CommScope fails to find access nets buyer after torrid year

Broadband technology player CommScope was unable to put a positive spin on Q4 and full year financials that saw sales from continuing operations plummet and EBITDA drop, with no sign of a buyer in sight for its access network solutions division or other assets.

The company posted net sales of US$1.2 billion in Q4, down 38.4%, while full year sales of US$5.8 billion were down 23.1%. Full-year EBITDA was down 18.3% to US$1 billion and CommScope posted a full-year net loss of US$339 million.

CommScope closed the sale of its Home division, comprising consumer premises equipment such as set-top boxes and cable modems to French tech outfit Vantiva in January. The company is seeking a sale for its access networks solutions business, comprising cable network technology such as CMTS, amplifiers and nodes, but has so far failed to find a buyer.

Kyle Lorentzen

On the company’s earnings call, CFO Kyle Lorentzen said the industry was in the midst of a serious recession with no immediate end in sight.

He said the company had not so far seen candidacies for divestitures with “valuations that made sense to us” and there was “no guarantee” that any sale could be made.

President and CEO Chuck Treadway said the company had “minimal visibility as to when a recovery could occur” and expected “a very difficult first half and specifically a difficult first quarter”.

He said CommScope would attempt to “control what we can control” as market leader in its segment. “The longer demand remains low, the more challenges we will face,” he said. “We can’t predict with any confidence when a recovery will occur.”

Move to DOCSIS 4.0

On the plus side, he said that the access networks segment had achieved a transition to edge-related products in 2023, and had seen the introduction of the first Full Duplex DOCSIS (FDX) amp and a successful move into DOCSIS 4.0, along with a DOCSIS 3.1 enhanced solution.

Chuck Treadway

“We are bullish on DOCSIS 4.0 upgrades,” said Treadway, with the expectation that there will be a momentum in the second half of 2024.

He said that CommScope has virtual CMTS and DOCSIS 4.0 trials in progress with MSOs.

However, cable operators are working through existing inventory and some had seen slower than expected 4.0 upgrades. As a result there will be a decline in sales between Q4 last year and the first quarter of this year.

“Understanding demand drivers has been difficult for us and our competitors,” he said, adding that expectations had not been met.

The company plans to cut costs by about US$100 million this year.

Access network solutions sales were down 38.4% to US$230.9 million. CommScope’s overall Q4 sales were down in all geographical regions, with US revenues dropping hardest – by 43.8%, followed by EMEA, down 36.5%.