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Vecima scooped up Nokia's cable access assets for just $4.87M

Vecima didn't have to dig too deeply into its pocketbook to acquire Nokia's cable access network technologies and assets.

According to Vecima's fiscal Q1 2021 financial statements (PDF), the Victoria, Canada-based supplier nabbed those Nokia assets, which include products for new distributed, remote MAC PHY architectures and DOCSIS Provisioning of EPON (DPoE) tech, for C$6.4 million ($4.87 million).

The purchase price included inventory, property, plant and equipment, intangible assets and goodwill. There are no additional earn-outs associated with the deal, Vecima President and CEO Sumit Kumar confirmed Thursday on the company's fiscal Q1 call. Vecima ended the period with a cash balance of C$27.3 million ($20.77 million).

Nokia first acquired those assets when it bought a startup called Gainspeed in 2016, but did not disclose the purchase price.

It appears that Vecima got a screaming deal. Kumar noted on Thursday's earnings call that the acquired portfolio of Nokia cable access network assets is expected to produce an incremental 10% to 15% of revenues for Vecima's fiscal 2021.

Vecima's filing also sheds more light on the financial performance of the Nokia cable assets. For the quarter ended September 30, 2020, they produced sales of C$1.09 million ($829,588), a net loss of C$787,000 ($598,962), along with assets of C$4.42 million ($3.36 million) and liabilities of C$2.5 million ($1.9 million)

The purchase price was not revealed when the deal was closed in August. But Nokia was clear at the time it thought Vecima had the right focus, resources and complementary product portfolio to take those cable access assets forward.

Kumar echoed as much this week. "A market like DAA and the fiber-to-the-home EPON requires, in our industry, especially the cable customers … a focus of a vendor of the scale and size and capability of Vecima," he said. "We believe ... that the home of the asset and the opportunity to realize the vison of the assets was suitable for a company like Vecima. That was certainly sponsored by some of the most important customers in the industry."

Signs of DAA momentum

The acquired Nokia assets partially contributed to Vecima's fiscal Q1, which produced revenues of C$27.8 ($21.15 million), up from $20.1 million ($15.29 million) in the year-ago period. That revenue result, driven by an 81% year-on-year increase in Vecima's video and broadband solutions business, was the company's best in over four years. "We're off to an excellent start," Kumar said.

Sales of Vecima's Entra-branded DAA lineup were up 16x, to $5.2 million ($3.95 million) as production deployments of the vendor's remote PHY nodes started to build in the period.

Kumar estimated that Vecima now has "hundreds" of Entra remote PHY nodes live in the field. The vendor has Entra-related activity underway with 46 operators, including "significantly higher than six" in the Tier 1 category, he said.

The new Nokia assets give Vecima a remote MAC PHY option that will enable operators to distribute both the physical layer of the converged cable access platform to the node along with the MAC processing. It also gives Vecima, which competes with the likes of CommScope, Casa Systems, Harmonic and Cisco, product options that fit into the new CableLabs-specified Flexible MAC Architecture.

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— Jeff Baumgartner, Senior Editor, Light Reading

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