By Abhirup Roy
Feb 27 Spirent Communications Plc
forecast a return to revenue growth this year as the rollout of
4G mobile phone networks in China and Europe replaces dwindling
U.S. demand for its telecom testing services.
Spirent's shares rose as much as 7 percent on Thursday to
rank the stock among the top percentage gainers on the FTSE-250
Spirent, which tests ethernet and wireless networks and
devices for companies such as Cisco Systems Inc and
Nokia, expects organic revenue growth of 8-9 percent
this year, Chief Executive Eric Hutchison said.
"We are on track to see revenue growth in the first
quarter," Hutchison told Reuters in an interview after Spirent
reported full-year results.
He said investments by wireless carriers to support the
rollout of long-term evolution (LTE) 4G networks, particularly
in China and Europe, would be the "big driver" of growth.
Ericsson, the world's biggest maker of mobile
networks, said last month that demand was picking up in Europe
and China due to investment in LTE networks that can cope with
increasing data traffic from smartphones and tablets.
The global LTE infrastructure market is forecast to reach
11.4 billion this year and the number of LTE subscribers
worldwide will exceed 153 million, according to Infonetics
Research, a telecom market research firm.
Infonetics said most of these subscribers would be in
Asia-Pacific, Europe, the Middle East and Africa.
"In terms of supply of test equipment in China, we've got
well over 50 percent market share," Hutchison said. "We should
see some growth coming out of that."
China issued 4G licences at the end of last year to the
country's three telecom carriers - China Mobile Ltd,
China Unicom Hong Kong Ltd and China Telecom Corp Ltd
Total spending on LTE networks in China may reach $16
billion in 2014, with the number of users topping 30 million,
the official Xinhua agency cited the minister of industry and
information technology as saying in December.
Growth in the European and Chinese wireless infrastructure
markets promises a better year for Spirent, analysts said, after
the company reported a sharp drop in profit and revenue.
"The market will hopefully say that this is a turning
point," Panmure Gordon analyst George O'Connor said. "There is
more transparency about the underlying business."
Spirent's full-year pretax profit fell 64 percent to $39.1
million and revenue fell 12 percent to $413.5 million.
Revenue from the United States, Spirent's largest market,
fell 10 percent last year.
While sales also fell in Europe and the Asia-Pacific region,
the prospect of a turnaround is better in these regions than in
North America, where demand for the company's test systems has
"That continues to be a feature, particularly in North
America, where we haven't seen significant contract releases
yet," Hutchison said. "That gives us a degree of near-term
Spirent also said it planned to invest about $33 million in
product development this year. After buying software maker DAX
Technologies for $37 million this month, the British company is
also considering more acquisitions.
"We are looking at $20- to $30-million technology bolt-ons
in wireless technologies, data analytics and in anything that
can help kickstart in automotive testing and in software-defined
networking," Hutchison said.
Spirent's shares were up 3.2 percent at 108.80 pence at 1322
GMT on Thursday on the London Stock Exchange.