Adtran says European service provider consolidation will benefit its international expansion
Adtran is finding that the European telecom market's recent spate of mergers and acquisitions could have a beneficial effect on its pursuit of new international revenues, said an executive during its Connect event at its headquarters in Huntsville, Ala.
Eduard Scheiterer, senior vice president and managing director, International Markets for Adtran, called out the merger and acquisition moves being made by Deutsche Telekom and Vodafone as potential targets to enhance its presence in the European region.
"Despite the regional differences, there's one common trend in most areas of Europe, which is consolidation," Scheiterer said. "Deutsche Telekom is enlarging their footprint, while Vodafone and Telefonica are following the same strategy."
Deutsche Telekom, according to reports that emerged in late-January, has made a bid to acquire the remaining piece it does not own in Greece's OTE phone company that's currently held by the Greek government. Its proposed move is to diversify its holdings by offering a mix of traditional wireline, wireless and Internet services.
One of the challenges with Deutsche Telekom is how it manages the network activities of its various European subsidiaries.
"Deutsche Telekom has various difficulties," Scheiterer said. "On one hand you don't want to steer these companies directly because you want to measure them on profitability. On the other hand it's clear that you want to come with one single network strategy because otherwise you don't gain anything."
Besides its M&A activity, Adtran and other industry watchers are keeping a close eye on the German incumbent telco's TeraStream initiative, which is based on a cloud-enabled IP-based architecture.
No less aggressive is Vodafone, which joined with its Greek business partner Wind to make a bid for Forthnet, one of Greece's largest paid TV providers in terms of subscribers.
If Vodafone is successful in acquiring Forthnet, Adtran sees it as a potential entry to gain influence inside the larger parent.
"We can assume that Forthnet will become part of Vodafone," Scheiterer said. "Being the sole supplier for Forthnet, I consider this as a big opportunity looking at consolidation hoping that I get a bigger share of the Vodafone group."
Thus far, Adtran's move to establish a greater presence in the international telecom market is paying off.
A key piece of the company's international strategy was its purchase of Nokia Siemens Networks' broadband access division in late 2011.
Before purchasing NSN's assets, Adtran was not a well-known player in the international arena. Since making that purchase, it has continued to ramp up its international game. While the United States is still the dominant geographic region with $97 million in revenues, Adtran's second-quarter 2014 international segment revenues were $79 million, up from $54.3 million in the first quarter.
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