Dragonwave (TSX: DWI; NASDAQ: DRWI), a microwave access player that gained prominence in recent years as a supplier to Clearwire, has struck a deal to acquire Axerra Networks for $9.5 million without debt.
If Axerra meets set revenue growth targets over the next 16 months, the value of the deal could reach up to $15.5 million.
Well known as a microwave backhaul provider to Clearwire and Canada's Videotron, Dragonwave will not only get a product portfolio that includes pseudowire technology that allows wireless operators to carry existing 2G TDM-based traffic over packets on both fiber and microwave. While fiber-based backhaul is clearly the preferred method, the reality is that microwave is and will continue to be a viable alternative where service providers can't initially make a business case to push fiber into a cell site.
But the acquisition's value is not just about new technology alone. By purchasing Axerra, Dragonwave will gain an unnamed cable MSO customer that's leveraging the Axerra platform to sell wholesale wireless backhaul services to wireless operators.
Peter Allen, President and CEO of DragonWave, said in a statement that the purchase of Axerra "will also strengthen our customer diversification as it brings a significant position with a Tier 1 US MSO."
Although neither Axerra nor Dragonwave revealed who the tier one cable MSO customer is having this in toe could calm investors who fear the vendor would be without another major customer when Clearwire, which as of July made up 85 percent of its revenue, completes the first phase of its WiMAX deployment.
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Investors jittery over DragonWave's customer prospects
Convergence or consolidation, DragonWave acquires Axerra