Acquisition Expected to Strengthen Sonus Mobility and Virtualization Strategies and Expand Sonus Addressable Market by 50%
Key Takeaways:
Acquisition expected to accelerate Sonus' mobility strategy by adding Diameter Signaling capabilities required in all-IP, IMS 4G/LTE (Long Term Evolution) networks.
Acquisition expected to expand and diversify Sonus' portfolio with an integrated, virtualized Diameter and SIP-based solution.
Diameter market, which is in its infancy, is rapidly expanding and projected to grow by an average of 42% per year from 2013 through 2017, to reach nearly $1 billion, according to Exact Ventures, which would allow Sonus to expand its addressable market by 50% to nearly $3 billion in 2017.
WESTFORD, Mass.--(BUSINESS WIRE)-- Sonus Networks, Inc. (NASDAQ: SONS), a global leader in SIP communications, today announced the successful completion of its acquisition of Performance Technologies, Inc. (PT). As previously announced on December 13, 2013, Sonus and PT entered into a definitive merger agreement under which Sonus would acquire PT for $3.75 per share in cash, or approximately $34 million, net of PT's cash and excluding acquisition-related costs. The transaction was unanimously approved by the boards of directors of both companies and was also approved by PT shareholders.
The acquisition of PT enables Sonus to expand and diversify its portfolio as the combined entity expects to provide an integrated, virtualized Diameter and SIP-based solution and deliver strategic value to service providers seeking to offer new multimedia services through mobile, Cloud-based, real-time communications. PT's premier suite of IP-centric SEGway signaling products includes Diameter Signaling Controllers (DSC), which anchor the authentication, authorization and accounting messages sent across mobile networks. As the adoption of the mobile Internet grows, the DSC market is forecasted to grow by an average of 42% per year from 2013 through 2017, to reach nearly $1 billion, according to Exact Ventures.
Quotes:
Raymond P. Dolan, president and chief executive officer of Sonus, said, "We welcome the PT team, who brings invaluable expertise and a rock-solid diameter signaling product to Sonus. The combination of Sonus and PT allows us to bring together unique and complementary technologies in wireless and wireline network intelligence, which is anticipated to expand our addressable market by 50% and advance our mobility and virtualization strategies."
Strategic Benefits:
Enhanced Portfolio of Offerings. The acquisition of PT is aligned with Sonus' strategy to offer a portfolio of solutions that enables Cloud-based, real-time, multimedia communications across wireless and wireline networks. As adoption of the mobile Internet grows, Diameter is the IP-based signaling protocol standard that drives authentication, authorization and accounting messages in the IP Multimedia Subsystem (IMS) architecture of wireless 4G/LTE networks. Providing an integrated, virtualized Diameter and SIP-based solution will enable Sonus to offer a more strategic value proposition to service providers seeking to deliver new multimedia services through mobile, Cloud-based, real-time communications.
Significant Addressable Market. With 4G/LTE subscriber growth increasing, industry analysts project exponential growth in Diameter traffic to be generated by tablets, smart phones and other mobile devices. Sonus believes that the acquisition of PT positions Sonus to capture the significant opportunity this trend presents and should increase Sonus' total addressable market by 50%, from approximately $2 billion in 2017 (SBC-only) to nearly $3 billion in 2017, when combining the SBC and Diameter markets.
Complementary Assets. The DSC market is a natural extension of the Session Border Controller (SBC) market. SBCs and DSCs both serve as points of entry into core IP networks by providing security, admission control, intelligent routing and interworking capabilities. PT's SEGway Universal Diameter Routers and SS7 Signaling Systems provide tightly integrated signaling and advanced routing that span mission-critical demands of both existing and next-generation 4G/LTE and IMS networks
Guidance:
As indicated at the time the transaction was announced, the acquisition is expected to be accretive to Sonus' non-GAAP EPS for full year 2015 and mildly dilutive (two cents or less) in 2014. Further guidance will be provided when Sonus reports its fourth quarter and full year operating results on February 20, 2014.
Other Facts:
On December 13th, 2013 Sonus announced a definitive agreement to acquire PT.
Approximately 100 PT employees will join Sonus across three continents.
PT is headquartered in Rochester, NY and maintains direct sales and marketing offices in the U.S. in Raleigh, NC and Chicago, IL and international offices in London, England and Shanghai, China.
PT has Centers of Engineering Excellence in the U.S. in San Diego, CA and Rochester, NY and one in Kanata, Ottawa, Canada.
PT has a global installed base of more than 1,000 signaling system installations.
PT's SEGway Signaling solutions are deployed in more than one thousand locations globally, serving as a backbone for several premier wireless networks.
The number of 4G-LTE connections worldwide is forecast to pass one billion by 2017, according to a new study by GSMA Intelligence.
Other Resource:
Download the White Paper "Leveraging Synergies across Diameter and SIP Signaling in 4G/LTE Networks."
