CommScope asset sale a 'lifeline,' but it's not out of the woods – analystCommScope asset sale a 'lifeline,' but it's not out of the woods – analyst

CommScope's proposed sale of its Outdoor Wireless Networks (OWN) unit and distributed antenna systems (DAS) line to Amphenol for $2.1 billion will help CommScope trim its sizable debt load. But it doesn't solve all of the company's problems, an analyst suggests.

CommScope has $1.3 billion of long term debt due in June 2025, $360 million of cash on its balance sheet and an expected burn of $82 million of cash in 2024, Raymond James analyst Simon Leopold points out in a research note.

The sale of two CommScope "crown jewels" is a start, but isn't enough, he said.

'Mixed blessing'

"[T]he transaction provides a lifeline but also creates a long term overhang. CommScope is not out of the woods because it had $4.5B due in 2026," Leopold explained. "CommScope has few options to avoid a solvency crisis, so the asset sale comes as a mixed blessing ... The cash infusion enables CommScope to meet its debt obligations through 2025; however, it is divesting some of its most profitable businesses and will no longer have the cash generation from the OWN and DAS assets."

CommScope, which previously sold off its Home Networks unit to Vantiva, is in the midst of an evaluation of its overall business that includes possible divestitures and other actions aimed at trimming down its $9 billion debt load.

CommScope has previously explored possible sales for its Ruckus Wireless unit (currently part of its Networking, Intelligent Cellular and Security Solutions, or NICS, unit) and its Access Network Solutions (ANS) unit, which is focused on cable access technologies.

But it's not clear if those assets are still on the table. The company has not commented on whether it would look to sell additional assets in the wake of last week's transaction with Amphenol, but has previously stressed that it won't let anything go "on the cheap."

Meanwhile, CommScope has been looking to expand its ANS unit amid its development of a Full Duplex (FDX) amplifier for Comcast, a renewed focus on a virtual cable modem termination system (vCMTS) as operators weigh network upgrades, and its recent acquisition of Casa Systems' cable assets.

CommScope is expected to provide more color on its path forward when it discusses Q2 2024 results on August 8.