Adtran’s Stanton: We expect Tier 1 G.fast shipments to ramp up in 2017

Adtran
G.fast and vectored VDSL deployments will put Adtran on an upward swing in 2017, CEO Tom Stanton told investors.

Adtran's CEO said the company is in a good position to take advantage of U.S. Tier 1 telcos’ G.fast adoption.

While he would not reveal the specific carrier, Tom Stanton said during the fourth quarter earnings call that Adtran is moving forward with a G.fast field trial with a large carrier.

“We started a field trial for the out-of-region deployment of G.fast,” Stanton said. “We still fully expect to start shipments for that customer in the first half of this year.”

Stanton said that it is unclear how fast its carrier customer will ramp up service deployments.

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“We will start shipments, but exactly how quickly they ramp up is somewhat out of our control,” Stanton said. “More than likely what you typically see is as they start marketing the service, you start seeing it take hold and it hits an inflection point.”

U.S. service provider interest in G.fast has ramped over the past year with AT&T, CenturyLink and Windstream all conducting trials or targeted pilot deployments.

Vectored VDSL also continues to be a factor for Adtran. The vendor said it has shipped over 10 million vectored-capable VDSL ports.

Stanton said the rise in vectoring sales is effectively driven by two major carriers, "so there’s a large percentage of the carrier base that can now deliver 50-100 Mbps service.”

Adtran noted that its services and international businesses grew 55% and 46% respectively over the same period last year. Network Solutions sales were $127 million, while services sales were $36.2 million, up from $23.3 million in the same quarter a year ago.

“I would expect services revenues to pick up on a percentage basis, but the unknown there is the G.fast ramp-up, both in the U.S. and outside of the U.S.,” Stanton said. “A lot of the pickup in services is vectoring and CAF-II related so on a project-by-project basis one may be a higher than the other.”

Stanton added that “you’ll see both of those grow this year.”

The vendor attributed the quarterly gains to a number of factors: customers moving forward with their CAF-II plans, fiber-based broadband sales, service business growth and the rebound of its international business.

Likewise, global demand for broadband continued to grow as Adtran bolstered its market positions in the U.S and Europe.

From a regional perspective, United States continued to dominate with a total of $123.7 million, up from $112 million in the same period a year ago.

Likewise, international revenues were $38.3 million, an increase of over $26 million in fourth quarter 2015.

Adtran reported fourth quarter revenues of $162.9 million, up year-over-year from $139 million in the fourth quarter of 2015, surpassing Wall Street forecasts. Analysts surveyed by Zacks Financial expected Adtran to report $152 million in revenues.

Company net income was $7.5 million compared to $5.7 million for the same period a year ago. Earnings per share, assuming dilution, were 16 cents compared to 12 cents for the fourth quarter of 2015. Non-GAAP earnings per share were 21 cents compared to 16 cents for the fourth quarter of 2015.

Shares of Adtran were listed at $22.55, up 30 cents or 1.35% in Wednesday morning trading on the Nasdaq stock exchange.