Small cells

CommScope Adds Small Cells to DAS With Airvana Buy

DAS provider CommScope has agreed to acquire privately-held small cell vendor Airvana as it looks to build a complete connectivity platform for enterprises.

The acquisition will bring together Airvana Inc. 's 3G and 4G LTE small cell portfolio with CommScope Inc. 's distributed antenna systems (DAS) offering, creating a company that covers all the connectivity bases indoors. CommScope notes that it will now be able to address everything from single-operator, single-band, low-capacity environments to multi-carrier, multi-technology, multi-band, high-capacity environments.

Specifically, CommScope plans to integrate its ION-E platform with Airvana's OneCell cloud-RAN system for enterprise and public venue LTE deployments. The companies are a fairly natural fit as they're both focused on cloud-radio access network (C-RAN) architectures for indoor connectivity that can support multiple operators.

Airvana's OneCell uses standard Ethernet switches and cabling to create a large single cell via an LTE controller and distributed radio nodes. It eliminates interference between neighboring macro cells via Airvana's device management system. (See Airvana DMS Promises Small Cell Nirvana and Airvana Is Back With a 'Cloud RAN' 4G Biz Cell.)

While relying on DAS, CommScope's system is designed to route network traffic as IP packets and also works with multiple operators. The two are alternatives, but increasingly DAS systems like this are being considered in combination with small cells for deployments indoors or in stadiums. (See C-RAN Small Cell Notches a Stadium Win.)

Airvana, a competitor to the likes of SpiderCloud Wireless , has shipped 1.5 million 3G small cells since it was founded in 2000. Ericsson AB (Nasdaq: ERIC) bought the vendor's CDMA EV-DO macrocell business in 2013, leaving it to focus on LTE small cells. It began operator trials of OneCell a year ago and started enterprise trials in the third quarter of 2014. (See Ericsson Buys Airvana Biz, Kills Lawsuit.)

"At face value it's a good fit," says Heavy Reading analyst Gabriel Brown. "The Airvana system can be seen as an extension of CommScope's venue coverage business, and you can see why it would want to acquire this type of capability. From Airvana's perspective, it is interesting timing. Presumably, it sold because the customers considering awarding big contracts would prefer to do business with a larger company, given these deals have long-term implications for the venue in question."

Brown adds that to make an immediate judgment on the deal, we'd really need to know the price CommScope is paying. Terms of the deal were not disclosed, but CommScope says it intends to fund it with cash on hand.

[Update: Light Reading has learned, from a source, that the purchase price for Airvana was $50 million.]

Want to know more about DAS, WiFi and small cells? Peruse the mobile content section and relevant sub-categories here on Light Reading.

CommScope says that Airvana's employees, based in Chelmsford, Mass., and Bangalore, India, will join CommScope, along with Airvana CEO Richard Lowe and CTO Vedat Eyuboglu. Airvana will maintain its Chelmsford headquarters and will operate within CommScope's wireless segment when the acquisition is complete, expected in the next 60 days.

CommScope's acquisition of Airvana comes seven months after the DAS provider also acquired TE Connectivity's telecom, enterprise and wireless business lines for $3 billion. CommScope boasts 17% market share in the global DAS space. (See CommScope Agrees $3B Takeover of TE Network Assets.)

CommScope was trading up 1.99%, or .65 points, to $33.30, on the Nasdaq after the deal was announced.

— Sarah Thomas, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, Editorial Operations Director, Light Reading

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MordyK 9/10/2015 | 2:16:32 AM
Re: price paid Anti-competetive maybe, but I wouldn't say they're anti-innovation. If you understand how difficult it is to deploy a network and the innovation in every aspect of planning through deployment and servicing, you would appreciate how innovative they are. My observation is that they can't innovate as part of a larger ecosystem beyond their existing vendor base due to the business processes they've developed to deploy these innvative networks.

Its a byproduct of protecting the RAN infrastructure to which they've allocated and bet their entire companies, so they're more comfortable dealing with the vendors tht helped them get there. this reliance effectively screws the ecosystem, but I don't believe that anyone in the carrier's set out to achieve that result. The vendors on the other hand do have that incentive...
laser_focus 9/10/2015 | 1:43:27 AM
Re: price paid I think you're close -- in general the carriers are anti-innovation and anti-competitive, it is in their DNA.  But the small cell solutions are way too complex and expensive to deploy and manage (surprise, just like the macro), and while carriers would love to have a cheaper and simpler solution to the capacity and coverage problem than just building more macro, they don't have that yet, not by a long shot.  And since this stuff doesn't make them money but only prevents churn, it's hard to blame them.  So they string along the vendors, both those established and those newly out of stealth mode, hoping that someone will come up with something, because God knows they won't figure it out.

And likely someone will eventually figure something out, but it will be by bypassing the carriers entirely and producing something completely orthogonal to the telco mindset.
DanJones 9/9/2015 | 7:02:40 PM
Re: price paid I'm hearing the same number.
MordyK 9/9/2015 | 12:58:50 PM
Re: price paid I know what I'm about to write is a bit out there, but I think its important to note.

What we've seen with Small cells is that overall the investors and visionaries/entrepreneurs didn't really make any money on their exits, this despite the market developing as promised albeit later than planned.

Today we see Airvana seeling low, PicoChip sold for less than raised throughout its various rounds, Ubiquisys was an outlier but still didn't go for much of a premium. Flarion's acquisition by Qualcomm was the real outlier here, and the joke is that they sold out early, although it can be said that the value was in their OFDM tech.

My hypothesis is that the fault lies in the carrier's lack of comfort and general unwillingness to make commitments outside their vendor community. This in effect delays innovatiive new capabilities from being deployed in their network, thereby starving the young visionary companies from significant deployments and revenues which hurts their ability to maintain funding levels for their burn rate. As the carriers are finally ready to make commitments they will only go to their "established" vendors which effectively maintains the "freeze" on the newbies and keeping them down.

While this may work wonders for the established players in filling-in their product line, it's only real value lies in the short-term and is self-defeating, as it effectively puts up a big "Oo not invest" sign on the sector which is extremely limiting on the overall pipeline of product innovation for carrier networks.

This result is already plain to see in the percentage of funds going towards OTT vs. teh funds going into carrier oriented businesses. Go pitch an investor on a cool idea and see them smile, then tell them it's a carrier dependent product and watch their face drain of excitement.

This needs to change! 
mendyk 9/9/2015 | 10:34:24 AM
Re: price paid Airvana did sell off a chunk of its business to Ericsson a couple of years ago, so it's not as bad as all that. Still, $50 million seems small change for small cells, if that technology is all it's cracked up to be.
Sarah Thomas 9/9/2015 | 10:24:27 AM
Re: price paid Much lower, indeed. (This is from a reliable source, btw. I've asked CommScope, but haven't heard back, and don't expect them to confirm anyway.)
mendyk 9/9/2015 | 10:20:44 AM
Re: price paid So the exit price was an order of magnitude lower than the entry price?
Sarah Thomas 9/9/2015 | 10:17:37 AM
Re: price paid It was acquired for $530 million back in 2009 by private investors.
mendyk 9/9/2015 | 10:06:07 AM
Re: price paid Market caps for private companies are guesses. In cases like this, the purchase price is the real indicator of value. If CommScope paid $50 million for 100% of Airvana, then that's what it was worth.
Sarah Thomas 9/9/2015 | 9:47:27 AM
price paid Light Reading has learned that the purchase price for Airvana was only $50 million. Wow, that's not a lot for a company with a market cap of $500 million. (The story has been updated with this info.)
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