Semtech Accelerates Vesting of Comcast Warrant

Semtech Corp., a semiconductor company tied to Comcast’s business-focused IoT activities, said it has accelerated the vesting of the remaining unvested shares from a warrant originally issued in 2016 as Comcast’s machineQ subsidiary prioritizes coverage in its current mix of deployment areas before expanding to more markets.

Semtech said the remaining 586,956 unvested shares have been vested. The warrant is now fully-vested and exercisable for a total of 869,565 shares.

The original 2016 agreement provided a warrant for Comcast to acquire up to $30 million of Semtech common stock, to help facilitate an anticipated network expansion in up to 30 U.S. cities within a period of 30 months following initial trials in Philadelphia and San Francisco.

As a result of today’s announcement, Semtech said it expects to record an expense related to the warrant of $21.5 million, including $15.9 million related to the acceleration, which will be reflected as a reduction to GAAP net sales in the company’s fiscal Q1 quarter. Semtech said it will discuss this in more detail on its scheduled May 30 earnings call.

Comcast has similar warrants agreements with other key suppliers, including Arris, Harmonic and Universal Electronics.

machineQ, Comcast’s enterprise IoT company, is using Semtech’s LoRA devices and wireless RF technology for rollouts underway in several markets, including Philadelphia, the San Francisco Bay Area, Chicago, Atlanta, Baltimore, Boston, Denver, Detroit, Indianapolis, Miami, Minneapolis, Oakland, Pittsburgh, Seattle, and Washington D.C.

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“As its deployment has matured, Comcast has shifted deployment efforts to better target high-value strategic markets by providing extensive coverage within these markets before expanding regional coverage to new markets,” Semtech said in a release.

Semtech said the change in priorities will be of interest to both companies, but were not anticipated in the original terms of the warrant.

“We are pleased with the speed and extensiveness by which Comcast has executed the deployment of Semtech’s LoRa technology to enable its machine platform,” Semtech president and CEO Mohan Maheswaran, said in a statement. “Comcast’s efforts in the deployment of LoRaWAN networks in various U.S. markets is further helping to establish the LoRaWAN protocol as the de facto standard for LPWAN deployments.”