broadband connectivity

Two key vendors to fiber network operators – Adtran and Adva – announced plans to merge today. The merger, expected to be completed by the second or third quarter of 2022, would combine specialists in broadband access and transport/ cloud connectivity to create an end-to-end fiber broadband networking solutions provider.

The deal calls for the creation of a new entity to be known as Adtran Holdings, with current Adtran shareholders owning about 54% of the new company and Adva shareholders owning the remainder. Adtran CEO Tom Stanton will be the CEO of the new company.

Adva is headquartered in Germany and the deal will require the approval of the German Federal Financial Supervisory Authority (Bundesanstalt fuer Finanzdienstleistungsaufsicht/ BaFin), among others. The deal has an equity value of €789 million ($931 million USD), and an enterprise value of €759 million ($895 million USD) for an implied multiple of 1.3x LTM Revenue.

Advertisement

Adtran Adva Deal

“The merger combines Adtran’s global leadership in fiber access, fiber extension and subscriber connectivity solutions with Adva’s global leadership in metro wavelength division multiplexing, data center interconnect, business Ethernet and network synchronization solutions,” a press release about the Adtran Adva deal explains.

The news comes at a time when fiber networks are seeing historic investment levels. The COVID-19 pandemic brought to light the importance of universal broadband and the current lack of broadband in some rural areas, where deployment costs are high. This, in turn, drove state and federal legislators to make unprecedented funding available to cover some of the costs of bringing broadband to those areas.

At the same time, data consumption in metro areas has jumped as a result of the pandemic, driving network operators to invest to increase broadband speeds in those areas. And as mobile operators deploy 5G, they are looking for denser cellular coverage, fueling demand for fiber back haul.

“We are in the early stages of an unprecedented investment cycle in fiber connectivity, especially in the U.S. and Europe, fueled by the demand for last-mile fiber access and middle-mile transport to provide high-speed connectivity to homes, businesses and future 5G infrastructure,” said Stanton in the press release about the Adtran Adva deal.

“By joining forces our combined firm’s portfolio will better position us to capitalize on this highly compelling global opportunity. We expect the transaction will create significant long-term value for both companies’ stakeholders by increasing our scale and improving our ability to serve as a trusted supplier for customers worldwide.”

Adtran has grown considerably through acquisitions over the last 10 years.

In 2011, the company bought Nokia Siemens Networks’ broadband access business, with the goal of expanding its global reach.

In 2018, the company bought Sumitomo North America to expand its cable operator business.

Join the Conversation

Leave a Reply

Your email address will not be published. Required fields are marked *

Don’t Miss Any of Our Content

What’s happening with broadband and why is it important? Find out by subscribing to Telecompetitor’s newsletter today.

You have Successfully Subscribed!