ELLEN MANNING MONEY IN THE MARKET
THE FIBRE-OPTIC INDUSTRY IS ON A ROLL BUT HOW DO THE NUMBERS STACK UP?
W hen it comes to the optical network market, growth is the name of the game. According to a forecast report by Dell’Oro Group in July, the Optical Transport equipment market is projected to reach US$16 billion by 2022 while Ovum forecasts optical network spending will reach US$17.8 billion in 2022. Such growth is undoubtedly driven by the ongoing requirements that filter from individual consumers all the way through to the data centres and metro and backbone networks that underpin the industry. “The development of network infrastructure has propelled the fibre optics market growth to a large extent,” a report from Market Research Future explained, observing that growth opportunities within healthcare are boosting market growth of fibre optics. And Grand View Research predicts that telecoms will dominate the application arena when it comes to boosting growth within fibre optics, beating other areas including oil and gas, military and aerospace, medical and rail transport. ARE THE EXPERTS RIGHT? But is the industry growing in line with experts’ predictions? “There are spots where there is growth currently, like fibre,” says Don Frey, principal analyst – Transport and Routing at Ovum. “There’s very much growth because all
It is widely thought that the markets for all things fibre optic is growing rapidly as network operators look to upgrade their operations. Ellen Manning looks at the financial side of the industry to find out by how much and over what timescale.
the company said they had raised the company’s
carriers, whether they are building fibre to the home, building more fibre to the enterprise, building fibre for wireless backhaul, for future 5G services, and then cable companies who are looking to go fibre-deep as opposed to using coax; these are all the things that are pushing fibre deeper into the network. Then once these things are laid and customers move [across] that will drive additional bandwidth and additional requirements on the metro and the backhaul.” This growth is reflected in Q2 results from Ciena, named by IHS Markit within its list of top optical vendors, which posted a Q2 revenue of US$730 million - increasing 3% year on year. Announcing the results for the quarter ending on April 30, 2018, president and CEO Gary Smith said the company’s gross margin was impacted by several new international service provider deployments in their early stages, but he anticipated strong revenue growth in the second half of the 2018 financial year. When Corning released its second-quarter financials,
outlook for the full year, expecting
higher sales of US$11.3 billion and a second-half
Don Frey, principal analyst capacity and margin expansion. One of the specific contributors to the company’s raised outlook for the year was optical communications, which Corning said was expected to grow by a high-teens percentage for the year rather than previous predictions of 10%. Network security solutions firm Anixter also reported growth for the quarter ending June 29, 2018, reporting sales of US$2.1 billion - a 6.8% increase versus the previous year’s quarter and the highest quarterly sales in the company’s history. ADVA also recorded a rise in quarterly revenues for Q2 in 2018 - up 2.7% to EUR 123.8 million from EUR 120.5
www.opticalconnectionsnews.com
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ISSUE 14 | Q3 2018
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