CommScope doesn't need to be coaxed into making cable. Through three key customer segments, the company makes coaxial, fiber-optic, and other cable products for data, voice, and video transmission including high-bandwidth cable that provides telephone, cable TV, and Internet access. Segments include Broadband, Broadband Network Solutions (BNS), and Wireless; in addition, its Enterprise operations make network infrastructure products including cabinets, antennas, software, and network design services. Customers include telecommunications service providers and OEMs, including Anixter, Alcatel-Lucent, and Comcast.
CommScope's Wireless division (RF networks and small cell distributed antenna systems primarily under the Andrew brand) contributes more than 50% of total sales. Enterprise, which includes SYSTIMAX and Uniprise branded fiber, cables, software, hardware, sensors, lighting, and control systems for data centers and commercial buildings, accounts for nearly 25%.
The Broadband division's multichannel video, voice, and high-speed data coaxial and fiber optic cable operations bring in 12% of sales. Its BNS segment (14%) provides fiber-optic and copper connectivity products and services for telecom and enterprise markets as well as DAS services for the wireless market.
The company's products are sold in more than 100 countries. It has production facilities in the Australia, Belgium, Brazil, China, Czech Republic, Germany, India, Ireland, Mexico, Singapore, the UK, and the US (North Carolina, Illinois, Nevada, and Texas).
Its Wireless division has been expanding its Suzhou, China, manufacturing and distribution center to serve local customers. The wireless telecommunications market is growing in this region and the company's Andrew brand is the only non-Chinese cable and antenna supplier that is approved by state-run China Telecom. To meet demand, Andrew has been continually expanding its manufacturing operations in all its China locations.
Sales and Marketing
Products from its Wireless segment are primarily sold directly to wireless operators and to OEMs. Direct sales to its top three Wireless segment customers represented 14% of net sales and sales to top three OEM customers represented 6% during 2015. The Enterprise segment has a dedicated sales team catering to thousands of end customers primarily through independent distributors, system integrators, and value-added resellers. Its top three enterprise customers accounted for 15% of net sales. Net sales to its largest distributor, Anixter International, accounted for 12% of total sales in 2015.
Broadband segment products are primarily sold directly to cable television system operators. Telecom products from its BNS segment are primarily sold directly to broadband operators or to service providers that deploy broadband networks at the direction of broadband operators around the world. Enterprise products from the BNS segment are sold to thousands of end customers primarily through independent distributors, system integrators, and value-added resellers.
Commscope's revenues increased by 10% to $3.8 billion in 2014, its highest total in seven years. Revenues in 2015 remained consistent, hovering around the same $3.8 billion mark.
Wireless segment revenue decreased in 2015 primarily as a result of lower sales in the US due to a slowdown in spending by certain domestic wireless operators. Broadband segment sales also decreased as a result of lower sales in all major geographic regions with the most significant decrease in the CALA (Central and Latin America) region. This was offset by Enterprise segment growth driven by a spike in sales from the US as well as the APAC and EMEA regions.
After posting $237 million in profits for 2014, Commscope suffered a net loss of $71 million during 2015. The loss was due to higher expenses associated with previous acquisitions and additional interest expenses affiliated with acquisition-related debt.
Mergers and Acquisitions
CommScope in 2015 acquired the telecom, enterprise, and wireless business of TE Connectivity for $3 billion. With the deal, CommScope gained a more diverse geographic and type of business mix of customers while complementing its current business.
Also in 2015, CommScope picked up Airvana, a provider of small cell technology for wireless networks. The company paid $44 million for Airvana in a deal that enhanced its Wireless segment.
Leading up to the acquisition, the company faced industry competition, recognizing that it had a limited number of core customers, distributors, and suppliers. The company put itself at risk by relying on contract electronics manufacturers to make its products. These factors, compounded by the global recession and credit crisis, caused CommScope to spiral downward. The company responded by consolidating and reorganizing its operations in an effort to trim costs and regain its financial footing.