Fiber management platform provider Clearfield has acquired Finnish supplier Nestor Cables for $23 million in a strategic move to consolidate its fiber introduction cable offerings and expand the availability of its FieldShield fiber platform in the North American market.
"The expansion of the North American [fiber optic] market and the need for more and more introduction cable solutions really prompted us to see this opportunity at this time," Clearfield CEO Cheri Beranek said on a conference call with investors. "FieldShield is an important part of our growth and is a growing part of being able to physically connect every home. As such, we want to be a more dominant supplier of introduced cables in the marketplace in the future, 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 continental Europe. It has been working with Clearfield since 2012 and co-developed the FieldShield last-mile solution, although Clearfield owns the IP. notably, Nestor's 100 employees include many former Nokia employees, Clearfield executives said on the conference call.
Nestor currently has two production facilities in Europe, with its main cable manufacturing plant in Finland. It plans to move production to Clearfield's existing facility in Mexico in 2023. That will help reduce the cost, complexity and shipping requirements for its fiber supply, she said.
Clearfield primarily serves Tier 2 and Tier 3 service providers such as Frontier Communications and Windstream. The move to consolidate a major fiber supplier will help Clearfield expand its capacity and scale its operations to meet the "incredible demand" for fiber-optic broadband products.
Nestor's revenues will total €31.7 million ($33.4 million) in 2021, according to Finnish GAAP. Nestor is likely to achieve 20-25 percent growth this year, but noted that Clearfield is more focused on the supply chain benefits of the deal.
"We do focus less on its revenue lines and profitability, which is certainly important, but more on integrating the supply chain to ensure availability of products in the North American market and increasing the availability of that product line," she explained.
Clearfield's move comes at a time when the telecom industry is grappling with supply chain issues that have significantly lengthened lead times for fiber and component supply.
In the first quarter of 2022, major telecom suppliers Corning and Nokia both reported strong demand for their products, but said supply challenges are limiting their growth. For its part, Corning has developed plans to expand its manufacturing capabilities by bringing a new facility online in Poland later this year and expanding its existing facility in the United States
