Vecima Networks today announced its intent to acquire the Cable Business unit assets of Casa Systems, which filed for Chapter 11 bankruptcy protection. Casa is seeking approval to designate Vecima as a stalking horse bidder for its Cable Business assets. The stalking horse bid sets the low end so that any additional bidders can’t underbid the purchase price. Presumably, other interested parties had the opportunity to set the stalking horse bid but chose not to. Vecima’s stalking horse bid does give it the advantage of being able to negotiate the terms of the purchase, including which assets it wishes to acquire. That alone might be enough to deter additional bids, as competitors determine whether the value of the assets is worth a higher bid.
Assuming Vecima’s bid is successful, it will have acquired assets that in 2023 generated revenue of $41M, primarily coming from license revenue from its installed base of C100G CCAP platforms. That revenue is a far cry from the $81M it generated in 2022 and $115M in 2021.
Casa, which from 2014-2018 generated cumulative revenue of just under $1.3B from its C40G and C100G CMTS and CCAP platforms and secured significant footprint at Charter, Claro, Rogers, and other tier 1 operators, was unable to rebound from the 1-2 punch of a softer market for DOCSIS licenses and Charter’s announcement in March 2023 that Casa would be excluded from its massive network upgrade project. Additionally, Casa was unable to find enough traction for its vCMTS and DAA products to offset declining license revenue for its integrated CCAP platforms, although the company does have some DAA traction with Rogers Communications, Vodafone, Liberty Global, and Claro Colombia.
However, Casa’s cable products are well-regarded in the industry for their architecture and reliability. We regularly hear from cable operators that the C100G platform continues to serve as the core of their broadband offering.
What Vecima offers to the Casa cable unit is a renewed focus on the cable and fixed broadband markets, which was arguably missing at Casa as the company tried to balance R&D investments in its cable, vBNG, mobile core, and fixed wireless access product lines. With the focus and continued support by Vecima of Casa’s existing customer base, Vecima can potentially turn those customers into longer-term DAA customers.
From a product perspective, Vecima gains Casa’s Axyom vCMTS software, which it can use alongside its own Entra vCMTS platform to scale overall vCMTS deployments as they continue to expand at cable operators around the world. Additionally, we are aware of deployments where Vecima’s RPDs have been deployed along with Casa’s vCMTS, so demonstrating interoperability at other operators shouldn’t be a challenge. Ultimately, we would expect the Axyom and Entra vCMTS platforms to be integrated into a single software stack to avoid parallel development efforts that could sidetrack operator deployments.
Though Harmonic currently dominates the vCMTS market, holding 98% of global revenue in 2023, a good portion of that revenue comes from Comcast, which was the early mover in deploying vCMTS platforms in the industry. Charter is also planning to deploy Harmonic’s cOS broadband platform but has also signaled its desire to have multiple vendors’ vCMTS platforms in its network, which leaves the door open for Vecima to secure a portion of that business in addition to the RPD business it has already solidified there.
Beyond Charter, there are dozens of cable operators who have yet to begin their transition to vCMTS. There are many more who are facing the discontinuation of Cisco’s CBR-8 platform, which will not be upgraded to support DOCSIS 4.0, thus pushing operators to transition to a vCMTS platform.
Finally, Vecima’s acquisition would include Casa’s Axyom vBNG platform, which could provide subscriber management and routing functions for Vecima’s SF-4X Remote OLT and EXS1610 OLT—particularly in those cases where operators are deploying XGS-PON. Vecima currently leads the emerging Remote OLT market, thanks largely to its contract with Charter for its fiber-based RDOF deployments. Now, Vecima is looking to expand its FTTH footprint and customer base through its EXS1610 OLT. Though Vecima has demonstrated interoperability with existing, hardware-based BNGs, as well as third-party vBNGs, being able to supply both the OLT and vBNG delivers an architecture and vendor relationship similar to the vCMTS and RPD combination that cable operators have become familiar with.
