DZS CEO predicts $1B market opportunity post acquisition

DZS CEO Charlie Vogt outlined some big picture opportunities ahead for his company in fiber access, open RAN and broadband stimulus funding Thursday at the company's annual investor day. But he also put a target on the market opportunity DZS sees from its proposed acquisition of assets from data and analytics specialist Assia.

Citing an internal analysis of data, Vogt said DZS envisions a $1 billion total addressable market opportunity when factoring in the 150 million connected homes between DZS and Assia coupled with the prospects to expand further into the market for licensing software to enterprise customers with its cloud-based DZS Xtreme platform.

That expectation follows DZS's recent play for Assia assets, including CloudCheck (its Wi-Fi experience management platform) and Expresse (data analysis and service assurance software for the access network). DZS expects to close the deal later this month.

Vogt views it as a "transformational acquisition" for DZS, which intends to integrate and cross-sell Assia's products and services. "With the Assia assets, we really complete a gap that we had," he said.

Vogt estimates that DZS currently counts 20 of the world's top 50 service providers as customers, with that number rising to 30 of the top 50 when Assia is added to the fold. Examples of service providers on Assia's roster include Bouygues Telecom, Deutsche Telekom, Liberty Latin America, Lumen, TalkTalk Group, Telefónica and Telus.

That deal is coming together after DZS pulled in record revenues in 2021, and a 62% increase in orders. Its 2022 guidance calls for revenues in the range of $380 million to $410 million, with EBIDTA in the range of $17 million to $31 million. DZS plans to revise guidance after it closes the Assia deal.

The Assia deal is also not yet included in longer range guidance that anticipates annual revenue growth of at least 10%.

Figure 1: Charlie Vogt, who took the helm of Dasan Zhone (since rebranded as DZS) in August 2020, sees growth opportunities on several fronts, including open RAN, PON buildouts and broadband-focused government stimulus programs.
(Source: DZS)

Other opportunities

DZS's presentation also touched on other areas of growth the company is pursuing, including upgrades and buildouts of fiber access networks, government-backed broadband stimulus programs and the use of open RAN standards to elbow into the historically closed-off mobile market.

With respect to PON upgrades, Vogt pointed to the opportunity in Europe to replace Chinese suppliers that are facing scrutiny over security concerns in the region. "There's more RFP activity we're chasing today [in Europe] than in any region in the world," he said.

Vogt also estimates there's $125 billion in broadband-focused, government stimulus money floating about worldwide.

"We've been going through upgrade cycles for years, but we've never had this much government stimulus behind us in this sector," he said. "I think it speaks volumes of just where governments around the world see the need for Internet and high speed broadband in their markets."

Open RAN, meanwhile, is a "game changer for companies like us," Vogt said, citing data from Omdia that well north of 50% of service providers are expected to deploy the standard in some form or fashion.

Open RAN champion Rakuten is using DZS's front haul gateway, but the vendor has already salted away other, similar deals with customers yet to be announced, Vogt said.

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— Jeff Baumgartner, Senior Editor, Light Reading

[Ed. note: This story was updated to clarify that the Assia acquisition would lead to a $1 billion potential addressable market for DZS.]