650 Group Blog
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Nokia’s Global Analyst Forum this week highlighted two main trends. First, the company says it has caught up to rivals in its 5G radio development. Furthermore, the company expects its wireless systems to become increasingly technologically differentiated from competitors. Second, the company emphasizes its message that it is the “green partner of choice.” We read that the company is making more power-efficient communications equipment. Apart from its significant themes meant for headlines, the company also highlighted that: (a) it’s experiencing strong private wireless growth, (b) its RAN systems are in the pilot phase with hyperscalers like AWS, GCP, and Azure, (c) it is embracing Open RAN faster than other established competitors, (d) it expects the Remote Radio Unit (RRU) to take an increasing fraction of total RAN spending, (e) it sees the RIC as a market expansion, (f) it expects to differentiate in radio in 2022 with its growing Carrier Aggregation capabilities. Nokia, which has significant revenue exposure to Mobile RAN, is in an interesting phase of its corporate development. With having brought on new CEO, Pekka Lundmark, recently, it abandoned its end-to-end product portfolio strategy. Yet, in recent times, the company’s non-radio portfolio has outperformed radio access network growth trends, which reinforces the idea that its broad portfolio serves it well. One of the company’s primary messages from the conference was that its RAN portfolio has caught up to competitors and that next year it will deliver significant improvements, including Carrier Aggregation and a broader portfolio of Massive MIMO systems. The company also said that it is working with a broad set of infrastructure providers and infrastructure software companies that will be able to support its RAN and core portfolio; examples include Anthos, Kubernetes, VMWare Tanzu, AmazonEKS, OpenShift, among others, operating on AWS, Azure, Google Cloud or on premises-based infrastructure. Nokia is investing in broadening out the appeal of its RAN and core systems both by embracing these various non-Nokia systems, as well as supporting Open RAN. The company says it expects an increasing amount of value to accrue to the RRU and away from baseband, which we see as consistent with its support of so many different infrastructure systems that would run baseband. The company sees revenue upside in the RIC market, part of the Open RAN architecture. The company’s support of Open RAN will lead to the commercialization of Open RAN systems in about two years, according to Nokia.   Furthermore, the company’s telecom core business is experiencing an acceleration in business trends. Like the RAN architecture support for various cloud systems, Nokia is even further along in offering support for its core systems like 5G Core. Management made two comments during its discussions that did an excellent job of explaining how far along the core market is in moving towards a hyperscaler-based infrastructure. First, Nokia said that “50% of RFQs include an option to run on top of the Hyperscaler.” Second, Nokia explained that of 82 of the engagements, 20 have serious public cloud investigations and dialog going. We are also encouraged by the company’s leadership in Fixed Wireless Access (FWA) and 25G PON. In 5G FWA, the company has some significant antenna and software algorithm capabilities, and we expect new, cutting-edge products in 2022. In 3GPP 5G FWA, the company holds a significant revenue market share lead as of 3Q21, illustrating its robust capabilities. The company made a bet on 25G PON and was a significant contributor to an MSA Group called 25GS-PON. Additionally, Nokia developed its own semiconductors, called Quillion, to support 25G PON (backwards compatible to lower 10G and 1G speeds).  
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Mavenir held its annual analyst event this week and highlighted some important information highlighting its progress in transitioning to a maturing ecosystem player in the telecom equipment industry. The company highlighted its recent Koch Brothers $500M investment; existing investors include Intel/Nvidia and Siris Capital, who remain majority equity holders. The company highlighted that it grew revenues and bookings in the mid 20’s percent year-over-year in its Fiscal 2020, an impressive figure. Two main themes came from the show. First, the company’s RAN portfolio is picking up steam. Second, the company’s portfolio now spans very wide, from telecom core to RAN.
The RAN portfolio has made significant progress. The company claims over 20 deployments in 14 countries. And, Mavenir has demonstrated the capability to deploy on AWS, IBM Cloud, Microsoft Azure, Oracle Cloud, Google Cloud, and VMWare. The company spent a great deal of time reviewing definitions of various Open RAN terminology, to address confusion, spanning from vRAN, O-RAN, C-RAN, Cloud-RAN, and Open vRAN. We’ve seen many public statements from Mavenir, its competitors, operators and pundits, alike, espousing the various benefits of some or all of these systems. We think the point Mavenir was making at its conference is that Open vRAN is the most open, interoperable system. When operators enable open systems, of course, it allows Mavenir and other vendors to bid on deals for networks that have existing equipment from traditional vendors like Ericsson, Nokia, Huawei, and ZTE. We see Mavenir’s efforts to work with various infrastructure companies and systems like AWS and VMWare as a means of gaining a foothold with operators who are trialing or in the early stages of deploying these various infrastructure systems. Speaking of partners, the company claims it has relationships with nearly 15 Remote Radio Unit (RRU) players. The company says it can deliver Massive MIMO capabilities to customers, which means that its RAN systems can satisfy what would be considered mainstream 5G use-cases; this represents very significant progress over last year’s RAN capabilities. Mavenir’s portfolio is extensive. The company made separate presentations about the following topics: RAN, OSS, Radio, Packet Core, Mobile Core, BSS/Digital Enablement, Security, Private Networks, and Enterprise over three days. With over 5,000 employees spanning the globe, exposure to the most relevant parts of the mobile infrastructure industry, Mavenir is a serious contender for deals. The company also highlighted that its telecom core technology uses modern programming techniques that enable it to operate on cloud infrastructure; among these are fully containerized micro-services design. The company shared that most microservices file sizes are under 25 Mbytes, evidence that the systems are designed as microservices (and can load fast). The fact that in April 2021, well-known Koch Bros made a $500M “strategic minority” equity investment in the company is an important validation of Mavenir’s place in the telecommunications industry. We see the investment as a reinforcement of the company’s balance sheet and an opening to new customers. |
CHRIS DePUY
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