4G roll-out leads to hike in Spirent orders

British telecoms testing company Spirent Communications pleased the market on Wednesday by reporting an increase in orders in the first quarter of 2014, up by 12% compared with the first-quarter of 2013, reflecting its multi-billion-dollar roll-out of 4G networks in China.

Revenue for the period at $111.9 million (£66.69 million) showed a 16% increase, with organic growth up 14%.

China is now a key market for Spirent's testing equipment as it issued 4G licences at the end of last year to its three telecom carriers, with a spend of $16 billion on 4G LTE networks estimated for 2014 by the Chinese government.

Orders in the wireless and service division rose 6% owing to strong growth in the Asia Pacific region on the back of the 4G roll-out. However, trading data was encouraging across the board, and the company said it expects further momentum during the second-quarter.

Further investments flagged in the full-year results for 2013 are also on schedule including Spirent Velocity, the first open-framework, cloud-based test platform for rapid development and validation of software-defined networking and network functions.

Last year, Spirent reported a 64% fall in profit due to contract delays from major equipment makers in the US, traditionally its largest market, and the company still faces challenges.

Free cash inflow fell to $2.9 million from $7.9 million for the same period last year as working capital was absorbed to fund revenue growth.

Eric Hutchinson, chief executive officer, highlighted the company's restructure in his statement: "The new company structure is established and new executives have been appointed to strengthen the management teams," he noted.

"Advances have been made in the development of new products and solutions and in driving our strategy at all levels. Market conditions have improved in all regions compared to 2013."

Shares in the company, whose clients include Nokia and Cisco, rose 6.9% to 103.25p, making it a top gainer on the FTSE 250 Mid Cap Index, a big step up from their 52-week low of 81.40p.