Fiber management platform provider Clearfield inked a $23 million deal to buy Finnish vendor Nestor Cables, in a strategic move to integrate its supply of fiber drop cables and expand the availability of its FieldShield fiber platform in the North American market.
“The expansion of the North American [fiber] market and the need for an expanding amount of drop cable solutions is really what spurred us to look at this opportunity at this time,” Clearfield CEO Cheri Beranek said on a call with investors. “FieldShield is an important part of our development and is a growing part of being able to actually connect each of these homes. And so we’re looking to be a much more predominant supplier of drop cables in the markets ahead and that’s where Nestor comes in.”
Founded in 2007, Nestor supplies fiber optic cables to customers in more than 50 countries, with a particularly strong position in Finland and on the European continent. It has worked with Clearfield since 2012 and co-developed the FieldShield last mile solution, though Clearfield owns the IP. Notably, Nestor’s 100-strong employee base includes many former Nokia staffers, Clearfield executives said on the call.
Nestor currently has two production facilities in Europe, with its primary cable manufacturing plant in Finland. But Beranek said it plans to transition production to Clearfield’s existing facility in Mexico in 2023. This will help reduce cost, complexity and transportation requirements around its fiber supply, she said.
Clearfield primarily serves Tier 2 and 3 service providers such as Frontier Communications and Windstream. Beranek said the move to integrate a key fiber supplier will help Clearfield augment capacity and scale its operations to meet the “incredible demand” for fiber broadband products.
In 2021, Nestor revenue totaled EUR €31.7 million (approximately $33.4 million) under Finnish Accounting Standards. Beranek said Nestor could post 20-25% growth this year, but noted Clearfield is more focused on the supply chain benefits of the deal.
“We really look at this less in regard to what its revenue lines are and its profitability, which of course is important, but more with strategic rationale of integrating supply chain to be able to ensure the availability of products for the North American market and to increase the availability of that product line,” she explained.
Clearfield’s move comes as the telecom industry grapples with supply chain issues which have dramatically extended lead times for fiber and component supplies.
In Q1 2022, key telecom vendors Corning and Nokia both reported strong demand for their products but said supply challenges constrained their growth. For its part, Corning has laid out plans to expand its manufacturing capacity by bringing a new facility in Poland online sometime later this year and expanding an existing facility in the U.S.