AT&T's OpenRAN acceleration should benefit Spirent and Calnex, says Canaccord

US telco giant AT&T announced on Monday that it is planning to build an OpenRAN-capable 5G radio network, with Ericsson as its lead vendor, over the next five years. OpenRAN enables mobile network operators to "use equipment from multiple vendors for individual network radio access network (RAN) components and still ensure interoperability compared to typically single- or dual-sourced 'standard' radio access networks," Canaccord analysts explained.

AT&T said it should have fully integrated OpenRAN sites starting in 2024 and ramp up deployments from 2025, moving away from "closed proprietary interfaces...enabling rapid scaling and management of mixed supplier hardware at each cell site."

It expects that 70% of its wireless network traffic will flow across its OpenRAN-capable network by late-2026.

"In our recent note, we highlighted OpenRAN as one of the technology drivers that could help boost demand for network test solutions over the next few years. However, so far the technology has only seen modest global adoption, but this commitment by AT&T could accelerate industry-wide momentum," Canaccord said.

"To deploy OpenRAN, telcos typically need a lot more testing capability in order to ensure and monitor interoperability of the individual network components."

AT&T is estimated to be Spirent's largest single customer, accounting for up to 10% of sales, while the news could also support demand for Calnex's SNE-Ignite OpenRAN emulation platform, Canaccord said.

"Overall, we view AT&T's announcement as an industry positive that should add incremental impulses to a still tough telco spending environment and improve visibility on our 2024+ demand recovery thesis."

Despite the news, Spirent's share price was down 0.5% in morning trade, while Calnex was flat.