In July of 2024, CommScope announced the $2.1 billion sale of its Outdoor Wireless Networks (OWN) segment and Distributed Antenna Systems (DAS) business to Amphenol. The sale represented a $550 million write down of its 2007 acquisition of the Andrew Corporation.
On Feb. 3, Amphenol confirmed that the transaction closed with Amphenol announcing that the new division will inherit 4,000 employees and contribute $1.3B in sales in 2025 to the Amphenol portfolio. It also launched an ambitious rebranding of the purchased assets, bundling them under the historic Andrew name. For CommScope, the deal represents the end of the company’s ambitions to be a one-stop shop for connectivity. Analyzing the 2024 deal reveals a company sacrificing long-term prospects for short-term financial relief.
The Andrew legacy and CommScope’s journey
The roots of this sale trace back to CommScope’s ambitious $2.65 billion acquisition of Andrew Corp. in 2007. At the time, this move was hailed as enhancing CommScope’s position as a worldwide leader in “last mile” solutions. However, the telecommunications landscape has shifted dramatically since then, turning what was once a strategic expansion into a financial burden. CommScope’s decision to sell these business units is driven by urgent financial pressures. The company is grappling with a staggering $9.3 billion debt load, with $1.27 billion coming due in June 2025. This sale appears to be a necessary step to manage this looming debt crisis.
The OWN segment, which includes the DAS business, has faced substantial challenges recently. CommScope reported a troubling 24.1 percent year-on-year drop in OWN net sales to $196 million in the first quarter of 2024. The decline was attributed to rising inflation and a significant reduction in operator capital expenditure, particularly in North America.
CommScope frames this sale as part of its CommScope NEXT strategy, initiated in 2021, which focuses on reallocating resources to business units offering the most potential value. By divesting these mobile network-focused divisions, CommScope is shifting its focus towards its structured cabling and enterprise Wi-Fi businesses. While the sale provides CommScope with much-needed cash to address its debt, it also raises concerns about the company’s long-term growth prospects and its ability to compete effectively in the evolving telecommunications market. The success of this strategy will depend on CommScope’s ability to leverage its remaining assets effectively in an increasingly competitive and rapidly evolving market.
As the industry continues to invest in 5G and looks toward 6G, CommScope’s reduced footprint in the wireless infrastructure market may also limit its ability to remain relevant in the sports and entertainment market. Structured cabling is a small part of project expenditure and their remaining wireless portfolio has proven uncompetitive. With a shrinking piece of the pie, can Commscope justify investment in sponsorship deals or afford a race to the bottom to overcome a lack of sponsor dollars? The company’s extremely low price-to-sales ratio (0.07x) indicates that the financial markets remains skeptical about its prospects, even after this significant transaction.
Andrew Rising
For Amphenol, this acquisition represents a significant expansion of its wireless infrastructure portfolio, positioning the company to play a larger role in next-generation wireless networks. This transaction reflects broader trends in the telecommunications industry, including the consolidation of wireless infrastructure providers and the ongoing challenges faced by companies in adapting to shifting market demands.
Now free of CommScope’s debt burdens, can Amphenol reorganize its new DAS portfolio under a historically significant brand and establish competitive parity with industry peers JMA and Solid – recent recipients of Open RAN development grants from the U.S. government ($43.9 million and $27.7 million respectively)? With a well-capitalized owner, the reformed “Andrew” may be well-positioned to return to a leadership position in the DAS industry.
