EXFO: Astellia Acquisition Foretells New Differentiation in Service Assurance Market

Ron Westfall – Research Director, Service Provider Infrastructure

Summary Bullets:

  • EXFO is advancing the completion of its acquisition of service assurance specialist Astellia, expanding its mobile assurance portfolio and customer footprint.
  • However, EXFO must use the Astellia acquisition to forge competitive differentiation in areas like fixed-mobile convergence assurance and 3D geolocation applications.

In December 2017, consolidation of the service assurance market heated up. EXFO announced the opening of its all-cash voluntary tender offer to acquire all outstanding shares of assurance specialist Astellia that EXFO does not already own, following the off-market acquisition of 33.1% of Astellia’s equity. The move follows Nokia’s 2017 acquisition of OSS supplier Comptel, due in good part to Comptel’s FlowOne closed-loop service assurance assets. The acquisition bolsters EXFO’s existing service assurance footprint, adding Astellia’s base of 120 operator customers. Equally important, EXFO locks up Astellia’s mobile service assurance expertise, augmenting its existing fixed and mobile assurance portfolio. However, EXFO cannot rest on its laurels in nearing the completion of the Astellia acquisition. In 2018, EXFO must find ways to differentiate its portfolio through the integration of the Astellia assets, as operator demands for automated assurance in complex multi-play service environments will escalate and will not wait for slow-on-the-draw suppliers because of integration distractions.

So, what does EXFO need to do to ensure the Astellia acquisition further differentiates and strengthens its existing assurance portfolio? A few things rapidly come to mind:

  • Push FMC Assurance: Service assurance suppliers primarily develop and market their portfolios to deliver service assurance for mobile and fixed access services. Astellia’s exclusive focus on mobile networks is a case in point. In contrast, marketing and development of fixed-mobile convergence (FMC) assurance solutions is rare. With the acquisition of the Astellia mobile assets, EXFO needs to direct portfolio integration towards supporting growing FMC assurance applications such as cable operator bundling of mobile services into their multi-play packages. The move ensures EXFO differentiates against the mobile-centric and fixed-centric offerings. EXFO also gains a stronghold to drive operator acceptance of FMC assurance solutions and revitalize ecosystem support of FMC-specific capabilities.
  • Tout 3D Geolocation Breakthroughs: EXFO must use the Astellia acquisition to create breakthrough differentiation in the crowded service assurance market. EXFO will gain little to no competitive benefits by promoting assurance capabilities like real-time monitoring and troubleshooting, as every competitor already delivers such capabilities. Rather, EXFO needs to emphasize new portfolio gains where competitor offerings are limited or under-marketed. This includes combining Astellia’s distinguished geolocation analytics platform with its real-time 3D analytics engine to deliver actionable business insights at the network, service, and subscriber levels in mobile, fixed, and FMC environments. Most rivals would have difficulty quickly countering EXFO’s broader, assimilated assurance portfolio.

EXFO’s pending acquisition of Astellia validates the essential role service assurance plays in operator digital transformation, especially for driving automated assurance of multi-play services. The acquisition indicates further vendor consolidation is expected in 2018. For example, Cisco acquiring assurance specialist Netrounds makes sense, as both companies already collaborate in delivering orchestrated assurance solutions and Cisco bolsters the defense of its cable operator footprint. Regardless, operators will expand their demand for automated service assurance, as it is vital to their digital services buildouts and digital experience enhancement goals.

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