Avanti Communications Group plc (AIM: AVN) announced a contract win and major strategic partnership with Hughes Communications (Nasdaq: HUGH) subsidiary, Hughes Network Systems. According to Avanti, the deal aligns the company with a ‘powerful force’ to aid Avanti in filling the HYLAS ‘superfast’ broadband satellite, quickly through Europe.
Avanti's first satellite, called HYLAS is under construction and will be the first superfast broadband satellite launched in Europe. Avanti currently provides satellite broadband services to customers in Europe using leased satellite capacity which it will transfer to HYLAS on launch. Avanti sells satellite broadband services to telecoms companies which use them to supply homes and businesses.
Hughes Network Systems is a major international network service and equipment provider. It has a significant global market share, in the provision of satellite networks to enterprise customers. It operates its own Ka band satellite in the USA, but leases capacity elsewhere in the World. Avanti’s HYLAS will enable Hughes to extend its competitive advantage in Europe.
The multi-faceted deal and partnership sees the companies align themselves through relatively long term agreements. Hughes has purchased capacity and managed services using Avanti's Virtual Network Operator service on HYLAS over a ten year period for an initial value of £7.5m.
Hughes has also committed to sell HYLAS services, and give Avanti access to Hughes' very extensive distribution channels in Europe - which currently account for more than 35,000 customer installations.
Avanti has purchased equipment from Hughes for use at the HYLAS network control centre, in line with capital budgets. Avanti has also secured a five year framework supply agreement enabling its 52 VNO (Virtual Network Operators) customers around Europe to purchase Hughes' dishes and modems at a ‘market beating’ price.
Avanti Chief Executive, David Williams commented on the deal, which represents a fundamental turning point forHYLAS in reaching the mass market:
"I am pleased to announce a deal of significant strategic importance to both companies. Hughes is overwhelmingly the global leader in satellite networks for enterprise customers and I am certain that they will be a powerful force in helping us to fill HYLAS quickly in Europe. Our capacity gives them a similar competitive advantage to that enjoyed with their own satellite in the USA. Furthermore we have secured a supply for our VNOs of the world's best customer premises equipment at a market beating price. This is fundamental in turning HYLAS into a mass market consumer broadband proposition and will have significant impact on our ability to sign more VNO customers leading up to the launch of HYLAS."