Juniper Wins British Telecom Deal - Analyst Blog

Leading networking infrastructure products and services provider Juniper Networks Inc. (JNPR) recently announced that it would provide MX Series Universal Edge Routers to British Telecommunications Plc.

 

Founded in the U.K., British Telecommunications is the wholly owned subsidiary of BT Group plc (BT), the world’s oldest and largest telecom company. Deployment of Juniper’s MX Series Universal Edge Routers will aid BT plc to set up its 21st century network (21CN). Moreover, the routers will help in efficient network deployment outside the U.K.

 

With 21CN, British Telecommunications will initiate a range of new and improved software-driven customer network services, to be available globally. This foray into international software-driven communications businesses provides British Telecommunications with a facelift and Juniper with new opportunities.

 

Powered by Juniper’s Junos software platform, the MX Series routers will help to streamline network operations, facilitate high-volume reliable data flow within networks and ensure security of network services globally.

 

MX series routers will provide extensive networking support (with technologies such as Ethernet, MPLS VPN services, Intranet and Extranet) for British Telecommunications’ 21CN network service. Moreover, British Telecommunications is keen on using MX960 routers for its networks specifically targeted at financial services’ customers, to provide them with high-speed services. Above all, the company expects to gain scalability as well as cost advantages with Juniper’s networking products.

 

Though we are unable to gauge the economical benefit arising from the deal due to the absence of financial details, we remain encouraged by Juniper’s long standing association with British Telecommunications. Back in 2007, the company selected Juniper to provide routers and security solutions for the U.K.'s Defense Fixed Telecommunications Service (DFTS) project. We believe the success at BT2 will likely trigger other important wins for Juniper.

 

The high demand for Juniper’s products led to the company’s strong second-quarter performance. With companies substantially increasing their IT spending budgets, we believe the demand for networking products will continue to grow through the rest of 2010.

 

Although Juniper’s growth appears imminent with improvement in network spending, stiff competition from other big players such as Cisco Systems Inc. (CSCO) and Hewlett-Packard Company (HPQ) may pose some challenges. The high operating cost of the company and its European exposure also add to our concerns.

 

We currently have a short-term Hold recommendation on Juniper, implying a Zacks #3 Rank.