Starent calls on India, China to diversify

BANGALORE (Reuters) - Starent Networks Corp (STAR.O) sees a large market opportunity in China and India due to robust wireless services growth and increased demand for broadband Internet on mobile devices in the two countries.

The move could allow the company, which helps wireless carriers deliver multimedia services to subscribers, to diversify its revenue, which is currently strongly tilted toward North America.

Starent expects shipments to India and China -- which form roughly 40 percent of the worldwide wireless market -- starting from 2010 and revenue from the countries from 2011, its CEO said.

The company is looking at partnerships with carriers in the two countries, Chief Executive Ashraf Dahod said.

"We are in engagements with all of the key carriers in this region," Dahod said in an interview with Reuters.

Its clients in India and China include Tata Indicom and China Telecom Corp (0728.HK), respectively.

Starent's infrastructure equipment is used by wireless carriers to offer video, multimedia messaging and voice-over-IP services.

Japan and Korea were two of Starent's early markets. It has tie-ups with KDDI Corp (9433.T), Japan's second-biggest cellphone operator, and SK Telecom (017670.KS), South Korea's top mobile carrier.

In 2008, United States and Canada made up 91 percent of the company's overall revenue. Japan made up 5 percent of revenue and Korea 3 percent. The company's hardware and software products have been deployed by over 85 mobile operators in 35 countries.

Starent's biggest customers include U.S. wireless carriers Verizon Wireless, a venture of Verizon Communications (VZ.N) and Vodafone Group Plc (VOD.L), and Sprint-Nextel (S.N).

SHIFT FROM CDMA

The company is also seeing a change in dynamics of the technology its customers are using.

Currently, about 65 percent of its subscriber base comes from CDMA, or code division multiple access, which is used primarily in the United States and Asia. The rest comes from GSM/UMTS, or global system for mobile communications/universal mobile telecommunications system, technology.

"Sometime next year we could really move toward 50-50.... we see the non-CDMA piece becoming greater than 50 percent once we go into 2011," Dahod said.

The shift would not affect margins, he said.

Operators are looking to shift to LTE, a new high-speed wireless technology aimed at faster downloads, video sharing and mobile TV.

Starent competes with Cisco Systems Inc (CSCO.O) and UTStarcom Inc (UTSI.O) in the CDMA market, and Cisco, Huawei Technologies HWT.UL, Ericsson (ERICb.ST) and Nokia Siemens Networks NSN.UL in the GSM/UMTS market.

Starent shares have risen 97 percent from the start of the year.