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Analyst Sees Adtran SBC Win

Adtran Inc. (Nasdaq: ADTN) has been selected as a supplier for SBC Communications Inc.'s (NYSE: SBC) Extended Reach DSL request for proposal (RFP), according to analyst Joe Noel at Pacific Growth Equities Inc.

"Our information indicates Adtran has now been selected for this contract," writes Noel in a note sent to clients yesterday. "While it appears to us SBC has now selected a supplier for this contract, we believe the actual implementation phase will not begin until mid-fourth quarter 2004, with a potential positive revenue impact for Adtran occurring later during Q1:05."

The Extended Reach DSL RFP, detailed by Light Reading in July, was SBC's approach to providing triple-play services without requiring an extensive fiber-to-the-premises buildout (see SBC RFP Refreshes Remotes).

The RFP asked vendors for a 24-port DSLAM with an enclosure that's hermetically sealed and submersible in up to four feet of water for a three-day period. It was to be mountable "to pole, strand, manhole, SAI cabinet, pedestal, pad, and vaults." The box was required to have a minimum of 24 ADSL output ports, but the RFP also asked vendors for pricing and availability of 48-, 72-, and 96-port DSLAMs.

"We believe ADTN is on track to meet or exceed our current September quarter estimates for $123.3 million in revenue and $0.28 in EPS [earnings per share]," writes Noel. "For the full year 2004, we are currently estimating revenues of $488.4 million and $1.08 in EPS and for year end 2005, we are looking for $594 million in revenues and $1.30 in EPS."

Adtran shares were up $0.22 (0.82%) to $27 in late morning trading on Wednesday.

An SBC representative could not be reached for comment.

— Phil Harvey, News Editor, Light Reading


For further education, visit the archives of related Light Reading Webinars:

rbkoontz 12/5/2012 | 1:19:01 AM
re: Analyst Sees Adtran SBC Win Congrats to ADTRAN, the little engine that could, but this is a small niche market for extended reach DSL - for those long copper loops > 18kft that can't be reached via CO or DLC. This is certainly less than 5% of total lines.

This win should not be confused with anything related to SBC's FTTN which calls for a massively different DSL box.
Scott Raynovich 12/5/2012 | 1:19:00 AM
re: Analyst Sees Adtran SBC Win MostWanted -- I'm currently doing some research in this area (DSL access) and would like if you want to give me a call 212 925-0020 x103

--Scott
rbkoontz 12/5/2012 | 1:18:56 AM
re: Analyst Sees Adtran SBC Win Kerry and Scott,

This is a nice little niche for Adtran to play in. However, as Adtran is inherently a TECHNOLOGY LAGGARD, they do not stand a chance at competing in such cutting edge markets like FTTN. They win business by having the highest-quality point products in commodity markets. They also know how to sell their point products to the RBOCs, but they have struggled to become a true systems company.

Consider for example that Adtran's bandwidth capacity and DSLAM architecture is a mere 50 Mbps, when what SBC and video centric services require is at least 100x that! There are probably 20 broadband vendors who have painstakingly completed small video over DSL deployments, but ADTRAN is not among them.

Kerry, as for your European client considering entering the US broadband market, I could not advise more strongly against this. There are currently 25 - 35 vendors competing in this market which can at most support 4 successful players and small handful of emerging vendors. Just look at ECI and their leading technology for an example of failure in this market.
Kerry Davis 12/5/2012 | 1:18:56 AM
re: Analyst Sees Adtran SBC Win Most Wanted,

I agree this is not to be confused with SBC's FTTN and it is a small market. Don't you think however, that there may also be a (albeit equally small) market in some densly populated US cities suffering from copper exhaust?

I'm currently consulting to a company that is in the European access market and considering entering the US market in some as yet undecided way.

Do you think that ADTRAN could add an optical ring interface to this box and grab the bigger SBC prize? And if so, would it be SONET Ring or GE/PON with RPR or door number 3? Also do you agree that, if an optical version were created, a small modular miniDSLAM environmentally hardened and submersible is equally important to SBC and others for the remainder of the US market?
intrigued 12/5/2012 | 1:18:53 AM
re: Analyst Sees Adtran SBC Win Kerry,

Forget RPR because of OSMINE.

Even GE PON may have trouble.

Think simple, point to point, not cutting edge and OSMINE comliant to crack the US market.
Otherwise forget it as Telecordia fees will kill you before you spell P.O.N
paolo.franzoi 12/5/2012 | 1:18:51 AM
re: Analyst Sees Adtran SBC Win
I want to second both of Most Wanted's comments.

FTTN represents the death nell of Adtran in the DSLAM business. Layer 2 and Layer 3 work is simply not what Adtran does very well.

The successful video deployers include that tiny company Alcatel.

As for your European customer, I also concur that this is a waste of time. The large carrier market has occurred. The small carrier market will be tough to reach. Nothing like sucking the heads in Monroe or Hunting elk outside of Anchorage but I think that this is not what a Euro-vendor will find easy to deal with.

seven
Kerry Davis 12/5/2012 | 1:18:41 AM
re: Analyst Sees Adtran SBC Win Intrigued & Most Wanted,

I had suspected as much on both responses. Thanks for the advice.
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