DZS to scoop up Casa's NetComm business

DZS has emerged as the acquirer of NetComm, the Australia-based unit of Casa Systems that makes and sells a portfolio of fixed wireless access (FWA) customer premises equipment, Wi-Fi products, fiber extension gear and enterprise IoT technologies.

The proposed deal represents the final leg in Casa's plan to sell off its array of businesses. Under a separate, court-supervised Chapter 11 sale process, Casa has struck a deal to sell its cable business to Vecima Networks under a stalking-horse bid of $20 million (with an auction to follow), and its 5G mobile core and RAN assets to Lumine Group for $32.5 million.

Under terms of the deal, DZS will pay $7 million at closing for NetComm (including its intellectual property and inventory), plus an additional earn-out of up to $3 million (for a grand total of $10 million) if NetComm 2024 revenues eclipse $87.5 million. The incremental earn-out structure begins at $72.5 million of 2024 net revenues.

The transaction is expected to close by the end of May. Roughly 100 NetComm employees are expected to join DZS, extending DZS's base to about 550 employees.

Casa acquired NetComm in 2019 for $115 million.

Filling out DZS's last-mile lineup

Charlie Vogt, DZS's president and CEO, believes the NetComm acquisition will effectively round out his company's access portfolio across wireline and wireless, building on DZS's legacy portfolio and its prior acquisitions of Optelian (optical technology), Assia (in-home Wi-Fi management) and Rift (cloud automation).

Related:Casa Systems to sell off its cable and 5G core/RAN businesses

Alongside its FWA product serving both licensed and unlicensed spectrum, NetComm has a lineup of Wi-Fi 6E and Wi-Fi 7 products that it's been selling primarily in Australia and New Zealand, and an industrial IoT portfolio that supports 4G, 5G and Wi-Fi.

NetComm's fiber extension offering centers on distribution point units (DPUs) that use G.fast technology to deliver gigabit speeds over copper to single-family homes or multiple dwelling units (MDUs) served by fiber-to-the-curb architectures.

NetComm has some "meaningful" fiber extension deployments with some larger Tier-2 service operators in Canada and the US, and sizable opportunities where DSL is deployed in markets such as the UK, Germany and Israel, Vogt said.

NetComm "really completes our last-mile access portfolio," Vogt said.

DZS has no plans to add hybrid fiber/coax (HFC) tech to its access network portfolio.

"I think the CMTS (cable modem termination system) and HFC plant is going to slowly be replaced by PON," Vogt said.

Little customer overlap

Related:Lumine beats Skyvera with $32.25M bid for Casa's wireless business

Vogt said there's almost no overlap between DZS's legacy business and NetComm's business. He estimates that of DZS's 320 active customers, there are only five that overlap with NetComm's customer base.

NetComm has about 50 active service provider and enterprise customers in the US, Canada, Latin America, Europe, Australia and New Zealand. Some of NetComm's larger, existing customers include UScellular, Bell Canada, Telstra, More Telecom and Vodafone.

"When you look at the investment thesis from a technology, customer, scale, revenue and earnings capability and the cross-selling sales synergies, we think [the acquisition of NetComm] is transformative," Vogt said.