Analyst: Occam’s Fairpoint deal could be worth $125M

Occam Networks’ recent contract to supply a broadband access rollout by Fairpoint Communications could yield $125 million in revenue, according to an estimate by Andrew Schmitt, an analyst with Nyquist Capital. And $80 million of that could come in the next 18 to 24 months.

For Occam, which reported total company sales of $75 million last year, the deal is potentially transformative.

Fairpoint was a major customer of the IP broadband access vendor before this deal was struck. But its recently closed acquisition of Verizon’s local access business in Vermont, Maine and New Hampshire has made it the country’s eighth-largest telco.

In the first stage of its deployment, Fairpoint is building 10-Gb/s Ethernet rings connecting 200 central offices throughout the three states. Those rings will be terminated by Occam equipment in each office, requiring new Occam chassis to be installed.

Pannaway was selected as a secondary supplier of access gear for the rollout. But whereas Occam announced the win in January, Pannaway has yet to do so. Fairpoint executives described Pannaway last month as a “new vendor [that is] prepared to support us quite aggressively, as is the existing vendor, Occam.”

In addition, Cisco Systems is supplying the back-end IP routing equipment for the rollout.

“Our biggest concern is why Fairpoint would bet their entire company on Occam and Pannaway,” Schmitt wrote. “This is a significant piece of business that major equipment vendors would want. Perhaps tier 2/3 carriers simply ‘think different’ and see equal risk in being a small customer fish in the big pond of Alcatel as they do working with critical vendors that are small companies.”