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open RAN

Open RAN groupie Airspan shows progress ahead of IPO

Airspan Networks – one of a handful of US-based companies hoping to cash in on the open RAN trend – announced quarterly results showing huge growth in revenues and profits.

Perhaps more importantly, the company also announced a "master purchase agreement" with a "large domestic operator" that it did not name.

Nonetheless, it's that kind of market momentum that potential investors will be keen to see in the months leading up to the close of its previously announced transaction with New Beginnings Acquisition (NBA), a special-purpose acquisition company (SPAC). That transaction – expected to close in the third quarter – promises to give Airspan a $166 million financial boost and return it to the status of a publicly traded company.

In its first quarter, Airspan reported a 67% year-over-year increase in its revenues to $45.9 million and a 42% year-over-year increase in its gross profit to $20.9 million. The company's net loss also rose to $13.5 million during the period.

"Our strong first quarter results reflect the adoption of Airspan's innovative 5G software, product and open RAN technology by customers across the globe. The validation we are receiving from our customers and partners supports our belief that Airspan is a differentiated, disruptive force in the industry," said Airspan CEO Eric Stonestrom in a statement.

Stonestrom also hailed the US Senate's recent approval of the $250 billion United States Innovation and Competition Act (USICA) – the legislation now heads to the US House.

There's certainly reason for Stonestrom to be excited about the progress of the USICA. As Open RAN Policy Coalition Executive Director Diane Rinaldo recently pointed out, the legislation "recognizes the importance of open RAN in establishing supply chain resiliency and supporting innovation."

More specifically, the legislation allocates up to $1.5 billion for open RAN research and development, as well as $500 million for semiconductor work related to open RAN. Airspan is one of a number of US companies – including JMA Wireless, Mavenir, Parallel Wireless and Altiostar – hoping to cash in on that spending.

Open to the open RAN opportunity

More broadly, Airspan is hoping a confluence of factors around open RAN will give it a bigger slice of the global wireless opportunity. First, a number of wireless network operators around the globe – both new and established – are hoping to leverage open RAN technologies to add new suppliers into their networks and to lower prices. Separately, lawmakers including those in the US are hoping open RAN can foster domestic 5G suppliers and create a bulwark against the threat of Chinese espionage they believe is embodied in vendors like Huawei and ZTE.

Some financial analysts believe Airspan is well positioned.

"In a world where network providers ZTE and Huawei have been placed on restricted lists, the want to do business with US-based companies has never been stronger and Airspan is the only maker of complete hardware and software systems," argued the analysts at D.A. Davidson & Co. in a recent note to investors. They issued a "buy" rating on NBA's shares in anticipation of the close of its transaction with Airspan.

Although the analysts warned that Airspan continues to rely on business from a handful of major mobile network operators – fully 78% of the company's revenues come from just three customers, including top customer Rakuten – they nonetheless see opportunity.

"Our bullish thesis on Airspan includes: strong end markets, industry adoption of open architecture that mirrors the company's business model, the only US-based maker of key network products, projected EBITDA [earnings before interest, taxes, depreciation, and amortization] profitability this year with continued strong 5G based growth ahead, ramping margins, and plenty of model leverage," they wrote.

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Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano

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