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Test & Measurement

Spirent Buys Wireless Test Firm

Spirent Communications plc is to pay up to 90.5 million Swiss francs ($72 million) in cash for SwissQual Holding AG , a profitable test technology specialist in the wireless performance management systems market. (See Spirent to Buy SwissQual.)

SwissQual supplies systems that help service providers monitor their wireless networks, benchmark service quality on theirs and others' wireless networks, and evaluate the performance of wireless and fixed network equipment in labs and research and development facilities. Among its products are probes that reside on handsets to assess the quality of services being received by end devices.

The acquisition, says Spirent, gives it a new team of 80 staff, an expanded presence in Europe, and a position in the increasingly important "video intensive handset applications testing market."

It also pitches Spirent squarely against one of its major test system rivals Agilent Technologies Inc. (NYSE: A), which today launched its new Wireless QoS Manager product. (See Agilent Unveils WQM.)

SwissQual's service provider customers include Vodafone Group plc (NYSE: VOD), Telecom Italia Mobile SpA (Milan: TIM), and Orange (NYSE: FTE).

Its vendor customers include Alcatel (NYSE: ALA; Paris: CGEP:PA), Lucent Technologies Inc. (NYSE: LU), Motorola Inc. (NYSE: MOT), Nokia Corp. (NYSE: NOK), and Siemens Communications Group .

The acquisition is part of the vendor's strategy to focus on its telecom test and measurement business, Spirent Communications . Last month Spirent anounced it is selling one of its non-core businesses so as to concentrate on the telecom sector. (See Testing's Tasty Tidbits.)

Spirent is paying CHF62.5 million ($49.7 million) up front, and up to CHF28 million ($22.3 million) more if certain financial and technical targets are reached. The acquisition is expected to boost earnings in the current financial year (ending December 31 2006). SwissQual reported revenues of CHF32.1 million ($25.5 million) in 2005, up 38 percent over 2004.

In a research note issued Monday, analysts at JPMorgan Cazenove said Spirent had paid a reasonable price for a fast-growing company, particularly one that is expected to enhance earnings by about 3 percent.

And Frost & Sullivan 's communications test and measurement program manager Jessy Cavazos noted that wireless testing is "definitely a growing market for test equipment manufacturers."

Cavazos says the market enjoys double-digit growth rates and it constantly challenges test vendors to keep up with the emergence of new standards and their various implementations. "Of course, this also means that this market offers numerous opportunities for the test and measurement industry," she says.

Another test firm believed to be considering a purchase in the wireless test sector is JDSU (Nasdaq: JDSU; Toronto: JDU). Last year JDSU acquired test firm Acterna, which is strong in fixed line testing but not in wireless. (See JDSU Buys Into Testy Market.)

Spirent's move is the latest in a series of acquisitions in the telecom test and measurement sector in the past year. (See Anritsu Branches Out With NetTest, EXFO Buys, Ixia Plummets, Ixia Buys CMC, and NetHawk Completes IPNetfusion Buy.)

Spirent's share price ended Monday down just one penny at $3.55.

— Ray Le Maistre, International News Editor, Light Reading

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