- The vendor eliminated over $1.3 billion in debt and secured $300 million in new financing
- Mavenir will shift focus to its bread-and-butter mobile core business
- It’s not abandoning open RAN, but it’s backing off on the radio hardware
The financial uncertainty hanging over Mavenir for the past year or so can finally be put to rest, at least for the immediate future.
That’s because the company is happy to report that along with controlling shareholder Siris, it restructured its finances through a recapitalization deal with lenders, eliminating more than $1.3 billion of debt and securing $300 million in new financing. Not bad for a company whose prospects looked dismal a few short months ago, largely blamed on an overly ambitious run at open RAN.
Open RAN is still part of the picture, but Mavenir is getting out of the radio hardware business and concentrating on design rather than manufacturing and distribution, Mavenir President and CEO Pardeep Kohli told Fierce. Going forward, Mavenir will work with ODM partners to provide the actual hardware production and delivery.
As for the next big focus? That, of course, includes AI. “We’re back strong and it’s the right way to approach the market with AI-leading efforts. We’re well positioned to claim this market,” Kohli said.
Mavenir’s tumultuous times
The past year has not been easy. Mavenir burned through a lot of cash while developing its open RAN technology and its debt grew to over $1 billion. At the same time, the open RAN space didn’t take off like a lot of people expected and interest rates rose. Moody’s and S&P Global downgraded their outlook, sparking questions about Mavenir’s ability to stay afloat.
The company late last year reportedly was in talks with Saudi Aramco’s digital arm to take a significant minority stake in Mavenir, but that deal didn’t transpire. This year, Mavenir set its sights on working with its lenders to see if they would convert their debt into equity. That turned out to be the right direction, according to Kohli.
Mavenir employs about 4,000 people, which is up from 2,000 from pre-pandemic times but down from a high of 6,000 during its heyday. No further layoffs are expected as result of this latest transaction, according to a spokesperson.
Kohli points out that Mavenir was founded in 2005. In an industry that’s seen its share of shipwrecks over the past 20 years – Nortel Networks went bankrupt and other distressed players like Alcatel-Lucent were sold – Mavenir is a rare survivor.
“We are actually a small ship, but we are the only North American company left,” he said.
What lies ahead for Mavenir
Mavenir will continue to support open RAN customers like AT&T and EchoStar/Dish Network, but open RAN is only about 10% of Mavenir’s business; the other 90% comes from its core business that consists of IMS, messaging, packet core and billing and charging, Kohli said. Customers include more than 300 communications service providers around the world.
The future will include a stronger focus on that profitable core segment – and it’s doubling down on the AI-native telco stack.
Open RAN is more of a geopolitical issue – it has been positioned as a good alternative to gear from Chinese vendors Huawei and ZTE – but AI revolves around technology, optimization and productivity, making it far less vulnerable to the whims of geopolitics, according to Kohli.
“We believe that if we actually lead in the space, there's a lot more innovation we can bring to the core, even the RAN side,” Kohli said. “We are already adopting the AI tools available in the cloud to bring more value to our customers.”
Recap provides runway: analyst
The change in open RAN strategy makes a lot of sense, according to AvidThink founder Roy Chua.
“Given that the open RAN market is taking longer to mature, not incurring hardware acquisition and inventory costs gives them a lot more agility and cash to invest in more mature and proven use cases, so it's likely a good strategy right now,” Chua told Fierce.
The new financing is a good structure for Mavenir, easing their debt load and giving them more working capital to continue to stabilize and grow the business as they pivot to a pure software play and focus on their strengths, he said.
“This recap allows them more runway to firm up their business while waiting for wider uptake of open RAN,” Chua concluded.