• Bankrupt Casa Systems auctioned its cable broadband technology unit
• Vecima Networks had reached a pre-auction purchase agreement
• But CommScope swooped in with a winning bid of just over $45m
• However, the acquisition comes at a tricky time for the cable broadband sector

CommScope has emerged as the winning bidder in the auction of Casa Systems’ cable broadband technology assets with an offer of $45.1m, beating Vecima Networks, which had reached a pre-auction agreement to acquire the assets as part of a “stalking horse” divestment process. 

Casa announced in early April that it had entered into a court-supervised Chapter 11 (bankruptcy protection) process to manage the sale of its key product lines and initially reached an agreement to sell its cable network technology business to fixed access network technology specialist Vecima Networks. 

Vecima, though, didn’t manage to prevail, as it was ultimately outbid by CommScope. The acquisition is expected to be completed by 6 June, following a sale hearing at the Bankruptcy Court for the District of Delaware that is scheduled for 4 June. 

Vecima noted in this announcement that it has been designated as the “back-up bidder” with its offer of $44.95m. It noted that the auction was a “competitive day-long process that consisted of multiple rounds of bidding by Vecima and several other interested parties,” with CommScope and, according to Light Reading, Harmonic being the other bidders. 

“Irrespective of the outcome of the auction, Vecima remains firmly positioned to drive the industry forward to the multi-gigabit networks of the future across both fibre and cable access,” stated Vecima president and CEO Sumit Kumar. “Vecima is entering a new era of growth, and we are excited by the market and technology opportunities ahead,” he added. Vecima recently reported a 2% year-on-year increase in revenues for the first three months of this year to $80.1m. 

CommScope, which generates annual sales of more than $4bn and which noted in its recent quarterly earnings report that it had seen early signs of a recovery in cable operator broadband spending, is clearly happy with the auction outcome as it is gaining a fibre and cable broadband access equipment business that counts the likes of Liberty Global, Rogers Communications and Vodafone among its customers.  

“The strategic accretive acquisition strengthens CommScope’s access network solutions leading market position, including enhancing its virtual CMTS [cable modem termination system] and PON [passive optical network] product offerings. The economics of the deal are supported by significant synergies. As a leader in the cable industry, we are quite pleased by the opportunity to acquire Casa’s cloud-native network solutions,” stated CommScope CEO Chuck Treadway. “Adding Casa’s technology to our portfolio will allow us to provide a seamless transition for our combined customer base that utilise both integrated and virtual CMTS products. This transaction provides stability to Casa’s customers while allowing CommScope to further grow our customer base as we enable customers to migrate to distributed access architecture solutions on their own timeline,” added the CEO. 

So CommScope looks set to strengthen its cable broadband product portfolio, but the move comes at a time when network operator spending is shrinking (a trend that helped push Casa into bankruptcy in the first place).

Research house Dell’Oro has just published its latest review of the broadband equipment market and it’s not pretty.

According to the Dell’Oro team, global broadband access equipment sales dipped by 12% year on year in the first quarter of this year to $4.1bn as “North American broadband providers reduced their spending by 25% year on year as continued subscriber churn, excess inventory and stubbornly high labour costs continue to put a damper on new equipment purchases.”

Jeff Heynen, VP and analyst at Dell’Oro, noted: “The North American broadband market is in the midst of a fundamental shift in the competitive landscape, which is having a significant impact on broadband equipment purchases. In particular, cable operators are trying to navigate mounting, but predictable, broadband subscriber losses with the need to invest in their networks to keep pace with further encroachment by fibre and fixed wireless providers,” added Heynen.

CommScope will look smart if the market bounces back and it is able to win additional business as a result of its Casa asset purchase.

Broadband access wasn’t Casa’s only line of business, though. As part of its bankruptcy process it also agreed to sell its 5G mobile core and radio access network (RAN) assets to Lumine Group, which ultimately had to pay just over $32m, more than double its original offer, as it fended off rival bids from Skyvera. 

In addition, optical and broadband access equipment vendor DZS picked up Casa subsidiary NetComm Wireless, the broadband and internet of things (IoT) equipment vendor that entered into a voluntary administration process as part of Casa’s bankruptcy process, for just $7m.

- Ray Le Maistre, Editorial Director, TelecomTV