Ciena Bullish on the Indian Market
The CEO of Ciena said that the company has already witnessed the telecom operators in India “really mitigate their exposure to Huawei” with Ciena winning “some of that business.” “And then there’s really sort of two to three carriers there,” Smith said in the fourth quarter earnings call. “The third carrier is very dependent on Huawei, and they’re all making plans to migrate away from that. Always takes longer than you think, but we’re actually quite bullish around the India market as we move forward into the second half of 2021 and into 2022.” Smith said that Ciena in the past few quarters “won business specifically around the Huawei replacement” but that the company has not “deployed” its products. “We’ve seen some of that migration away from Huawei in India more aggressively than we’ve seen it in Europe,” Smith said in the fourth quarter earnings call. “It’s moving and decisions are being made now by all of these carriers around mitigating their exposure to Huawei. Some have more exposure than others, but those decisions are being made.”
Huawei Situation Not a “New Dynamic” to Ciena
The company on Thursday reported US$828.5 million revenue in its fourth quarter for the period ended October 31, 2020, as compared to US$968 million in the 2019 fourth quarter. Ciena recorded US$65 million as net income in its 2020 fiscal fourth quarter as compared to US$80.3 million in the same period in the previous year. In January, 2020, Ciena emerged as the top vendor in the Voice and Data’ s 24th annual India Telecom Industry survey. The company is said to have clinched the position in terms of market share by revenue in the Open Networking and Converged Networks segment. Smith said that the Indian telecom market “has been obviously very challenging” in the past 18 months due to the “economic issues” along with the “taxation of the service providers.” “And then the impact of COVID, I think, we’ve been disproportionately affected on their – rolling out their new network,” Smith said in the fourth quarter earnings call. “So it’s been a very down market for the last sort of couple of years.” However, Smith said that the situation involving Huawei where the operators around the world are trying to reduce their exposure to the Chinese vendor “has been in play for a couple of years now.” “I understand that it’s getting a lot of geopolitical attention and a lot of publicity, but this is not particularly a new dynamic to us,” Smith said in the fourth quarter earnings call. The CEO of Ciena also highlighted that the European telecom operators have got “massive amounts” of Huawei equipment installed that are “integrated into all of their back-office systems.” “It’s very expensive for these carriers to make those kinds of wholesale moves, and the operational issues associated with that are very large,” Smith said in the fourth quarter earnings call. “It’s a great tailwind and will happen we think over a period of time, but not as fast as folks will think, possibly with the exception of India.”
