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UTStarcom Sells IPTV to China

UTStarcom Inc. (Nasdaq: UTSI) announced another customer for its mVision end-to-end IPTV network and it's a biggie: China Telecom, China's largest fixed-line operator.

The carrier is launching a new IPTV service powered by UTStarcom's gear by the end of this year. The first iteration of the launch will reach up to 5,000 subscribers in Shanghai and the services offered will include video-on-demand, network-based personal video recording capability, as well as live broadcast TV.

UTStarcom says it has 40 carrier trials going on worldwide involving its mVision equipment. Its only other announced customer in Asia is the largest broadband network operator in Japan, Softbank BB Corp. The company also says it has one trial with a cable MSO in India and one trial in North America with an Alabama-based CLEC called SmartTel Communications. (See UTStarcom Trials in Brazil, UTStarcom Wins (Again) at Softbank BB, and UTStarcom Wins IP TV Deal.)

As vendor gear contracts go, this isn't a whopper. But it is a huge, symbolic win for UTStarcom, which is competing with the likes of Alcatel (NYSE: ALA; Paris: CGEP:PA) and Siemens AG (NYSE: SI; Frankfurt: SIE) worldwide to provide the infrastructure for next-generation carrier access networks. (See UTStarcom, Myrio Have Their IPTV .)

The company's stock responded in kind this afternoon as it closed up $1.53 (23%) to $8.10 following news of the China Telecom IPTV deal. The stock's highest point in the last 52-weeks, however, was at $23.05.

In a statement, UTStarcom China's CEO, Ying Wu, reiterated that this deal was one of opportunity, not assured victory, perhaps a nod toward last quarter's IPTV-inflicted shortfall. (See UTStarcom Stung by Softbank.) He says the company doesn't expect the revenue associated with this win to be "meaningful in the near term," but he said it does represent "a significant opportunity over the next several years."

UTStarcom, as it wins more IPTV deals, may outsource some of the lower-margin, higher-volume piece parts of its solution. "We could start licensing the set-top box business in the future," says Chesha Kamieniecki, UTStarcom's director of investor relations.

But that doesn't change its overall vision: It can only succeed in the IPTV sector by owning or by having significant influence over all the elements involved, from video encoders and headends all the way to the DSLAMs and set-top boxes. (See Access, Video Are 'All In' at USTA.)

— Phil Harvey, News Editor, Light Reading

materialgirl 12/5/2012 | 2:54:03 AM
re: UTStarcom Sells IPTV to China Does anyone buy this? UTSI cannot even sell DSLAMs to anyone other than Softbank (not exactly an arm's length arrangement). With the (or should I say yet another) $40M Q3 push-back of Japanese DSLAM revenues, these things seem suspect even to their friends.

Every quarter or so, they pull out 100s of millions of Chinese peasants about to buy their PAS handsets, only to put them back in the closet when they miss numbers again.

And now, with stalled PAS sales and falling DSLAM revenues, they are supposed to be a player in IP-TV? Dream on. They need to walk before they run. Right now they do nothing right.

With Chinese manufacturing, they are going to outsource "low margin" gear? What exactly is their value-add?
issey 12/5/2012 | 2:53:48 AM
re: UTStarcom Sells IPTV to China They do have a big IPTV deployment.. in Softbank Yahoo BB. The system is supposed to be working better than the Alcatel that SBB had before..
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