UTStarcom Gaining IPTV Foothold

UTStarcom Inc (UTSI), a provider of IP-based broadband equipment, has become a major contender for the global IPTV (Internet Protocol TV) solutions business. The strategic decision taken by the management to transform the company from a mobile handset developer to an IPTV and fixed broadband access system solutions provider has been favorably implemented.

UTStarcom’s RollingStream IPTV solutions are acting as the main catalyst and at the end of March 2009; the RollingStream system supported more than 1.32 million IPTV subscribers worldwide with a total deployed subscriber capacity of 2.5 million. The company maintains a commanding market position in the Asian regions, especially in China and India.
 
Nationwide deployment of 3G wireless networks by Chinese telecom carriers has resulted in strong order bookings. Recently, China Telecom (CHA) announced plans to implement a large-scale Mobile TV system in China using UTStarcom’s RollingStream platform.

The company has also expanded into IPTV advertising systems to obtain new revenue opportunities along with emerging prospects at Chinese cable operators. In India, the state controlled BSNL and MTNL together with Bharati Airtel, India’s largest wireless service provider use RollingStream solutions. Sri Lanka Telecom also delivers IPTV services using UTStarcom’s technology.
 
UTStarcom is trying hard to get a commanding market share in the European and North and Latin American markets. Latin/Central American regions may become a new growth area for the company with huge untapped market potential.

However, competition will be very tight in all these markets. European and North/Latin American markets have so far been served by financially sound companies like Thomason SA (TMS), Microsoft (MSFT), Motorola (MOT), Cisco Systems (CSCO), Siemens AG (SI) and Tandberg.

We believe the company’s ongoing restructuring activities and a strategic decision to optimize its R&D spending by focusing on selected products may help the company to introduce competitive products in the near future. We maintain our Hold recommendation for UTStarcomm.

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