Pannaway Adds 2.4 gig GPON via TelStrat Deal

In a move that adds2.4gbps GPON to it product line, Pannaway Technologies plans to buy the access business unit of TelStrat International for an undisclosed sum.

The cash and stock transaction is expected to close by the end of August. As part of the deal, Bob Carroll, founder and CEO of TelStrat, has joined the board of Pannaway. Sid Schmid, formerly general manager of TelStrat’s telecommunications division, has joined Pannaway as an executive vice president and will lead the integration efforts.

According to Pannaway,TelStrat is the first to deploy 2.4gbps GPON systems in North America. "From technical standpoint, we’re in a race to deliver 2.4 GPON, which TelStrat is already delivering," said Kevin Brown, Pannaway’s vice president of marketing, adding that TelStrat last quarter shipped 10,000 2.4 GPON endpoints. "They haven’t been hugely successful in the copper world, but their GPON stuff is very well accepted," Brown added.

The TelStrat deal more than triples Pannaway’s customer count – from just shy of 100 customers to about 300 total customers. Both companies target Tier 2 and 3 service providers.

"It brings us to profitability sooner. Next year, initially, was the goal to profitability," said Brown, who wouldn’t comment on when profitability for the privately-held company is now expected.

The deal also makes Pannaway a stronger competitor to Calix, said Brown. Calix is a leader in the broadband access space. But with the TelStrat deal under its belt, Pannaway becomes second to Calix from a customer acquisition standpoint, according to Brown. "And we feel that being IP based it puts us in a great place to compete," he said, adding that the Calix solution is ATM based.

TelStrat in particular was a good match for Pannaway given the companies use the same Broadcom chipsets and the same operating system, said Brown. He added that TeleStrat’s Inteleflex chassis is a nice mid-density addition to the Pannaway broadband access portfolio. And the T1/special circuit technology that comes with TeleStrat’s access business further strengthens Pannaway’s product line, Brown continued.

"Coming on the heels of its recently announced MAGNM-20 chassis announcement, this acquisition brings together the broadband access and transport technologies that telcos need to compete – all under one roof," said Jeff Heynen, directing analyst, Broadband and IPTV at Infonetics Research, as quoted in a press release issued today by Pannaway. Heynen noted that independent telcos prefer companies with products that can offer a range of access technologies – from POTS to VDSL to GPON – to support a wide range of customers and applications.