AT&T's (NYSE: T) interest in using G.fast as a way to extend broadband services where it can't build a business case to bring fiber directly to a home could spell opportunity for Adtran, one of the telco's key broadband infrastructure suppliers.
Cowen and Company said in a research note that carriers rolling out broadband to more rural areas thanks to the FCC's Connect America Fund (CAF-II) and G.fast will drive new revenue streams for the vendor.
"Our Market Perform rating is driven by ADTN's market position which we believe is turning a corner, driven by an increasing product mix of next generation DSL solutions; an improving gross margin outlook driven by U.S. CAF_II funded rollouts," Cowen and Company said, according to Benzinga. "In addition to CAF-II funded projects, we view AT&T's G.Fast project as driving incremental revenue growth opportunity."
Although AT&T has not provided many specific details about G.fast, the service provider has set an aggressive FTTH buildout path with plans to reach over 11 million homes per an agreement with the FCC that enabled AT&T to get its DirecTV acquisition approved earlier this year.
Adtran, says Cowen and Company, could be in line for "significant revenue opportunity" from its AT&T relationship. AT&T could leverage Adtran for its ongoing network buildouts.
Tom Stanton, CEO of Adtran, said during its fourth quarter earnings call that it "exited the year securing a major award by a Tier 1 carrier here in the U.S. for G.fast."
AT&T is just one telco that is interested in Adtran's G.fast gear. The vendor has been also engaged with trials with BT (NYSE: BT) and Deutsche Telekom.
In January, BT confirmed that it is testing Adtran's 500G fiber-to-the-distribution-point (FTTdp) platform as part of its G.fast trial taking place in over 2,000 premises in Huntingdon, Cambridgeshire, UK. The trial in Huntingdon also includes testing similar equipment from Nokia's (NYSE:NOK) subsidiary, Alcatel-Lucent, and Huawei.
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