Mavenir is on the brink of a revival. In the last week, Aramco Digital – the technology subsidiary of national oil company Saudi Aramco – is said to be investing $1 billion in the Open RAN evangelist. Then, Tareq Amin drops clues that he will be CEO of an as-yet-undisclosed company. Finally, AT&T announced that Mavenir will supply radios as part of its whopping Open RAN deal with Ericsson. These various activities are a huge boon, not just for Mavenir, but for Open RAN more broadly.
Activity at Aramco Digital, like most Saudi Arabian entities, has been low-profile in the months since Amin joined. The former Rakuten Mobile CTO joined Aramco Digital in late 2023 and there has been little news of his activity since then. Until now that is. News emerged last week that Aramco Digital may be investing $1 billion in Mavenir, what would be an eleventh-hour rescue for the US firm.
To add to the furor, this week Amin enigmatically updated his LinkedIn profile to say that he is the new CEO of “Confidential” – which sent spectators into a spin as to whether he might be taking over as CEO of Mavenir. Having played a key role in Open RAN in his role as CTO of Rakuten Mobile, this investment will be Amin’s opportunity to return to the field as a potential innovator again, especially if he steps into the CEO role.
The other recent news is that Mavenir will be a radio vendor in AT&T’s major Open RAN deal led by Ericsson. AT&T said on Tuesday that, alongside Fujitsu, Mavenir would develop radios for crowded urban areas. The radios will be open C-band radios (TDD 4T4R) and dual band radios (B25/B66 FDD 4T4R).
This is a huge win for Mavenir, which has been berated by credit ratings agencies in recent months for the costly impact of its R&D investments in radios.
Mavenir has been struggling to meet its financial commitments over recent months and was notably absent from the recent Open RAN landmark event, the Telecom Infra Project’s FYUZ last month. Mavenir did not have a stand at FYUZ, and there was only one Mavenir representative on the attendee list.
This led to conjecture about Mavenir’s role in the Open RAN community – was it pulling back intentionally, or making some tough budgetary decisions about events? Recent news suggests that Mavenir was laying low ahead of various announcements this week.
In late October, credit ratings agency S&P Global Ratings lowered its credit rating on Mavenir to ‘CCC-‘ on the basis that the firm did not have sufficient liquidity to repay a $133 million term loan obligation maturing in January 2025.
“We forecast a free operating cash flow deficit of about $30 million over the next six months. Therefore, absent a maturity extension or capital infusion, we believe the company will likely default on this debt when it comes due,” S&P said.
The cause of this pain, according to the credit agency, has been twofold: low customer revenues and high cost of R&D “which we expect to continue in the near term.”
The high R&D costs boil down to Mavenir’s commitment to building radios, which it started in 2021. This was an unusual decision, given that the firm has a strong background in providing software for the network core, which was its main source of income. Committing to building radios would require a cumbersome R&D budget.
Competing with the major RAN vendors is an uphill battle. Looking at 2022 figures, Nokia spent €4.5 billion ($4.7 billion), Ericsson spent SEK 47.3 billion ($4.3 billion), and Huawei spent a whopping $23 billion.
Mavenir, meanwhile, spent $500 million (that it received in 2021 as an investment from Koch Investments Group) building radios, CEO Pardeep Kohli told Light Reading last year.
Mavenir employees told Wireless Watch at MWC this year that the company was looking for small radio deals, around the $10-$20 million figure.
Either Mavenir must cut its losses on its RAN R&D investments, or pile in completely. The cash injection from Aramco will allow the firm to continue on this RAN hardware trajectory, for now.
The new AT&T deal, alongside the Saudi Aramco investment looks like Mavenir’s revival and an approval of its commitment to build radios, even if the firm is only providing a small portion of the AT&T deal.
Despite the optimism for Open RAN in the early years, the juiciest macro Open RAN deployments have been slow to fruition. Telus is transitioning its macro network into an Open RAN, multi-vendor setting in Canada – as a result of the need to replace Huawei kit.
The need to rip and replace Huawei equipment will continue to be a promising avenue for macro deployments. Otherwise, operators will be reluctant to unnecessarily replace working equipment.
The promise of a group-wide RFP from Vodafone for 170,000 sites, of which 30% was due to be Open RAN, has had vendors salivating for some time. Vodafone has said that it is on the cusp of naming suppliers for this tender. But this may not be quite as fulfilling as expected, since it is now expected to be fewer than 170,000 sites since Vodafone divested assets in Spain and Italy.
Vodafone may also fall below the 30% Open RAN goal, since there has been a sense of fallen enthusiasm from the operator.
But the geopolitical push for vendor diversity remains strong, especially in the US. At FYUZ this year, the US Department of Defense was vocal in its support of Open RAN networks and recently released its 5G strategy which included strong support for open networks. A Trump presidency is expected to continue in this vein.
Mavenir will be drawn into the orbit of Saudi Aramco and its goals for the Saudi nation. Aramco said in March this year that it has six primary areas of focus: Aramco Cloud, Aramco Intelligence, Aramco Connect, Aramco Secure, Aramco Solutions, and Aramco Sustain.
This is all part of Saudi Arabia’s transition away from dependency on oil, called Vision 2030. Open RAN is key to this “digital transformation” for Saudi Arabia.
The Saudi Aramco strategy includes a partnership with Intel, working on edge-native Open RAN solutions and an Open RAN Development Center which was earmarked to start activity in 2024 but there has been very little further detail on the center this year.
With the deep pockets of its parent company, Aramco Digital will not be short of suitors to help with projects at the Open RAN Development Center. But Aramco has chosen to pick a small US vendor for its bedfellow which will give it greater autonomy from the major vendors. Saudi Aramco will have to continue to pour in the cash, if Mavenir fails to become profitable on its own terms.