Viavi shores up 5G T&M competency with $455M acquisition

5G (Pixabay)
The $455 million planned all-cash transaction will boost Viavi's 5G competency. (Pixabay)

Communications network test and measurement provider Viavi is looking to better position itself for the coming era of 5G wireless deployments, with the acquisition of two sister companies, Cobham AvComm and Wireless T&M.

Viavi has snagged the pair from British aerospace and defense supplier, Cobham, which is best known for its air-to-air refueling systems for military aircraft. In addition to giving Viavi a larger 5G competency, the $455 million planned all-cash transaction will add more than $200 million in annualized revenue to the acquiring company’s run sheet. It will also allow Viavi to benefit from Cobham’s military-industrial background, by inheriting a customer base in the military, public safety and avionics test markets.

Cobham AvComm and Wireless T&M together specialize in core-to-RAN test and measurement for communications networks. The two have a particular expertise in 5G: In May, Cobham announced the availability of a network test solution which can validate 5G network performance as experienced by end users. Billed as an industry first, the TM500 claims to provide operators and network equipment manufacturers with a scalable system to test network performance.

This dovetails with Viavi’s strategy for its ongoing efforts to set its Network and Service Enablement (NSE) division on a profitable path. As recently as 2016, the company’s shareholders were pressuring it to consider a sale. Instead, the company has looked to next-generation approaches to creating value.

Last year, Viavi joined the Zero Touch Network and Service Management project, which also includes Amdocs, Ciena, Dell EMC, Ericsson, HPE, Huawei, IBM, Intel, Infosim, NEC/Netcracker, Nokia and Orchestral Networks. Its goal is to deliver a concrete guidance proposal to the industry on how the capability can be improved, with the outcome expected to have an impact on network operations in 5G. Now, Viavi expects the acquisition to further its quest to be seen as a 5G leader.

"This combination is another step in our NSE strategy of driving operational scale and monetizing our net operating loss assets," said Oleg Khaykin, president and CEO of Viavi, in a press release. "Cobham AvComm and Wireless T&M are recognized leaders with a world-class team that has a long track record of successfully bringing innovative solutions to market. Together, we expect new opportunities to grow through channel expansion and technology sharing as we address rapidly emerging opportunities in 5G, software-defined and virtualized test."

Cobham, meanwhile, itself no stranger to organizational unrest, will refocus the business on its core aerospace and defense markets.

“I am delighted that we have been able to conclude the portfolio review of the AvComm and Wireless test and measurement businesses expeditiously, after a competitive auction process,” said Cobham CEO David Lockwood in a statement. “[The] announcement is a good deal for Cobham shareholders, as we can now focus on delivering value-add technology and capabilities to our defense, aerospace and space customers, supported by a more resilient balance sheet.”

The deal is expected to close during the second half of Viavi's fiscal year, which ends in August.