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The high-profile acquisition allows Keysight and Viavi to capitalize on high-growth markets, with far-reaching impacts on long-term growth, competition, and dynamics of the industry
The three-way transaction between Keysight, Viavi, and Spirent has dominated headlines for over 18 months now. On October 15th, the companies officially closed the acquisition processes, ending a long chapter marked by bidding wars, regulatory scrutiny, and market uncertainties. So, it’s time to unpack the story and get a closer look.
About 18 months back, Viavi made a bid to acquire UK-based Spirent Communications for $1.3 billion. This was the year when Spirent’s revenues were down, and squeezed by high interest rates and inflationary pressures, the company was deliberately trimming costs, while making strategic pivots to capture marketshare in the non-telco space.
Although initially Spirent supported Viavi’s offer, it later declined for a higher bid from Viavi’s competitor, Keysight, whose proposal came shortly after Viavi’s. With an offer of $1.46 billion —15% higher than Viavi’s — Keysight ended up winning the bid.
The deal was momentarily settled, but soon encountered months of delays due to regulatory hurdles. Keysight’s proposal drew scrutiny from antitrust regulators from around the world (U.S., UK, France, Germany, and China), considering the potential impact it could have on fair competition in the technology-testing markets.
The Department of Justice (DoJ) blocked the transaction on antitrust grounds, and it was decided that Keysight will divest Spirent’s most contested business lines — high-speed Ethernet testing, network security testing, and RF channel emulation — to Viavi. The latter acquired these assets in a $410 million base cash deal — and an additional $15 million contingent pay — closing in October.
What Keysight gets, and why it matters
The synergy expands Keysight’s portfolio by combining its hardware and RF testing suite with Spirent’s software-driven lifecycle assurance, automation, and digital-twin capabilities, creating a holistic “lab-to-live” validation platform.
With assurance becoming a cornerstone in design, integration, deployment, and operations, lab to live becomes a key piece of the puzzle. “Spirent emerged as a first mover in this transformation, bridging the gap between network testing and live service assurance through automation, observability, and digital-twin technologies,” Patrick Kelly, founder and principle analyst, Appledore Research, wrote in his report on the acquisition.
“In context of Spirent’s portfolio, Keysight really doesn’t have any software at all,” he said to RCRTech. “So they’re getting Lifecycle Service Assurance (LSA) which is high-margin; they get a customer base they don’t have, for that software. A lot of that’s around cloud testing, 5G, open RAN-based testing, and it’s all lab-to-live.”
The integration could also help Keysight better serve customers in certain sectors. Roy Chua, founder and industry analyst, AvidThink, noted, “the transaction strengthens both acquirers’ product portfolios. Keysight obtains Spirent’s high-value positioning and network automation divisions, solidifying its “lab-to-live” software strategy, and consolidating its leadership in 5G/nascent 6G, autonomous vehicle, and satellite/non-terrestrial (including LEO) network markets, where it had some gaps — these are all promising industries.”
In terms of the financial risks associated with high-cost acquisitions like this, industry observers believe Spirent’s technology and market reach will offset the financial burden.
A strategic M&A for Viavi
Although Viavi seemingly lost the bulk of Spirent’s business to Keysight, its acquisition of the divested assets was a calculated bet to unlock immediate revenue. In the press release, the company estimated that Spirent’s business lines will add no less than $180 million to its non-recurring engineering (NSA) revenue just within the first year, post-closure.
That’s not a mere overestimation: the Ethernet testing, networking security, and AI infrastructure domains are headed for tremendous growth propelled by 5G rollouts, cloud computing boom, and the rise of generative AI. Capturing Spirent’s strategic assets positions Viavi to claim a larger share in these markets.
“Viavi is immediately elevated to a top-tier competitor by acquiring the divested lines,” said Chau. “In particular, Viavi grabs a critical, high-share position — likely 40-45% — against Keysight in the white-hot AI data center validation market, and network security continues to experience rapid growth fueled by AI-powered cyberattacks.”
Impacts on the larger T&M landscape
In his Appledore research, Kelly wrote, together, Keysight and Spirent, represents 22% of the global telecom testing and assurance market — a $1.3 billion industry today. This marks a seismic shift in the telecom assurance industry, and the larger test and measurement market.
“This transaction is a carving up of the T&M markets,” Chua opined. “Keysight maintains a plurality share in satellite/positioning and network assurance. Viavi now commands a similar significant share in high-speed Ethernet and strengthens to double-digit share in RF/5G/6G testing, with both companies positioned strongly across the hottest growth vectors, but in largely non-overlapping segments.”
Both Kelly and Chua concur that for the broader T&M industry, this transaction represents stiffer competition. “Smaller players like EXFO — which Viavi failed to acquire in 2021 — will now have to find scale to keep on the 800G/1.6T/3.2T treadmill for data center testing. Anritsu likely remains resource-constrained versus more diversified competitors. They will face intensifying market pressure, while Rohde & Schwarz could benefit as a European alternative that some customers seek to avoid duopoly dependence.”
