Fiber or 5G? Ribbon is rooting for both to boost its IP routing biz

Ribbon Communications had a rocky first half in 2022 thanks in part to supply chain issues and inflation. But the tide began to turn as it exited the year and as it now heads into 2023, CEO Bruce McClelland told Fierce he’s optimistic it will be able to deliver “meaningful” improvements in both profitability and revenue growth as it leans into IP routing amid growing demand for 5G and fiber.

“Strategically, we’re really focused around how 5G is evolving the network and some of the new products we’re bringing into the market there and really focused on increasing our business with some of the large service providers around the world,” he said.

About half of Ribbon’s business comes from the U.S. today, with Verizon and AT&T ranking among its biggest accounts. But it also has a substantial footprint in India, Japan and Australia. Across the board, McClelland said 5G is the number one priority for most service providers, though broadband is a close second. And both of those require more and robust transport infrastructure.

“From our perspective, it’s a lot more than just the radio infrastructure and the RAN network and the move to the 5G RAN technology. It means more traffic which means more fiber, and in a lot of cases if you’re going to a small cell architecture like millimeter wave it means more fiber much deeper into the network,” he said. “Ultimately, what we’re finding is the deployment of IP and routing technology is moving deeper into the network as well.”

Thus, growing its IP routing platforms has become objective number one for Ribbon. While the company acquired ECI in 2020 in a bid to boost growth by offering new voice services, McClelland said it has begun shifting its investments from voice to IP routing and – to a lesser extent – its optical portfolio as well.

In the IP routing space, Ribbon is up against the likes of Cisco, Ciena and Nokia. In optical, it’s squaring off with Ciena, Infinera and Nokia. McClelland acknowledged these are strong rivals but noted “we’re finding our customers want more choices.” He pointed to a cell site deal Ribbon inked with India’s Bharti Airtel at the end of 2022 as one of several recent wins that will serve as a tailwind for the company this year.

“We’re very organically focused, it’s very heads down operationally focused,” he said of the company’s plan for 2023. “We’ve got a lot of good proof points that we’re headed the right direction…We expect to see some meaningful improvements in profitability and some good revenue growth.”

Ribbon is set to report its Q4 2022 earnings on February 15.