Vecima Networks will partner with MARA Technologies USA to bring manufacturing for some of its Entra Fiber Access products to the U.S. as part of the Buy America initiative. MARA (a subsidiary of Invotek) will manufacture Vecima’s SF-4X Optical Line Terminals (OLTs) in its Holly, Michigan facility.
Vecima is another vendor preparing for the Broadband Equity, Access and Deployment (BEAD) program’s Buy America rules, last year announcing its plans to onshore some manufacturing operations into the U.S.
Certain Vecima OLTs being manufactured domestically helps ensure BABA compliance required by the National Telecommunications Information Administration (NTIA), which oversees the BEAD program. Now, participating fiber broadband service providers will be able to source BABA-compliant fiber access products from the company.
At an event this month, U.S. Secretary of Commerce Gina Raimondo said that the BABA requirements are “being taken seriously” by the NTIA. Even though BEAD has been branded primarily as in infrastructure program, Raimondo noted it’s a “jobs program,” too.
Through the Vecima partnership, MARA Technologies expects to add approximately 100 new U.S.-based workers in Michigan. In a prepared statement, Representative Mike Mueller of Michigan’s 72nd District lauded the growth created by the partnership, adding, “In Holly and across Michigan, we’re creating jobs that are making our communities and families stronger.”
Vecima has previously said two of its Entra products – the SF-4X Remote Optical Line Terminal and EN8100 Remote PHY Access Node – are currently compliant with BABA requirements under the Middle Mile Broadband Infrastructure Program.
Additionally, its portfolio of 10G PON products has achieved strong market adoption. In March 2023, Dell’Oro Group named Vecima the global market share leader in both Remote MACPHY and Remote OLT Distributed Access Architecture (DAA) solutions.
According to Dell’Oro analyst Jeff Heynen, BABA requirements are already starting to impact the market for PON equipment, even though most of BEAD’s money hasn’t actually materialized yet. For example, Nokia last year announced it would team with longtime manufacturing partner Sanmina to bring production of fiber network electronics to the U.S. state of Wisconsin. Both CommScope and Corning announced expanded manufacturing plans, as well.
Vecima Q2 earnings and look ahead
Vecima also reported fiscal results for Q2 2024 this week. Although its stock has been down as much as 18% over the past month, financial sources say the company’s “fundamentals look pretty decent.”
Vecima had strong operating performance and margins in the second quarter, achieving a gross margin of 47.8%, adjusted EBITDA of $12.5 million (20.1% of sales) and EPS of $0.15. Despite anticipated challenges in the broader equipment market, the company successfully launched a new program into production deployment.
The first half of fiscal 2024 marked a transition period for Vecima's Entra DAA business, with key customers refining rollout logistics, said CEO Sumit Kumar during earnings. However, the company anticipates a jump in DAA sales velocity in the second half of the fiscal year, driven by multiple growth pathways.
Those opportunities include the rollout of next-generation ERM3 Remote PHY devices through a partnership with Charter Communications, opportunities arising from the BEAD program and the launch of its new Generic Access Platform (GAP) node, recently certified with an unnamed Tier 1 customer. Kumar said those developments “are just some of the major growth opportunities ahead for Entra and our VBS [Video and Broadband Solutions] segment.”