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BLOG

Open Insight #15

(Click here to read the Swedish version)

Welcome to the fifteenth edition of Open Insight, our blog for investors. This is where you can find out more about our offering and market position, our progress, our challenges and our growth. 

2022 was the year when we established our position as a strong provider in 5G time synchronization. It was the year we achieved our strongest operating earnings ever. We can pride ourselves on stable growth, important steps forward in Cloud and IP and, last but not least, the launch of our new product Zyntai for 5G synchronization. However, it was also the year when inflation soared, a shortage of components sometimes posed challenges and we noted a tendency for investment hesitancy among customers.  

We succeeded in navigating these challenges by staying focused on our strategy, and have not only delivered on our financial targets, but surpassed them. The results led us to revise our targets, and I am highly confident that we will achieve them. Important factors for increased growth include our newly developed synchronization product for 5G and an expanded offering of Cloud and IP Media Gateway solutions, which will be launched in 2023. We expect the growth to vary over the years but to exceed 15%. A higher proportion of support and licensing revenue as well as improved scalability in our business are also expected to contribute to further strengthening our operating margin. Our new financial targets in 2023–2027 are an organic average annual growth of at least 15% and an operating margin (EBIT%) that within the period will reach 20%.

In this issue we will take a closer look at our intensive development in 5G synchronization and our new product, which has been launched and will be showcased at the Mobile World Congress in Barcelona. We will talk about how we shortened the lead times for customer testing of our synchronization products, and about the successful verification testing of the new 5G synchronization architecture.

Launch of our new product for 5G synchronization

We just launched Zyntai – our new product family in 5G synchronization. The launch marks a major step forward in enabling the supply of large customer installations and rollouts in 5G and critical networks. It allows for advanced management of large synchronization networks with all the unique features of our synchronization solution Precision TimeNet.  

The first Zyntai units are planned for delivery in late 2023, with a gradual increase in volume during 2024. As customers such as Türk Telekom and Three Sweden have already done, we expect more customers to order our existing product Nimbra TimeNode in 2023 to verify integration, ensure nationwide deployments and be ready for larger deployments of our new large-scale product family Zyntai in 2024.  

Broad communication initiative

In connection with the launch, we conducted a major marketing campaign to publicize our unique solution and highlight key messages and benefits. Among other things, we held a seminar for analysts in which several leading telecoms analysts took part. This seminar was highly successful and resulted in several individual meetings with analysts. We highlighted the importance of accurate time synchronization to a well-functioning 5G network, the challenges of existing solutions, and how our GPS-independent solution can significantly reduce costs and make 5G rollout faster and smoother for mobile operators.  

Several industry magazines including 5G Magazine have discussed the challenges in achieving secure, scalable, GPS-independent time synchronization in order to realize the 5G promise of income-generating high quality business services, where our solution represents a cost-effective, future-proof choice.  

As part of the launch, we also designed a new website dedicated to synchronization. The aim is to explain all the benefits of our solution and how it can be implemented in various network solutions and utilized in different market segments. 

High activity over the past year

As announced in Open Insight #9, in late 2021 we won a major strategic deal with Türk Telekom worth over SEK 200 million. The deal involves supplying a GPS-independent synchronization solution for Türk Telekom’s 5G rollout. In 2022 we carried out training, integration and the first phase of implementation, which includes installations that cover all regions of Turkey. Three Sweden, whom we signed a contract with in Q2 2022, implemented their initial order of our synchronization product in its 5G network. The solution is now up and running, following thorough testing of the product in their network in the spring of 2022. The leading Canadian operator that placed a pilot order with us at the end of last year has launched the pilot. In early 2023 we also announced news of another new customer and in a new market segment, critical networks.   

Unique advantages

Our synch solution delivers very high time precision in 5G networks over existing infrastructure, offering customers a safer, more reliable alternative to GPS that is also more cost-effective than existing alternative solutions. Moreover, it is designed for large-scale deployments and high requirements for security, reliability and accessibility, which makes it a future-proof solution for time synchronization in 5G networks.  

High expectations at Mobile World Congress

It is with high expectations and much excitement that we are exhibiting at the Mobile World Congress (MWC) in Barcelona this year. Needless to say, we’ll be showcasing our newly launched product family Zyntai, which will be highlighted at our booth. Visitors will be able to see a presentation and a live demo from an existing customer installation, with traffic and real-time visualization of the whole synchronization network.  

The primary focus will be on profiling ourselves as a cost-effective, GPS-independent alternative offering higher security, reliability and faster 5G rollouts. During the trade show, besides meeting customers and partners, our experts will meet analysts and journalists to present the unique benefits of our synchronization solutions. 

Read more about the launch of Zyntai in our press release

Successful review of the architecture in the 5G synchronization project

In December 2022 we carried out a so-called walking skeleton in the Zyntai development project for 5G synchronization. This term comes from agile development and means that a thin use case is implemented early in the project which includes and connects all layers of the product architecture. In our case, it meant that we successfully demonstrated functionality from the hardware all the way up to our management system, including functioning communication between two units.  

The strengths of this method are that it gave us a clear common goal for all the development teams, and that it required us to integrate all our components at an early stage, thus reducing the project’s risks. 

Good results and continuous improvements

We have made good progress and have a clear picture of what remains to be done. The walking skeleton milestone showed, among other things, that the hardware-independent clock controller (HICC) that we have developed and refined on our existing Nimbra platform performs even better on our new platform. We also had several inspections carried out by an independent security firm to ensure that we meet all of the telecom industry’s high requirements for security and secure development.  

We are continuing to improve our algorithms on the Nimbra platform and have introduced several usability improvements in the management system that enable workers at Türk Telekom and Three Sweden to operate and integrate our synch nodes in their operating environment in a robust, simple way. Türk Telekom’s network now has over 100 nodes and is used for synchronization of Türk Telekom Mobil’s 5G network.  

Card deliveries according to plan

Our chosen card production supplier manufactured an initial version of prototypes in October. With them, we have ensured that all hardware functionality works as planned and have identified all the changes that need to be introduced in the second version. We will receive the second version from our factory in mid-March, which will be complete with mechanics. 

All parties benefit from shorter testing times

There is currently strong demand to test our synch solution, so we have focused on dealing with the requests as efficiently as possible and allocating more resources to meet the increased demand. The aim is to satisfy as many customer requests as possible without compromising on quality.   

By continuously improving our processes, we have rationalized and shortened our product testing times through what is known as proof-of-concept (PoC). The total test period including preparation and shipping was previously about 12 months. This period has now been shortened to about 6–9 months, including 3–6 months for the actual testing at the customer’s premises. In 2024 we aim to achieve more general acceptance times of 1–4 months. Our customers appreciate this progress, and it also benefits our development organization by freeing up key resources for further development in the future. 

In 2021 and 2022, the tests were also used to verify new functionality and demonstrate interoperability with 5G radio networks, which made the testing period longer. Our synch solution in mobile networks is now more mature and well-established, which means the testing times can be gradually shortened.  

Another way to shorten lead times is by preconfiguring the nodes before shipping them to customers. We also have technical experts at the customer’s premises who follow an agreed testing plan to ensure a good, efficient start to the testing period. This plan includes a deeper understanding of the customer’s unique situation and network.  

Verifying and securing our solution in our customers’ existing networks, including live traffic, is an important part of the testing process for our customers. For this reason, we focus strongly on ensuring that testing can be carried out at our customers’ premises under optimal conditions.   

If the customer requests an expanded testing period, we offer a second phase that includes nodes and network analysis. Customers use the network connections, including contracted capacity, that suit their needs best. They can then analyze the networks’ behaviors using our built-in measurement functions. This gives the operator a real-time diagnosis of the stability and quality of the GPS-independent time synchronization in their network.   

An eventful year

Thank you for your time. Looking back over 2022, we can summarize it as a highly eventful year. We now embark on an exciting spring with many projects and initiatives in 5G synchronization, Cloud and IP. Despite the uncertainties in the surrounding world, I am very confident that we will achieve our new financial goals.  

Crister Fritzson, 

CEO Net Insight

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