O-RAN Pioneer Mavenir Files for IPO

Article By : John Walko

Mavenir has filed for an IPO and applied for listing on the NASDAQ board, an indication that open RAN technology is maturing...

One of the early pioneers in the Open RAN bandwagon, Mavenir, has filed for an IPO and listing on the NASDAQ.

The move by the Richardson, TX-based company follows the announcement of record revenues and improved margins.

The SEC Form suggests a $100 million placeholder for the company, which just a few weeks ago acquired small cell specialist  ip.access (Cambridge, UK) for an undisclosed sum.

That move adds important support for 2G and 3G capabilities to Mavenir’s already impressive portfolio of software-centric, disaggregated radio access networking (RAN) technology.

The company also offers software and (some) hardware solutions to companies offering edge-computing and packet/voice messaging services.

The 15-year old company has had an eventful corporate existence, having gone public on the New York Exchange back in 2013. Two years later it was acquired by the Mitel group and renamed Mitel Mobile, and then was relaunched as a stand-alone private company in 2017, when it saw the opportunity in the virtualization sector and acquired the vEPC unit of Brocade.

Mavenir booked revenues of $427.2 million for its fiscal year ending January 2020, up 8.7% on its fiscal 2019, and up 8.7% year-on-year, while it halved annual operating losses to about $10 million.

And ahead of the IPO filing late last week, it revealed revenues had risen to $234.9 million for the first six months of its current fiscal year (ending July), up 17% on the same period a year, and a much improved operating profits of $17.3 million for the same period, compared with losses of $36.6 million in the corresponding period last time.

Some weeks ago, we opined that the increasingly relevant Open RAN sector was ripe for mergers and acquisitions and IPOs.

For instance, Japanese group Rakuten (which unlike most competitors in the sector is both building its own open RAN networks and is a developer of the technology) recently bought out Tech Mahindra’s 17.5% stake in Altiostar, which focuses on radio software. The Indian conglomerate and systems integrator acquired its stake two years ago. Other companies with a stake in Altiostar include Cisco and Qualcomm.

With the ip.access acquisition adding to its 4G/5G Open RAN capabilities, Mavenir added some 500 extra customers, and can now boast a multi-generation offering, much as its main rivals such as Parallel Wireless and Altiostar. It has also widely extended the company’s geographic reach.

One bit of information that might inspire caution among those looking at the Mavenir IPO is that it was heavily reliant during fiscal 2019 on just a handful of customers in its core business. For instance, T-Mobile US accounts for nearly a third of revenues, while Japanese operator Rakuten accounted for 17% of sales, a situation that can be precarious for any firm.

Its top ten customers were responsible for 71% of revenues during the first six months of fiscal 2020, yet Mavenir claims to supply gear to over 250 mobile operators — including 17 of the top 20 globally. Importantly, it counts among its new customers Dish Networks, which is planning a major push in the US 5G networking business.

Also on the plus side, Mavenir notes that it had just received glowing endorsements from Vodafone for its open-RAN-enabled radio interface systems. The operator’s large UK division switched on open RAN 4G networks in several areas of the UK (mostly in rural areas).

Vodafone said a recent RFI indicated that Mavenir’s radio unit hardware for Open RAN is one of the best on the market, alongside China’s NTS.

Mavenir IPO

And the prospects for the IPO will certainly not be harmed by updated and eye-catching predictions last week from ABI Research that suggests the market for open-RAN-enabled radio units will be worth $47 billion by 2026. The market research group even posits that by 2027-2028, investments by network operators in open RAN solutions will overtake that of traditional RAN gear.

ABI maintains that capex on open RAN radio units for public outdoor networks — including that for macro and small cell deployments — will hit $40.7 billion by 2026, with the anticipated spend on indoor enterprise units for the same year being worth $6.7 billion.

According to Jiancao Hou, senior analysts at ABI, the group “expects greenfield installations, as well as private enterprise networks and public consumer networks, in rural/uncovered areas to drive the deployment of Open RAN throughout the entire forecast period.”

The analyst also anticipates that the existing major cellular infrastructure suppliers such as Nokia, Ericsson and Samsung will soon begin challenging the likes of Mavenir, and notes that incumbents such as Fujitsu and NEC are also showing increased interest in the open RAN sector. Meanwhile Huawei remains completely antagonistic towards the technology.

It should be noted that other market research groups are less bullish about the open RAN opportunity. For example Dell’Oro recently suggested equipment sales to be more in the $5 billion range in the next five years.

To date the largest greenfield site investments, both for 5G services, are those from disruptive Japanese operator Rakuten Mobile and the roll-out of Dish Networks’ offerings in the US.  Mavenir is a supplier to both.

And with the IPO, investors, large and small, can start riding the open RAN wave.

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