Adtran is seeing more of its Tier 1 and Tier 2 customers trialing and deploying G.fast to maximize their copper networks to deliver gigabit speeds where they can’t make a case for FTTH.
Tom Stanton, CEO of Adtran, told investors during the vendor’s third quarter call that more of its Tier 1 telco customers in the United States and international countries are making progress, but cautioned that there's a long runway ahead.
“At this point we’re are well ahead of about 90 different trials with G.fast,” Stanton said during the third quarter earnings call. “It’s just very early in the cycle.”
Israel’s incumbent telco Bezeq named Adtran as its prime G.fast project vendor, for example. Bezeq is leveraging ADTRAN’s G.fast solutions in a variety of locations and deployment scenarios including FTTB, FTTCabinet and both aerial and FTTdp (fiber to the distribution point).
In the United States, Adtran is seeing a number of its customers still open to working with various vendors and one customer is entering a larger field trial. However, Adtran would not reveal who that customer is.
“This customer is still in trial phase and is out there with some live customers and there’s some kind of soak period before they open up the flood gates and start deploying it en masse,” Stanton said. “The reality is that’s a customer that’s difficult to forecast and we’re very happy we got through this piece, but I can’t tell you exactly what the size will be at this point.”
While G.fast deployments are still in flux, Adtran said that an uptick in international and service sales were key contributors to year-over-year revenue growth in the quarter.
Adtran’s international business grew 42 percent over the previous quarter and 7 percent year-over-year due to “stronger broadband access sales in Europe.”
Likewise, services sales rose 35 percent over the previous quarter and grew 63 percent year-over-year as it pursues more service provider customers that are in the midst of their CAF-II builds as well as and vectoring solutions and services.
“Growth is driven by projects and CAF-II is a big driver,” Stanton said. “We expect CAF-II to continue on into next year."
Stanton added that “we have fairly large vectoring deployments going on in the United States and based on what we’re hearing we’d expect that to be materially larger next year so I expect a large services number in Q4 and next year.”
The CAF-II program has provided Adtran with an opportunity to further hone its services skills. Besides being a supplier of network to multiple Tier 2 and Tier 3 telcos that serve rural areas, Adtran had plenty of experience in serving telcos meeting government mandates via the Broadband Stimulus program.
Adtran told FierceTelecom in a previous interview that it has been able to help CAF-II recipients reduce network deployment times in rural markets by 50 percent. In addition to assisting CAF-II providers with network planning, Adtran can address a mix of outside plant (OSP) and inside plant (ISP) issues.
From an overall financial perspective, Adtran reported $168.8 million in revenues, up 7 percent year-over-year from $158 million in the same period a year ago.
Within the revenue mix, Adtran reported that network solutions revenue declined year-over-year to $136.2 million, while services and support were $32.6, up from $19 million in third quarter 2015.
Total third quarter net income was $12.4 million, up from $7.1 million in the third quarter of 2015. Earnings per share, assuming dilution, were $0.26 compared to $0.14 for the third quarter of 2015. Non-GAAP earnings per share were $0.26 compared to $0.19 for the third quarter of 2015.