The proposed deal will see Germany-based ADVA pay $10 per share for all of California-based MRV. The board of directors at both ADVA and MRV have approved the deal, and it is expected to close by September.
MRV reported $21 million in revenues for the first quarter of 2017, which was a 12 percent year-over-year increase. The company also managed to slash its first quarter losses from $3.8 million in 2016, to $1 million this year.
ADVA reported $161 million in first quarter revenues, which was a 16 percent year-over-year increase, with net income of more than $7 million for the quarter.
ADVA said the deal will boost its optical, Ethernet, and software portfolio, and increase its reach into “non-European regions.”
“There can be no question that this acquisition will present many new business opportunities, especially for communication service providers who are seeking to explore the possibilities of virtualized network services,” said ADVA CFO Uli Dopfer, in a statement.
ADVA has been active in bolstering its optical networking and virtualization platforms. The company last year purchased Overture Networks, which included carrier Ethernet and NFV products, and led to the launch of the Ensemble NFV platform. Verizon earlier this year selected ADVA’s Ensemble NFV technology to run the telecom giant’s white box universal customer premises equipment (uCPE).
ADVA last month updated its optical transport product targeted at metro fiber deployments. The updates included increased support for software-defined networking (SDN) and synchronization of 5G technologies.
ADVA noted metro deployments are witnessing increased demand from data centers, carrier hotels, enterprises, radio access networks, and broadband access points.
“What’s deployed today is rather static infrastructure. It’s fixed and was designed to be as cheap as possible when it was deployed,” said Michael Ritter, VP of technical marketing at ADVA. “Now, operators want more agility and SDN control. This cannot be addressed with what’s in the field today.”
Optical Market Attention
ACG Research predicts the optical data center interconnect market will grow from $13.6 billion in sales last year, to $17.3 billion in sales by 2021. The research firm cited Verizon as driving the North American metro optical market from a downturn in 2016, to an area of growth this year.
A number of large companies participate in the optical networking space, including Nokia, Ciena, Fujitsu, and Infinera.
ACG said that virtualization technologies are set to play a greater role in the optical networking space as operators look to gain greater control over their transport assets.
As an example, AT&T recently said it would trial 10-gigabit symmetric passive optical network technology (XGS-PON) later this year as part of an initiative to virtualize access functions within the last-mile network. Testing is expected to show support for multi-gigabit per second Internet speeds and allow for merging of services onto a single network. Services to be supported include broadband and backhaul of wired and 5G wireless services.
Eddy Barker, assistant vice president for access architecture and design at AT&T, said the carrier’s goal was to develop a more cost-efficient network platform to support growing demand.
“In working on next-generation PON, we have focused on trying to get the economics to where we are with GPON,” Barker said. “A big aspect is just the equipment costs and more significantly the silicon and optics costs.”
AT&T said it has worked with ON.Lab to develop and test Open Network Operating System (ONOS) and Virtual Optical Line Terminator Hardware Abstraction (VOLTHA) software to hide the lower level details of the silicon. The carrier is also waiting approval on submissions of open white box XGS optical line terminal (OLT) designs to the Open Compute Project (OCP).