Mavenir felt slammed in the trade press this week by a couple of articles that cited reports from Dell’Oro and Moody’s.
First, the Dell’Oro report said that Mavenir had fallen out of the ranks of the top 5 mobile core vendors and had been replaced by Cisco. According to the Dell'Oro report, as of the second quarter 2023, the top 5 mobile core vendors are now Huawei, Ericsson, Nokia, ZTE and Cisco.
A story in Light Reading, citing Dell’Oro’s report, suggested that Mavenir had “hit the skids.”
But Pardeep Kohli, CEO of Mavenir said the problem is that Dell’Oro lumps wireless and wireline networks together, and Mavenir doesn’t work in wireline networks.
He said Cisco has a packet core, but it doesn’t have an IMS wireless voice component. Cisco bought Starent in 2009, obtaining its packet core. And it bought BroadSoft in 2018, which does wireline voice only.
Kohli said Cisco is “weak in wireless,” but it has a packet core in wireless and a wireline IMS from the BroadSoft acquisition, and Dell’Oro lumped all that together and referred to it as “mobile core network.”
Mavenir also complained that it’s not fair to compare vendors who sell both mobile core software and hardware against Mavenir, which only does the software.
Kohli said, “It’s like comparing apples and oranges.” Mavenir only sells the software, which can ride on off-the-shelf servers from the likes of Dell and HPE. If the Dell’Oro report made a fair comparison, it would have to collect the revenue made by Dell and HPE and include that.
He also said the behavior of operators is changing, and they no longer need companies like Mavenir to act as a middle-man to buy their off-the-shelf servers. They can simply buy those themselves. And Mavenir never really wanted to be in the server-selling business, anyway. Kohli said, “We can run on Cisco, Dell hardware. In a way, we are a category of our own.”
Finally, Kohli said the full Dell’Oro report does include sections that break out mobile core vendors by software and hardware, and Mavenir looks much better in those sections compared to its competitors. But those sections didn’t make any of the headlines this week. **Update 9/1/23 7:04 pm: Mavenir clarified that previous Dell'Oro reports had the breakdown of NFV and non-NFV as well as Wireline and Wireless IMS until July 2022, but stopped publishing those breakdown in July 2022.
Kohli has penned his own blog defending Mavenir in regard to the Dell’Oro report.
As a side note, everyone in the industry knows that Mavenir is doing open radio access network (RAN) work for Dish. But Kohli today said its biggest mobile core network customer in the U.S. is T-Mobile. “T-Mobile is the only one that has gone live with Voice over New Radio (VoNR), he said. “In T-Mobile, we are doing the core. They are using our product.”
Moody’s report
Mavenir also looked kind of bad this week after Moody’s downgraded the company’s corporate family rating (CFR) from B3 to Caa1.
Moody’s stated, "The downgrade of the CFR to Caa1 reflects significantly lower revenue and EBITDA expectations over the next 12-18 months, due primarily to economic uncertainties, slower than expected radio deployments, and a significant delay by a major customer to deploy Mavenir's solution in a fixed wireless architecture."
Kohli said Moody’s looks at companies based purely on their debt. And Mavenir is clearly spending money on R&D for its open RAN technology, causing cash to go down. And interest rates have risen. So Moody’s ratings are just “natural mathematics.”
But he isn’t concerned about Mavenir’s finances. He noted that even the U.S. government’s credit rating was recently downgraded by Fitch.
He said Mavenir continues to raise money, and its debt is not due until 2028. “Ratings don’t mean anything if you keep paying your bills.”
Moody’s report wasn’t all negative. It stated, “Strengths to the credit profile include a large target addressable market with strong demand drivers. Its niche position to develop and deploy new software, hardware, and services for next generation 5G Open RAN wireless architectures is generating a small, but high-growth base of new revenue streams. It also has hundreds of customers including most of the top 20 carriers and good geographic revenue diversity, which are positive credit factors.”
Kohli said, “I have raised money in the last 15 out of 18 years. This year we’ve already announced we have raised $100 million.”
He said Mavenir is spending aggressively on R&D “by choice,” and “it’s not that we are being forced."