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OCP Buys GigaComm

Optical Communication Products to acquire GigaComm, a Taiwan-based supplier of passive optical network (PON) fiber-to-the-home components

July 14, 2006

2 Min Read

WOODLAND HILLS, Calif. -- Optical Communication Products, Inc. (NASDAQ NMS: OCPI), a leading manufacturer of optical subsystems and modules, today announced it has agreed to acquire privately-held GigaComm Corporation, a Taiwan-based supplier of passive optical network (PON) fiber-to-the-home (FTTH) components, in an all cash transaction. OCP will pay approximately $20 million for GigaComm.

Based in Taiwan, GigaComm is currently the leading supplier of FTTH modules in Japan, which is presently the world's largest FTTH market. GigaComm provides PON components to many of Japan's leading technology companies, including Mitsubishi Electric Company.

The transaction is OCP's initial venture in Asia and is projected to be completed by the end of this summer. Acquiring GigaComm is part of OCP's strategy to make its product offerings more comprehensive, bring focus to its efforts in Asia, and to extend the Company globally. The strategic combination is expected to increase OCP's level of current revenues by approximately 25%.

The Japanese FTTH market is the largest in the world, with the number of FTTH subscribers nearly doubling from 2.9 million at the end of March 2005 to 5.4 million by March 2006. GigaComm holds the majority of the country's market share for Gigabit Ethernet Passive Optical Network (GEPON) modules. The GEPON standard is widely deployed in Japan to enable data, video and IP voice services over fiber optic networks. NTT, Japan's largest service provider, has reported that it expects to have 30 million FTTH subscribers by 2010.

A recent report from market researcher Heavy Reading indicates that the number of households connected via FTTH worldwide will soar to nearly 86 million in 2011, up from about 11 million in 2006, a nearly 700% increase. FTTH growth over the next five years will be dominated by Asia, where the number of connected households will grow to 59 million by 2011. The rest of the subscriber base at 2011 is expected to be split equally between the Americas (mainly the U.S.) and the EMEA (Europe/Middle East/Africa) region.

"As the largest supplier of FTTH modules in Japan, GigaComm gives us instant penetration into the Asian market, as well as positioning OCP to take advantage of the emerging Gigabit Passive Optical Network (GPON) markets in North America and Europe," said Dr. Muoi V. Tran, OCP's Chairman and CEO. "The acquisition of GigaComm also gives us an enhanced ability to increase capacity through its integrated manufacturing facility, an important second and competitive source of lasers, and a talented pool of engineers and management in Asia." GPON is the technical standard for FTTH services expected to be deployed in the U.S. and employs technology similar to the GEPON standard being implemented in Japan.

Optical Communication Products Inc. (OCP) (Nasdaq: OCPI)

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