Mavenir Secures $95 Million via Public Debt

Open Radio Access Network (RAN) gear vendor Mavenir has raised $95 million via public debt, at the same time, slashing the headcount in its marketing team, according to media reports. The development comes after Mavenir's rival, Parallel Wireless, significantly laid-off employees and shuttered the Canada unit. "As you know, markets are not what they were last year. We are [a] private equity owned company, but our debt is through public lenders", Mavenir, CEO Pardeep Kohli told Light Reading.

Kohli added that the company's headcount has grown from 3,200 employees in March 2020 to 6,000 in May 2022. He said the company is looking at ways to optimize going forward. Though the chief executive did not elaborate on the number of employees that have been let go, he said the company may hire people with different skills. James Crashaw, an analyst with research firm Omdia noted that with Parallel Wireless announcing layoffs and with internet giants Google and Microsoft being cautious about headcount, it is not a `big surprise' that Mavenir is tightening its belts.

Crashaw added that with significantly increased R& D spending over the last few years to support their broad portfolio, the companies might need to keep their spending in check as they ride out the ‘challenging macroeconomic backdrop'. In light of this, Moody's has downgraded Mavenir to B3 from B2 following the company's new funding to pre-fund anticipated cash burn due to significant R&D spend which is rising materially, higher working capital needs, and a softer top-line growth forecast.

Moody's said that the company's private equity sponsors and other strategic investors­ Koch Strategic Platforms, Siris Capital Group, and others have traditionally funded Mavenir. In 2020, Mavenir dropped an initial public offering (IPO) plan citing the market volatility. "This shift in the financing mix, with a material issuance of debt, is significant break from the sponsor's track record over the last four years of back-stopping all negative cash flow with equity which was a key factor supporting the credit profile", the American financial services firm explained.

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Moody's added that Mavenir's revenue growth is strong, driven by long term relationships with a large customer base, including 17 of the top 20 carriers. "Good geographic diversity, a large target addressable market with strong demand drivers, the Company's strong niche position in leading technology software and services, and strong engineering talent and patent portfolio also support the credit profile," it said.

Moody's expects Mavenir to "maintain adequate liquidity over the next 12 months", but the highly concentrated ownership and an aggressive growth strategy being pursued by a private equity sponsor require substantial research and development spending. "The Company is also relatively small in scale, with revenues below $700 million, has high customer concentration (above 20 percent), limited segmental diversity, and has a small share of a large market with many, and much larger competitors", it said.