The Microwave Transmission market dropped to a new quarterly revenue low in 2Q17, declining 18 percent year-over-year (Y/Y). The main factors driving this disappointing quarter was a sharp reduction of purchases in the Indian region and broad slowdown in the Vertical markets.
- We estimate that radio TRx shipments into India declined sharply quarter-over-quarter (Q/Q), following an outsized purchase by Reliance Jio in the prior quarters. We expect deployments in the India region to improve during the second half of the year, but not at a high enough level to offset the recent decline.
- In 2Q17, the Verticals market declined at a double-digit percentage rate compared to a year-ago. We do not have specific details on the customer categories that make up the Verticals market, but we believe most of the decline was due to fewer telecom long haul deployments and a softer public safety sector. However, deployments by wireless internet service providers likely continued to expand.
Average selling price (ASP) of microwave radio transceivers continued to be stable with a relatively small amount of price erosion. We estimate that radio transceiver ASP declined below five percent Y/Y in 2Q17. We attribute this smaller price erosion to the following factors: 1) declining share of revenue from mobile backhaul; 2) reduction in new large contract bids; and 3) shift to higher capacity radio transceiver systems.
The bright spots for the microwave market continued to include E/V-Band, which grew five percent Y/Y, and Full Outdoor Unit systems, which grew four percent Y/Y, even with the total Microwave market’s decline in the back drop.
One vendor stood out in the quarter. While all other vendors experienced flat to down Q/Q sales into India during the quarter, Ceragon benefited from a large one-time order. Hence, Ceragon’s India revenue grew 87 percent Q/Q, which helped to raise its worldwide market share by 240 basis points to 11 percent in 2Q17. As a result, Ceragon was able to claim the third highest market share position in the quarter (Figure 1).