Casa Signs Historic 5G Baseline Agreement and Verizon Equity Investment, 5G

Leading US carrier Verizon has selected 5G core technology from Andover, Massachusetts-based Casa Systems to support its edge mobile computing (MEC) strategy, awarding the company a contract that could be worth up to to $140 million over the next few years, and also gave the seller a corporate stamp of approval by investing $40 million in return for a 9.9% stake.

the multi-year agreement and investment news sent Casa’s stock price up more than 80% to $7.10 on Monday, although it fell back to $6.34 at the start of Tuesday’s session. Verizon secured its slice of the company on April 14 at $4.24 per share (at that time the shares were trading below $4.00, so Verizon paid a premium). The operator does not obtain a seat on the board of directors or special investor privileges as a result of its investment.

Verizon’s move is a major validation of Casa’s portfolio strategy, R&D capabilities, and potential provider of next-generation cloud-native 5G core functionality to the telco community.

“Casa Systems is an important member of our 5G and MEC ecosystem, providing flexible applications that will allow us to scale for our customers as real-time solutions continue to develop,” said Kyle Malady, President, Global Networks. and technology at Verizon. “We have confidence in Casa as a cloud-native technology partner and look forward to joint innovation as we expand the power of 5G and MEC in the years to come.”

Casa, which was diversifying away from its portfolio of traditional wired network technologies in recent years has generated revenues of $401.3 million and an operating profit of $18.3 million in 2021, so this transaction is significant from a financial as well as market validation perspective. Verizon will pay Casa $20 million this year to help with the vendor’s R&D and product readiness processes, with the potential for $120 million in business to follow starting next year if Casa complies. its timelines and meets Verizon’s expectations (so the company is unsecured, but firmly in the pipeline and it’s essentially Casa to lose).

And it gives the vendor a great launch pad for new business, as the deal will position it as a key competitor for rivals such as Cisco, Ericsson, HPE, Huawei, Microsoft Azure (Affirmed), Nokia and Oracle as d ‘other 5G core decisions are being considered. and do.

During a special webcast on the deal on Monday, Casa President and CEO Jerry Guo took the opportunity to position Verizon’s commitment as a game-changer for the industry as well as its business.

“Verizon has an incredible heritage as one of the world’s leading providers of technology and communications services, and we are honored to have them as a strategic partner as our business continues to grow. This announcement is a significant milestone for our wireless programs and…represents strong validation of our industry leadership in cloud-native wireless carrier technology,” Guo noted. “Verizon is a recognized industry leader in driving innovation in the mobile wireless industry, with consistent world premieres over many years, announcing new technologies and associated vendors to market,” it said. – he continued, adding that the deal “represents strong justification for our cloud native design investment that we have made over the past few years. This award puts Casa at the forefront of global industry evolution to cloud-native, software-controlled, edge-deployed telecom networks We hope that Verizon’s approval… will help unlock new business with other large-scale service providers around the world who are currently planning their own transition to a cloud-native network architecture.

Guo added that “the announcement of the cloud-native 5G basic contract is a strong indicator of the direction the wireless industry is taking towards its 5G networks. While we have seen many Tier 1 mobile operators announce and deploy 5G networks over the past few years, the vast majority of these networks are based on traditional chassis or virtual network functions, which is not the way of the future. The Casa cloud-native solution can be used to supplement or replace the legacy 5G core due to scalability, speed of deployment and network changes, and built-in high availability.

The MEC solution announced today “is deployed at the edge or edge of the network, with thousands of locations”, unlike most current 5G core deployments which are deployed in a small number of center locations. major data centers, Guo noted. “The Edge or Far Edge deployment architecture provides significantly lower latency to enable real-time applications, which is one of the key benefits of 5G. Existing 5G deployments today are mostly non-standalone: ​​Casa supports multiple network deployment modes, including standalone, non-standalone, and 4G in control mode and user-plane separation… We believe the 5G and 4G cloud-native core addressable market is wide open today. And with this award, we are extremely well positioned. As we speak, Casa is conducting technology trials and working on deals involving several 5G core cloud-native opportunities around the world. These are significant transactions, and we will continue to improve the market as we look to deliver more positive news throughout the year,” added the CEO.

Guo went on to note that Casa has other unannounced deals and additional business with Verizon that he has yet to share.

Casa has been involved in basic 5G tests and trials with other major operators in recent years, but has not always been successful: for example, in February, after extensive trials, Orange left Casa and HPE in the cold when opted for Ericsson and Nokia as stand-alone 5G core technology providers.

– Ray Le Maistre, Editorial Director, TelecomTV

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