What's next for Vantiva?

Vantiva rang in the new year by clinching its acquisition of CommScope's Home Networks business, a unit that develops and sells a family of set-tops, streaming media players and DOCSIS modems and gateways.

Under the deal announced last fall, CommScope sold its struggling Home Networks unit in exchange for a 25% stake in Vantiva. While it's expected that CommScope will largely steer clear of Vantiva's day-to-day activities, CommScope stands to receive an earn-out payment of up to $100 million if Vantiva achieves annual EBITDA of €400 million (US$434.55 million) in the coming five years.

The deal effectively takes Home Networks off of CommScope's books (CommScope acquired that business via its 2019 acquisition of Arris). The transaction will increase the scale to Vantiva's CPE business and provide it access to a handful of new Tier 1 operators in North America and some operators in Europe that are new to the company.

Now comes the hard part: integrating the business, streamlining operations and product lines, formulating a final DOCSIS silicon strategy and determining if it makes sense to stay in the retail modem business.

While some of those decisions will be made in the months to come, the main priority is to push ahead with the integration and ensure that there are no disruptions for customers that have programs underway with Vantiva and the erstwhile CommScope consumer premises equipment (CPE) division, says CEO Luis Martinez-Amago.

Related:Vantiva CEO on life after the Technicolor separation and spin-out

Vantiva CEO Luis Martinez-Amago. (Source: Vantiva)

Vantiva, he said, is now in the "discovery phase" as the companies could only share a limited amount of generic financial information prior to the close, when Vantiva and CommScope were still active competitors.

One early move is the hiring of industry vet Tim O'Loughlin as SVP of Vantiva's customer unit for the Americas. Most recently with Verifone, O'Loughlin is a former executive of Pace and Arris (Arris acquired Pace in 2015). Mercedes Pastor serves in a similar role for the Vantiva's Eurasia region. Vantiva's product division is led by SVP Leopold Diouf.

Dave Davies, who joined the company in 2015 when Technicolor (now Vantiva following a 2022 spin-out) acquired Cisco Systems' CPE business, is the SVP and GM of Vantiva's Home Networks division and will serve as an advisor to Martinez-Amago on the integration.

"Step number one is to put the teams together," said Martinez-Amago. The full integration could take about six months to complete. "2024 is a crucial year."

'Significant room for synergies'

About 1,400 CommScope employees have joined Vantiva, which had about 4,400 employees (including 1,200 in its Connected Home unit) prior to the deal.

Related:Vantiva makes play for CommScope's set-top and gateway unit

"There's significant room for synergies," Martinez-Amago said.

Vantiva hasn't decided how that will shake out, but he said the company could "re-route" some employees into areas where Vantiva is looking to gradually diversify its business. One possible option is Vantiva's emerging focus on IoT solutions for businesses, which already has a pipeline of customers and some live trials underway, he explained.

With the integration underway, Vantiva expects to present its new budget and provide some guidance for 2024 by the end of March.

CommScope and Vantiva have similar video and broadband CPE product lines that will largely stay intact as Vantiva looks to support and honor CommScope's existing awards and contracts. Vantiva will then develop a unified produce line and roadmaps.

Will Vantiva go dual-source for DOCSIS 4.0 silicon?

But the company will look to go with one unified lineup for new products going forward.

Vantiva's DOCSIS 4.0 CPE lineup and its silicon strategy for those products are still being determined – a situation that will be of great interest to MaxLinear.

Martinez-Amago said Vantiva has "several" operator wins for D4.0 modems that are powered by Broadcom silicon, and is already shipping them to one unnamed operator (likely Comcast, which has DOCSIS 4.0 deployments underway in a set of markets and is collaborating with Broadcom on chips for D4.0 modems, amplifiers and nodes).

Related:How Broadcom and MaxLinear will push the limits of DOCSIS 3.1

CommScope, meanwhile, is among a small group of "early adopters" for MaxLinear's new D4.0-capable Puma 8 chipset.

Martinez-Amago said Vantiva is evaluating whether to pursue a dual-source silicon strategy for its D4.0 product lineup.

"We're going to talk to customers and see what MaxLinear can provide. But we are very happy with Broadcom's performance in this space," he said. "We are going to analyze and see what is there for possible alternatives, but no decision has been made yet."

DOCSIS retail a 'corner case'

Vantiva is also evaluating whether to retain or discontinue CommScope's retail business for DOCSIS modems and gateways. However, the company doesn't view retail as a significant contributor.

"It's really a corner case. It's not a material business," Martinez-Amago said, noting that Vantiva will decide in the next month or two on what path to take.

If Vantiva opts to exit retail, it will remote yet another option. Minim, which sold DOCSIS devices under the Motorola brand at retail, is out of the cable modem business for all intents and purposes.

A Vantiva exit would leave Netgear as the primary DOCSIS retail player, though Hitron does sell a few models via Amazon. At last week's CES 2024 in Las Vegas, Netgear officials told Light Reading that the company will introduce new D4.0 products at retail.

But, like the general CPE business, the DOCSIS device market is in decline and may have trouble surviving for the long term.

Jeff Heynen, VP of broadband access and home networking at Dell'Oro Group, estimates that the total percentage of DOCSIS units sold via retail "is around 8% and declining, at this point." He said he won't be surprised if Vantiva casts aside CommScope's retail business.

Heynen also believes that retail sales of DOCSIS CPE "ultimately go away," noting that coming options, including upgraded DOCSIS 3.1 devices and new D4.0 products, stand to complicate the market. Meanwhile, operators are putting a greater focus on selling packages featuring Wi-Fi mesh devices, he said.