CommScope's Access Network Solutions unit saw sales dip in Q3 as some operators delay network upgrades and use up inventory. However, CommScope expects sales of Full Duplex nodes and amps to Comcast to start picking up.
CommScope's cable access unit saw sales decline in the third quarter of 2024, but believes better days are ahead as Comcast starts to progress with DOCSIS 4.0 network upgrades that use CommScope's family of Full Duplex (FDX) nodes and amplifiers.
Speaking today on CommScope's Q3 2024 earnings call, CEO Chuck Treadway said the company expects to see a "significant" increase in FDX node shipments in the fourth quarter and for that momentum to continue into 2025. CommScope also expects to see some initial "small shipments" of FDX amplifiers to Comcast in the fourth quarter, followed by "substantial increases in 2025," Treadway said.
Comcast is using both network elements to underpin a DOCSIS 4.0 deployment based on FDX, an option that allows the operator to run upstream and downstream traffic in the same block of spectrum. Comcast, which has deployed D4.0 to more than 1 million households across parts of ten markets, plans to shift to nodes, amps and modems powered by "unified" DOCSIS 4.0 chipsets from Broadcom that support both FDX and Extended Spectrum DOCSIS (ESD).
That FDX ramp-up is important to CommScope's Access Networks Solutions (ANS) business, which saw revenues decline 15% to $188 million in Q3 as operators continued to burn through existing inventory and, in some cases, pushed out their network upgrade plans. For example, Charter Communications, one of CommScope's top cable operator customers, announced last week that its multi-phased hybrid fiber/coax (HFC) upgrade plan has been pushed out to 2027.
CommScope's ANS unit also hopes to make some hay with a virtual cable modem termination system (vCMTS) that competes with market leader Harmonic and Vecima Networks. CommScope, which recently broadened its vCMTS portfolio by acquiring the cable assets of Casa Systems following an auction, said it won a vCMTS deployment in the quarter with an unnamed cable operator.
"Although customers have indicated a fairly aggressive upgrade cycle over the next several years, many of these upgrades have been delayed," Treadway said. "The timing and magnitude of these upgrades cycles will be an important driver of revenue and profitability for ANS."
Financial snapshot
CommScope posted net sales of $1.05 billion, up year-over-year. That figure does not include revenues for the company's outdoor wireless networks unit and distributed antenna systems (DAS) businesses, which are in the process of being sold to Amphenol.
The Connectivity and Cable Solutions (CCS) saw revenues climb 17% to $737 million driven by growth from deployments and sales in the hyperscale datacenter market. CCS also anticipates future growth from the Broadband Equity Access and Deployment (BEAD) program, but it doesn't expect projects related to the program to begin until late 2025.
"We remain bullish on this program," Treadway said, calling BEAD a "2026 story."
Excluding the portion of the business being sold to Amphenol, CommScope's Networking Intelligent Cellular and Security Solutions (NICS) business saw revenues drop 22% to $157 million. However, Treadway said the Ruckus unit inside of NICS is slated to see growth in 2025 partly due to market traction for new Wi-Fi 7 products and technologies.
CommScope's $9.33 billion debt load remains an overhanging concern. Though the $2.1 billion sale of CommScope's OWN and DAS business to Amphenol will help, "we still question how it will satisfy the $4.5B due in 2026," Raymond James analyst Simon Leopold explained in a research note.
On today's call, CommScope CFO Kyle Lorentzen said the company is continuing to evaluate "several alternatives" to address upcoming debt maturities and ways to deleverage its balance sheet.
Editor's note: The story has been updated with CommScope's current debt situation and commentary from Raymond James.
You May Also Like
