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Ciena to Power Telefonica UK Network Automation Capabilities

Zacks Equity Research

Ciena Corporation CIEN recently announced that Telefonica UK, part of the global telecommunications group Telefonica, S.A. TEF, will deploy a technology from the former to migrate its legacy traffic to a new network. The transition will enable the U.K. carrier to augment network automation capabilities and gain greater control over its operations while reducing costs and improving reliability quotient.

Per the deal, Telefonica UK will leverage Ciena’s 6500 Packet Transport System (PTS) to shift its legacy Time Division Multiplexing (TDM) infrastructure to a next-generation Adaptive IP network. Powered by WaveLogic coherent optics, the 6500 Packet Optical platform offers a robust infrastructure that is highly scalable and cost-effective. This will facilitate the carrier to better address the evolving customer demand for data-intensive applications across a single, converged packet-based transport network. This, in turn, will enable the company to enhance real-time visibility and proactively take adequate steps to address any potential issue.

Meanwhile, the deal would increase the scope for Ciena’s customer engagement and boost sales, leading to a recurring revenue stream. The company’s top line is expected to benefit from rising demand for packet-optical transport and switching products, integrated network, and service management software. The company has been diversifying its footprint in datacenter connectivity. This has enhanced its reach to a broader end-to-end optical and data-equipment market.

Ciena is increasingly investing in the data and optical fiber market in order to cash in on the tremendous growth opportunity presented by rising bandwidth demand from network service providers. Moreover, network upgrades by telecom carriers to meet increasing demand bode well for the company’s long-term growth prospects. Currently, the company is one of the leading suppliers of 40G and 100G optical transport technology.

In addition, Ciena is making efforts to expand its Web Scale IT Architecture in the enterprise market by launching products like chipsets, metro architecture and mobile backhaul solutions. Fiber Deep technology represents a big opportunity for the company, going forward, driven by the strong adoption of its products among all major cable operators in the global market. We believe Ciena’s strong product portfolio will boost its top line in the long run.

The company remains confident about its business model and ability to achieve the three-year financial targets on the back of its diversification, global scale and innovation leadership. The company is augmenting its Packet Networking portfolio with new Adaptive IP capabilities, coherent optics and purpose-built hardware platforms to enable service providers to capitalize on 5G.

Ciena currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader industry are United States Cellular Corporation USM and Telenav, Inc. TNAV, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

United States Cellular delivered a positive earnings surprise of 104.1%, on average, in the trailing four quarters.

Telenav delivered a positive earnings surprise of 108.3%, on average, in the trailing four quarters.

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Ciena Corporation (CIEN) : Free Stock Analysis Report
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