partnership? 

Whitehill: I will be happy to sign with people. I think what we bring is geographic expertise and customer understanding. Not everyone is going to think Starlink is the right network or OneWeb is the right network. Let’s take MTN, the biggest telco in Africa, it’s in 16 countries. They have multiple different types of solutions from backhaul, mobile money, and rural that will need different things. They need to deliver enterprise-grade services. 

VIA SATELLITE: How soon will you be signing a deal with a LEO operator?

Whitehill: I think we will be signing something in Q1 next year.

VIA SATELLITE: It sounds like you are pretty close to signing something?

Whitehill: I was and then we backed off, because we couldn’t get it done in time. We are pretty close to signing one of the agreements. It won’t be before the end of the year. It will be in the first quarter next year. 

VIA SATELLITE: Is the standalone regional Geostationary operator fast becoming a thing of the past? Can operators like Avanti not compete unless they have an effective multi-orbit strategy?

Whitehill: There are two different dynamics here. Can you survive as a standalone GEO operator in the medium-term? That answer is yes. The government-owned regional operators like Yahsat and Turksat — they are fine. They can do whatever they want. They are protected by their sovereignty. If you look at Avanti, ABS, Kacific, Spacecom — no, absolutely not. At the moment, we have an advantage around customer intimacy and relationship, and trust in a GEO network. But, in two to four years, a customer is going to want to buy an alternative network. They just are. I think it would be naïve to assume that we can sustain our current business model for the foreseeable future.

VIA SATELLITE: Given what you have said about a multi-orbit strategy, how does this impact your capital expenditure for new satellites over the next two to three years?

Whitehill: We weren’t planning to spend any money on new satellites. If you look at all of the reports around capacity availability, capacity is increasing exponentially. I think the most public with this view was Echostar, who said that there is no large GEO business case to be done anymore. I think it is really interesting that Viasat after the 3.1 issue have backed away completely from continuing to launch big capacity satellites going forward. For me, this is the best option. The pricing is going to come down as more third-party capacity comes to market, regardless of whether it is GEO/MEO/LEO, and I think it will sustain profitability. I see more competition, more networks, more pricing coming down. 

VIA SATELLITE: Given the consolidation we have seen in recent times (Viasat/Inmarsat, Eutelsat/OneWeb), will Avanti become part of a bigger operation going forward?

Whitehill: I think it is inevitable. I think all telecoms markets have a well-worn path, fixed industry consolidation. The mobile industry consolidated and continues to consolidate. You have had a brief flirtation with the service provider integration of Viasat and Inmarsat. I think now the Viasat/Inmarsat is good, and people will look at this big network and figure out how to monetize it. So, anyone that has a good customer reach like us is going to be attractive to companies who are looking to fill in geographic gaps.

VIA SATELLITE: How did Avanti perform this year? What have been the key growth markets for the company?

Whitehill: We see it as a year of two halves. The first part of the year was bionic. The first half of the year saw us deploy four Hylas-4 steerable beams. We deployed a Hylas-2 steerable beam in a short period of time. That gave us a good double digit EBITDA performance. In the second half of the year, we saw a complete shift, not just away from steerable beams, but more towards enterprise activities in central Europe and South Africa where people require greater resilience around their networks. This has taken us from single digit EBITDA to the 30-35 range. So, a quite significant moment in our history.

VIA SATELLITE: Are you poised to increase profits and revenues in 2023? How would you assess the year financially for the company?

Whitehill: We have had two very significant years of growth, roughly the same scale of growth in each of those two years but having doubled from the previous year. We will more than double on revenue and EBITDA year-on-year by the end of 2023.

VIA SATELLITE: Where do you see the growth opportunities for Avanti in sub-Saharan Africa? What has the dealflow been like?

Whitehill: In 2023, we had large scale-deployments of ultra-rural networks in Nigeria. We have almost 1,000 sites in northern Nigeria, and the dealflow there has been good. It continues to be strong particularly through HS and ATC tower companies. Secondly, in South Africa, attributable to the load shedding issue that the country faces, the telco operators are building resilience from that grid failure into their networks. You are seeing a demand for resilience internally and externally with their customers. So, if you have signed up an SLA with an enterprise customer, and you are using five to six hours a day because of grid failure, then you are under real pressure on SLAs and financial penalties. Because we can deploy a much lower power solution, it allows them to give them a much higher level of availability. That has been a real golden market for us, and that will stretch into 2024 and beyond on some scale. I think the market in sub-Saharan Africa will continue to deploy in rural, but spreading much more into enterprise in 2024 and beyond. 

VIA SATELLITE: When we look at verticals, mobility, telco, land mobility, government, which ones offer Avanti the most hope for the future?

Whitehill: The most hope for us in the future falls in three categories. Firstly, you have mobility. Mobility for us means in the conventional military. It is very sad, there is so much armed conflict going on that there is an increasing need for businesses like ourselves to provide governments with vital connectivity. 

The second one, which is more Africa-focused, is around governments in Africa that are becoming very conscious of their security situations and require wide area networks around their borders where they have trouble. The third area is enterprise customers, particularly in Southern Africa, that require alternatives to the fixed and mobile networks which have these grid failures all the time. So, this is where growth will come from. Mobility on the ground, mobility in the air, government security, and then enterprises. 

VIA SATELLITE: I know when we spoke before we talked about the partnerships between telcos and satellite operators. Do you think 2024 will be a tipping point when it comes to new deals here?

Whitehill: I am a telco/satellite person rather than satellite/telco person. Fixed and mobile operators have spent 50 to 100 years building these very, very high availability networks that require a huge amount of capital investment into them. That has become a real strain for them. They have got to the point where they can’t roll out much further with a high CapEx model. My view five years ago, which is even firmer now, is that if you want to extend a fixed and mobile network you are going to have to do it via satellite. Those companies have historically used satellite as a network of last resort. The perception was satellite was slow and more expensive. Now, our Hylas network has shown that you can extend fixed and mobile networks into areas where putting your own terrestrial network is unaffordable. I think that will accelerate like crazy. 

Telcos are looking at the existing GEO networks and thinking it’s a high resilience network to support existing customers, and a proven technology that is beginning to be price competitive. Secondly, I have got this raft of LEO players coming. They may not know exactly what it is going to do yet but they are going to look to understand the capabilities it might bring. Thirdly, the direct-to-device has been the holy grail of mobile operators for 50 years. It won’t be a giant market, but it will be a market of some requirements. The vast majority of the population tend to be in the same place at the same time every single day. So, the priority is Wi-Fi working at home, for example. Customers want to be able to make affordable calls. Telcos are finishing off some of the coverage that they require and satellite is the solution for them. 

VIA SATELLITE: What are your hopes and expectations for Avanti over the next two to three years?

Whitehill: I will start with a very simple principle. You have to own the customer relationship. In order to own that, you need three parts. Firstly, you need the competitive advantage of owning your own network. That differentiates you from other service providers. Making sure people know that is important. Secondly, you want to be a trusted partner that tells them the truth about what else is available and what that availability might mean for them. If you can sit down with the likes of MTN and BT and say this is the landscape today, and explain how the landscape is evolving. You also have to try and explain what is happening. I don’t think anyone could have forecast that Viasat was going to do a complete 180 around from their network proposition. I think it is naïve as a satellite operator to be thinking complacently. You need to stay very open minded on what the next technical innovation might be coming into our space. My view of the next three years is to stay alert, keep the customer happy, deploy the best networks you can with the best solutions, and keep a very close eye on innovation.