ADVA Scores Metro Deal With DT

Deutsche Telekom awards metro network deal to optical vendor and Siemens

March 29, 2004

3 Min Read
ADVA Scores Metro Deal With DT

ADVA AG Optical Networking (Frankfurt: ADAG.F) added Deutsche Telekom AG (NYSE: DT) to its list of European incumbent customers today by announcing a two-year deal in conjunction with Siemens Information and Communications Networks Inc. (see ADVA, Siemens Win at T-Com).

The German incumbent's fixed-line unit, T-Com, is to deploy ADVA's Fiber Service Platform (FSP) 3000 and network management software from Siemens. No value for the deal was released.

According to ADVA's chief marketing and strategy officer, Brian McCann, the contract is the culmination of a three-year sales cycle, including lab trials and pilots about 12 months ago. And it's a deal that wouldn't have happened for ADVA without its Siemens partnership, a relationship that was recently extended (see ADVA, Siemens Extend Contract). "We can't win these incumbent carrier deals ourselves. Siemens is our partner in Europe, and we work with Fujitsu in North America and Asia."

It's worth pointing out that ADVA's reseller deals with Siemens and Fujitsu may not last for ever. Alcatel SA (NYSE: ALA; Paris: CGEP:PA) and Cisco Systems Inc. (Nasdaq: CSCO) once sold ADVA gear, until they got their own products. And the flip side of ADVA having Siemens on its side might be that its margins get squeezed.

McCann says DT will use ADVA's FSP 3000 Slimline, which has two ports, as a "feeder, delivering traffic from enterprise customer sites and local POPs back into [DT's] SDH network," and the standard FSP 3000, which has eight ports, in the metro core. The Siemens Telecommunications Network Management System (TNMS) works with the ADVA gear to provision the services.

McCann says DT has plans to offer wavelength services to large enterprise customers and service providers, and will roll out the new system where demand is greatest, initially in fewer than half a dozen cities. The carrier did not return calls regarding its service plans and equipment decisions.

The German contract is ADVA's eighth major metro infrastructure deal announced during the past two years. "This gives us the major missing incumbent in Europe, the one on our home turf," says McCann. ADVA's other operator customers include BT Group plc (NYSE: BTY; London: BTA), France Telecom SA (NYSE: FTE), Telecom Italia SpA (NYSE: TI), Swisscom AG (NYSE: SCM), and Spain's Telefònica SA. These and other deals make ADVA a key player in the metro optical market (see ADVA Claims No. 2 Spot in Metro WDM).

McCann says ADVA is seeing a growth in carrier capex, with spending in metro core networks growing at about 15 percent a year, and spending on access network equipment rising by about 40 percent annually, "driven mostly by Ethernet and storage area network services."

ADVA's financials reflect this upturn in operator capex budgets (see ADVA Grows, Says It's Organic ), and this financial strength helped it attain a high rating among the international equipment incumbents in a recent Light Reading Insider report, "Telecom Recovery Leaders and Laggards" (see Who's Winning in the Rebound? ).

But while carrier spending is showing signs of increasing, sales cycles are still long, says McCann. For example, he doesn't expect to see any revenues from the vendor's new Ethernet access gear, launched this month at CeBIT, until 2005 (see ADVA Launches Ethernet Access Products).

— Ray Le Maistre, International Editor, Boardwatch

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