CommScope exploring sale of assets, including access network unit, to drive down debt – sources

CommScope is exploring a sale of certain assets, including Ruckus Wireless and its access networks solution (ANS) unit, to help it pay down a $9 billion debt load, industry sources confirm.

That confirmation comes on the heels of a Bloomberg report last week that CommScope is evaluating divesting ANS as well as its Ruckus Wireless business (Arris, now part of CommScope, acquired Ruckus in 2017), among other assets. Bloomberg said CommScope reportedly aims to generate about $4 billion through those divestments, a figure confirmed by an industry source who is familiar with CommScope's thinking.

Amid those potential moves, CommScope has also been trying to spin off Home Networks, a struggling unit that makes and sells set-tops, streaming media players and DOCSIS modems and gateways. In August 2021, CommScope announced a plan to spin off Home Networks into a separate, publicly traded company to be led by Home Networks SVP and President Joe Chow, but later put that plan on ice amid supply chain constraints and other negative market conditions fueled by the COVID-19 pandemic. CommScope has also expressed interest in exploring other alternatives for Home Networks, including a sale of the unit.

If CommScope is successful in offloading these assets, such moves would effectively unwind its $7.4 billion acquisition of Arris in 2019. CommScope shares jumped about 8% Friday in the wake of Bloomberg's report. CommScope shares were up 20 cents (+6.23%) in Monday morning trading.  

Related:CommScope demos DOCSIS 4.0 at CableLabs interop

Evaluating assets

CommScope confirmed it is looking to "optimize" its portfolio as part of "NEXT," an initiative launched in 2021 designed to evaluate the company's assets. Under Chuck Treadway, named CommScope's CEO in the fall of 2020, that initiative is expected to result in the shedding of some pieces of CommScope's portfolio as well as potential strategic acquisitions.

"When we rolled out our CommScope NEXT plan in 2021, we identified portfolio management as a key pillar of the program. Portfolio management is an ongoing process, and we have identified several opportunities to optimize our portfolio," CommScope said in a statement. "That said, we are not yet prepared to share details about those opportunities. Separately, as we discussed on our last earnings call, we had identified several options to address our 2025 maturities. We are now executing on a specific plan to address them. We will have more say on both our portfolio management process and our plans to address our 2025 and 2026 maturities later this calendar year."

Related:CommScope can't rid itself of struggling Home Networks unit

It's not immediately clear who might be in line to acquire CommScope's ANS division. If those assets are of interest to competitors, that list of candidates could include the likes of Harmonic, Casa Systems, Vecima Networks, ATX Networks and Applied Optoelectronics (AOI), a supplier that has sparked a plan to sell amps and node products directly to cable ops.

An industry source familiar with the situation said individual investors/entrepreneurs with a cable tech background are interested in pursuing the ANS assets and building a new company with a team of cable industry vets to run it.

The timing of CommScope's purported interest in finding a buyer for its ANS assets could be beneficial. Such a deal would enter the picture as North American cable operators start to upgrade their widely deployed hybrid/fiber coax (HFC) networks to support a new distributed access architecture (DAA) and possibly DOCSIS 4.0. Those upgrades could take advantage of CommScope's product line and the company's relationships with top cable operators.

Notably, CommScope is developing a Full Duplex DOCSIS (FDX) amplifier that is poised to play a significant role in Comcast's DOCSIS 4.0 network upgrade plans. CommScope has also resurrected its virtual cable modem termination system (vCMTS), a product that could play a role in cable distributed access architecture (DAA) upgrades.

Related:CommScope delays Home Networks spin-off as supply chain constraints linger