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LightCounting values cloud 200/400 GbE Optics at $6.2 billion in 2023
Altice Europe N.V. has agreed to sell a minority stake of 49.99% in its French SFR FTTH operation for €1.8 billion. The buyer is Allianz Capital Partners, AXA Investment Managers - Real Assets, acting on behalf of its clients OMERS. The cash, along with access to cheap lines of credit, will be used to expand the Altice France/SFR fibre infrastructure. With 5 million homes to be passed (including 1 million homes built by year-end) and more to be franchised or acquired, SFR FTTH is the largest alternative FTTH infrastructure wholesale According to its latest global forecast for optical components and modules, LightCounting expects that sales of 200 GbE, 2×200 GbE and 400 GbE optics will expand the cloud/ datacentre market segment from $2.3 billion in 2018 to more than $6.8 billion in 2023. The company also believes the cloud pulled the optical transceiver market out of a ditch last year, and it is projected to limit the optical transceiver market’s decline in 2018 to less than 3%. The analyst firm had projected slightly higher sales of optics to the cloud in 2018, but rapid price declines of 40 GbE and 100 GbE transceivers limited sales growth. Google started deployments of 2×200 GbE optical transceivers in 2018 and its plans for next year are consistent with LightCounting’s forecast. Other cloud companies are exploring options of either staying with 100 GbE for another two-to-three years, or of possibly using 200 GbE or 400 GbE in a breakout
deal represents the first transaction of this type in Europe and the creation of one of the largest European FTTH wholesalers in Europe. It will also create the only nationwide infrastructure challenger to the incumbent with a very strong competitive position on its footprint, and accelerate the deployment of FTTH in medium and low dense areas in France. SFR FTTH complements Altice France’s other fixed infrastructure assets: a fully modernised and fully owned FTTB network covering 9 million homes delivering up to 1Gbits/s, and a fully-owned FTTH network. only 18% of the ports will use transponder modules made by companies like Acacia or Oclaro. Converting this to sales opportunity, the market for coherent modules is projected to reach $680 million in 2019, but it would have reached $3,750 million if all coherent ports used transponder modules. The company predicts that market share of coherent transponders will increase from 18% in 2019 to about 35% in 2023. The company also reckons that there are signs that a new cycle of DWDM system upgrades is starting now. Suppliers are reporting strong sales of pump lasers for applications in fibre amplifiers since the second half of 2017. Sales of WSS modules used in ROADMs are up sharply in 2018. All these products are usually deployed in the early stages of upgrade cycles and these should be followed by a pick-up in sales of DWDM transponders and line cards. LightCounting’s conclusion: this is very likely to happen in 2019. www.lightcounting.com
partners and committing large resources to build the leading FTTH wholesaler in Europe,” said Altice Founder Patrick Drahi. “With this transformational transaction, and the various tower sales and partnerships announced earlier this year, Altice Europe has been able to crystallise €8 billion of infrastructure value and obtain cash proceeds of €4 billion in total in a few months. Through these transactions, Altice France and Altice Europe will deleverage and will have access to new and cheaper liquidity to invest in its fibre infrastructure.” Altice points out that the US-made products to ZTE added more confusion to the market and reduced the annual sales of optics to ZTE by 20% to 30%. Numerous projects were delayed in 2018, not just in China, but worldwide because of the ZTE ban and because of uncertainty related to China- US trade war. LightCounting believes the DWDM module market has room to grow. It expects that 130,000 coherent modules will be shipped in 2019, but the total number of coherent 100/200/400G ports will reach 710,000. This means that 82% of the ports will be built by system vendors (like Ciena or Huawei) and
operator in France. SFR FTTH will sell wholesale services to all operators at the same terms and conditions, including SFR as customer, with no minimum volume commitments. Altice France will sell technical services to SFR FTTH for the construction, the subscriber connection and the maintenance of its FTTH network. The plan is for SFR FTTH to deploy fibre massively in the next four years, with at least 1 million homes passed per year. “I am very pleased that three of the most renowned infrastructure investors in the world are becoming our configuration to maximise switch radix. The decline in sales of telecom optical components and modules in 2017-2018 was mostly due to weaker than expected sales of optics to Huawei and ZTE. Suppliers of optical components and modules first reported sharp drops in sales to these customers in March of 2017 which was related to excess inventory accumulated by Huawei and ZTE in 2016. Most of the excess inventory was depleted by the end of 2017, but suppliers continue to report slower than expected business with these Chinese customers. The April 2018 ban on sales of
Altice sells half stake in French fibre wholesale operation for €1.8bn
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| ISSUE 15 | Q4 2018
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