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Pace plans 2Wire acquisition as revenues rise

Pace has announced plans to acquire residential gateway specialist 2Wire as it also revealed an impressive rise in half-year revenues.

The UK-based set-top vendor is set to acquire 2Wire, a provider of residential gateways and associated software and services for the broadband service provider market, for $475m (€368m). 2Wire has established customer relationships in the tier one telco market, in particular with service providers in North America. AT&T has been a customer of 2Wire for 10 years, with the company providing software and hardware solutions to enable the telco’s U-verse suite of services that includes multiroom high-definition TV, high-speed broadband and telephony. 2Wire is currently owned by a consortium including Alcatel-Lucent, AT&T, Telmex and Oak Investment Partners. Pace said the deal would enhance its position in the cable and satellite markets in the US.

Neil Gaydon, CEO of Pace, commented: “This acquisition will strengthen our Americas business, extending Pace’s US market coverage with entry into the tier one telco market. We have built a strong position in the US with cable and satellite operators and 2Wire, with its expertise in the broadband residential gateway market, will enable us to address a full range of US operator requirements. 2Wire’s software and gateway expertise will further drive development of our home entertainment convergence strategy. The transaction introduces deep client relationships with important customers including AT&T and further develops our platform to deliver ongoing sustainable growth.”

Separately, Pace announced that it increased revenues by 21% to £635.2m (€760m) in the six months to end of June.
The company saw volume shipments of its pay-TV products up 12.9% to 9.6m in the half-year to June after winning new customers and launching new platforms for existing customers, including Multichoice, M7, Sky Deutschland and Astro. Pace said 37% of products were delivered to North America, where revenues reached £233m and 33% were delivered to Europe, amounting to revenue of £208m.

Adjusted profit before tax was up 39% to £47.8m.

Commenting on the results, Gaydon said: “In the first half, Pace delivered excellent revenue and profit growth and increased its cash position to further strengthen the balance sheet. These results were produced despite some challenges within the supply chain, due to the skill of our operations teams, scale and strong supplier relationships.”