Telecom’s next big G is bankrupG

For a while, 5G, 6G and 10G were all the rage in the US telecom industry. But now it seems like the next big “G” in telecom will involve bankruptcy (bankrupG?).

Casa Systems said on Wednesday it would sell off its cable business and a sizable chunk of its mobile/wireless business under a court-supervised Chapter 11 process.

The day before, Airspan said it filed a Chapter 11 bankruptcy plan that most of its creditors, including Fortress Investment Group, supported. Airspan said the move would give it up to $95 million in new equity financing.

They’re not alone. Cyxtera Technologies – which provides data center colocation and other digital infrastructure services – filed for Chapter 11 bankruptcy protection in June 2023. It ended up selling its assets to Brookfield Infrastructure Partners in November 2023.

Also last year, telecom construction company QualTek Services filed Chapter 11 in May, and data center provider Internap Holding did the same in April. Fixed wireless Internet provider Starry Group emerged from bankruptcy in August.

Other companies look like they’re on the brink. CommScope, Lumen Technologies and Dish Network are facing extremely difficult financial situations and may pursue some kind of restructuring – including bankruptcy – as a result, according to ratings company Debtwire. And Ligado Networks recently warned the US Court of Federal Claims that it’s on “the brink of bankruptcy.” To be fair though, that’s a familiar place for Ligado.

The great telecom slowdown

None of this really comes as a surprise. Although each company in the telecom industry is facing its own unique set of circumstances, broadly the sector is suffering through a prolonged spending drought. US vendors began warning toward the end of 2022 that network operators had mostly halted spending on their networks.

The trend isn’t restricted to the US.

“Preliminary findings show that worldwide telecom capex [capital expenses], the sum of wireless and wireline/other telecom carrier investments, declined for the full year 2023 in nominal USD [US dollar] terms, recording the first contraction since 2017,” wrote research firm Dell’Oro Group in a recent release.

Based on commentary from the likes of Calix, Corning, Cisco and others, the spending freeze appears to have continued into 2024. The apparent end of the US government’s Affordable Connectivity Program (ACP) subsidy program probably won’t help.

In response, big vendors are shedding thousands of jobs. In just the past few weeks Cisco confirmed it will cut around 5% of its workforce, or around 4,000 positions. And Ericsson said it would reduce headcount in Sweden by 1,200 roles, just months after cutting 9,000 jobs.

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