Cisco Pledges $5B Over Three Years to Finance 5G

Phil Harvey
2/26/2019
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BARCELONA -- MWC19 -- Service providers looking for a bigger push into 5G can now look and leap at the same time.

If carriers are looking for ways to invest in the network of the future and keep their current credit lines as is, telecom vendors say that vendor financing is still an option.

Here at Mobile World Congress, in a pile of incremental announcements about product upgrades, virtualization moves and cloud-native software competency, Cisco said it had earmarked some financing to help carriers transition to 5G.

Cisco said it would commit $5 billion in 5G funding over the next three years to help service providers who need access to additional funding.

The networking giant is providing the loans via its Cisco Capital arm. This is financing, not investing. There are no strings attached, except that Cisco must feel the deal is a good one.

Access to capital is always an issue for service providers, Cisco said through a spokeswoman, via emails to Light Reading. Most service providers are interested in alternative funding that will improve cash flows and not affect existing credit lines. "Cisco Capital provides flexible payment options to accelerate their network investments, realize the benefits and pay for technology and services over time," she wrote.


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Also, the industry is in a hurry to move 5G along, whereas service providers, depending on their situation, may feel the business case needs more thought.

The long tail of 4G technology is still going strong and many network operators are just beginning to fully monetize their network upgrades from years ago, said Daryl Schoolar, principal analyst at Ovum.

So it's no wonder that vendors are helping service providers ease into new network technology decisions. "One of the earliest use cases for 5G is enhanced mobile broadband and that's not a huge incentive for carriers that serve some of the less densely populated cities," Schoolar told Light Reading.

"It's safe to assume vendor financing helps smooth the way [to 5G]," said Heavy Reading analyst Roz Roseboro, in an email to Light Reading. "Having superior technology smooths it best."

Other vendors weren't impressed with Cisco putting a number and timeline on what is thought to be a common practice between vendors and their service provider customers.

"For certain customers, financing is important and that's never really been an obstacle for us," said Juniper Networks CEO Rami Rahim, in an interview with Light Reading on Tuesday. "We're always able to find some way of finding financing for a project.

"[Financing] is typically not the thing that determines whether you win or lose. I mean, I think you win or lose based on the capabilities of the technology and services, et cetera. Once a customer makes the technical decision and a business decision, finding the financing is typically not a challenge at all."

Phil Harvey, US Bureau Chief, Light Reading

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Pickles534
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Pickles534,
User Rank: Light Beer
3/1/2019 | 10:01:53 AM
Nice article
Very nice article Thank you for this
brooks7
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brooks7,
User Rank: Light Sabre
2/27/2019 | 9:48:54 AM
Re: 5 Billion Drop in the Bucket
Vendor Financing was so successful in the Optical/Internet/CLEC bubble.  Just ask Lucent and Nortel.

seven

 
Phil Harvey
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Phil Harvey,
User Rank: Light Sabre
2/27/2019 | 9:09:54 AM
Re: 5 Billion Drop in the Bucket
How much vendor financing do they do? The story wasn't about R&D spending but I don't doubt at all that Huawei outspends everyone else. 
CEO87052
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CEO87052,
User Rank: Light Beer
2/26/2019 | 1:41:03 PM
5 Billion Drop in the Bucket
Huawei spends about $12 billion annually for R&D of 5G.   Cisco'a five billion is a down payment.  Huawei has been investing heavily since 2009, when the U.S. let Nortel go bankrupt, Lucent merge with Alcatel and went bankrupt as well as let Ericsson and Nokia wither away financially. Bell labs gone, Bell Core gone.......Now Cisco commits $5 billion to catch up?