Good morning, ladies and gentlemen, and welcome to the CommScope fourth quarter and full year 2019 conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. If anyone should require assistance during the conference, please press star then zero on your touchtone telephone. I will now turn the conference over to your host, Mr. Kevin Powers.
Good morning, and thank you for joining today to discuss CommScope's fourth quarter and full year 2019 results. With me on the call are Eddie Edwards, President and CEO, and Alex Pease, Executive Vice President and CFO. You can find the slides that accompany this review on our investor relations website. Please note that some of our comments today will contain forward-looking statements based on our current view of our business, and actual future results may differ materially. Please see our recent SEC filings, which identify the principal risks and uncertainties that could affect future performance. Before I turn the call over to Eddie, just a few housekeeping items to review. Today, we will discuss certain adjusted or non-GAAP financial measures, which are described in more detail in this morning's earnings materials.
Reconciliations of non-GAAP financial measures and other associated disclosures are contained in our earnings materials and posted on our website. All references during today's discussion will be to our adjusted results. Note, the fourth quarter 2018 results include historical errors results reflecting certain classification changes to align to CommScope's presentation. All quarterly growth rates described during today's presentation are on a year-over-year basis, unless otherwise noted. I will now turn the call over to our President and CEO, Eddie Edwards. Eddie?
Thanks, Kevin, and good morning, everyone. Today, we reported fourth quarter sales that were in line with our outlook and adjusted EBITDA at the high end of our outlook. We're also pleased to report adjusted earnings per share above the high end of our guidance and that we generated over $300 million of adjusted free cash flow. Similar to the third quarter, our results were largely consistent with expectations, with the exception of our networking cloud software sales that were expected to occur in the first quarter of 2020. In what remains a challenging environment, our performance results reflects our commitment to strengthening the business and our solid track record of execution. We are focused on taking action and actively managing our operations to ensure CommScope is well positioned for organic growth in the near and long term.
During the quarter, we maintained our focus on driving cost and operational efficiencies to deliver shareholder value. Turning to specific business performance, let's begin with Connectivity Solutions. Despite a challenging copper enterprise market throughout 2019, we improved our position in copper infrastructure, extended our market leadership, and continued to lead the way with solutions and services focused on next generation applications and intelligent infrastructure. Here are some examples. As office connectivity moves from being in the walls to the ceiling, CommScope is actively investing in Category 6A capabilities and innovation to help customers manage the connectivity challenges of today and tomorrow. These include solutions for increased bandwidth and Power over Ethernet needs from devices such as Wi-Fi access points, video camera, Internet of Things, and indoor small cells.
Our network cabling connectivity business remains soft as expected due to seasonal declines in fiber connectivity spending by international tier one carriers and slower fiber to the home deployments by North American carriers. This was somewhat offset by modest recovery in fiber cable, coax, and passive subscriber devices in tier one cable operators. This trend is encouraging and demonstrates the additional capacity is being added to the networks. Tier two and tier three cable operator spending continued to be strong on the back of the U.S. government's Rural Broadband Fund initiative. To assist our customers with these deployments during the quarter, we released the first family of products from our NOVUX connectivity platform. NOVUX features a new gel sealing system, new identification technology, and common construction between products to allow for ease of use.
We are seeing good momentum with European operators and alternative network providers looking for greater simplicity to train installers and network managers, and we're excited about its potential. Our inside plant business was down modestly versus our prior year, largely due to enterprise seasonal spending and continued weakness in China with the current trade environment. However, our hyperscale and cloud data center business thrived during the quarter as hyperscale customers expand data center builds outside of North America. We continue to improve our position with these large customers as we apply focused resources to customize our portfolio to their needs. To support this effort, we are investing in products that see the demand for higher fiber counts and greater density. Our ability to rapidly deliver these customized solutions at scale around the world is a key differentiator for CommScope.
In Mobility Solutions, we continue to shift infrastructure for 5G rollout to leading carriers, while also helping them densify and virtualize their networks in preparation for 5G. For example, our base station antenna business, we are releasing new products that incorporate 5G spectrum while retaining the same physical footprint. We have built a leadership position with North American operators, and we are leveraging our expertise to win new business in Europe and other international markets. In our metro cell business, which features fully integrated smart poles and street furniture for services such as urban cellular, Wi-Fi, and IoT applications such as security cameras or traffic management, we continue to see growth in the U.S. for 4G and 5G deployments. Expansion is happening not only in large urban areas, but also in tier two cities and municipalities where they have recently obtained zoning approvals.
We're also supporting deployments outside the continental U.S. with key projects in Alaska and Puerto Rico, as well as growing interest from Latin American markets. In our distributed antenna systems and indoor small cell business, we are making progress across all product lines. Era, our digital DAS solution with C-RAN architecture, is quickly becoming popular with enterprise customers where revenues nearly double this year. We expect continued growth in 2020. ONECELL, our industry-leading indoor small cell platform, received additional approval from a major U.S. operator for our next generation of radio points that brings multi-band and multi-operator support and are 5G ready. We're also developing a 5G millimeter wave Open RAN ONECELL solution for another major U.S. operator. Moving to our CPE business. In the quarter, we had successful field trials on self-installable LTE fixed wireless access gateways, an important element of our plan for fixed wireless access devices.
We saw positive net promoter scores on our DOCSIS 3.1 gateway deployments in Europe, and we see growing demand for both IP set-tops and DSL gateways in the Americas. Lastly, we drove a sequential increase in gross margin and adjusted EBITDA in this business. We finished the year with the best quarterly EBITDA performance in 2019, with a nearly 50% increase versus last year. Turning to networking cloud, we continued to broaden our virtualized and distributed access platforms as operator shifts steadily towards DAA and virtual CMTS. We completed a major release of our vCore virtual CMTS product, which will prepare us for operator deployments in early 2020. We also completed deployment and development of our Remote PHY Shelf product, which enables operators to place multiple RPD modules in a single chassis for data distribution from remote hubs.
We expanded our broad distributed access portfolio with the launch of our Remote Optical Line Terminal module. Similar to the RPD modules, Remote OLT allows operators to plug modules into new or existing distributed architecture nodes. This new module supports 10 Gig Ethernet PON networks and provides operators with the ability to add passive optical networking to their broadband distribution networks. The product is currently in early field deployments with a major operator in Japan and in trial with U.S. operators. Turning to our Ruckus Wi-Fi and switch portfolio. We exited the year with better than expected Wi-Fi 6, as Wi-Fi 6 orders spiked on the heels of our R750 introduction. We saw nice growth in our cloud-managed Wi-Fi subscriptions. We're very excited about the upcoming launch of our cloud-based analytics platform that uses machine learning to detect network anomalies and provide actionable insights.
Turning to our switching portfolio, the Ruckus ICX 7850, which enables modern high-performance 100 Gig capable enterprise networks, won product of the year in network category from CRN. This product completes CommScope's offering of Ethernet switches. We saw continued execution of cross-selling of switches and access points together. The successful adoption of both sets of products by a common customer base can be seen by the rapid growth in attachment rate of switches to SmartZone network controllers. Finally, we are founding members of the CBRS Alliance, and we're excited to launch a CBRS LTE portfolio, including access points and cloud services. These new devices and services, combined with our existing SaaS and environmental sensing capability, helps us maintain a leadership position in the enterprise market.
In conclusion, while 2019 was certainly a challenging period for CommScope, our industry at large, and our investors, when I reflect upon the accomplishments of the past year, I'm incredibly proud of our CommScope team. Our people have shown great resilience and tenacity to transform our organization and have made considerable progress positioning the company for future growth. Now I'd like to turn the call over to Alex, who will discuss our fourth quarter performance in more detail and our outlook for the first quarter and full year 2020. Alex?
Thanks, Eddie. Before we discuss the details of the quarter, I'll start with a brief review of 2019. For the full year, net sales of $8.35 billion increased 82.7% year-over-year, primarily due to the contribution of $4.03 billion from the ARRIS acquisition. As a combined company, net sales declined 13.8% to $9.75 billion, which includes approximately 1% impact of unfavorable foreign exchange. Full year sales were down across all geographic regions as we faced a significant reduction in cable operator spending, geopolitical trade tensions, and a temporary pause in spending due to the pending T-Mobile and Sprint merger. For the full year, adjusted EBITDA increased 42% to $1.3 billion, or 15.5% of sales.
Combined company adjusted EBITDA declined 20% to $1.37 billion, or 14% of sales. Adjusted net income for the year was $479.4 million, or $2.15 per diluted share as compared to adjusted net income of $442.5 million, or $2.27 per diluted share last year. Included in these adjustments to net income is a $376.1 million non-cash goodwill impairment charge that we took in the fourth quarter related to our ARRIS reporting units as a result of our annual goodwill impairment test. Since the closing of ARRIS, these reporting units have experienced challenges that impacted our performance, including declines in spending by cable operator customers that resulted in declines in net sales and operating income, as well as the loss of key leaders following the acquisition. We initially anticipated a recovery in spending by certain customers starting in 2020.
However, during our annual strategic planning process in the fourth quarter, a number of specific factors arose, including an assessment of historical and future operating results, key customer inputs, new assessments of market trends, and anticipated costs required to support the changing market dynamics, which affected each one of these reporting units. As a result of these factors, we expect a more prolonged recovery, and we concluded that the fair value of each of the ARRIS reporting units was less than its carrying value, resulting in the non-cash goodwill impairment charge. Moving to slide seven, I'll cover our fourth quarter of consolidated results. In the fourth quarter, net sales increased to $2.3 billion, primarily driven by the benefit from the ARRIS acquisition, which contributed $1.33 billion. ARRIS sales in the fourth quarter include a $13.2 million reduction of revenue related to deferred revenue purchase accounting adjustments.
Combined company net sales declined 19%, which includes a less than 1% impact of unfavorable foreign exchange. Fourth quarter sales were down largely due to the same factors that impacted our full year results. Consolidated orders for the quarter were nearly $2.5 billion, providing a book-to-bill ratio of 1.08. For the fourth quarter, adjusted EBITDA increased 54.6% to $323.6 million or 14.1% of sales. Combined company adjusted EBITDA declined 18.4%, however, EBITDA margins did improve 20 basis points to 14%. The adjusted EBITDA results were primarily driven by lower volumes, particularly in Network & Cloud and Connectivity Solutions. We partially offset this softness with favorable commodity and raw material pricing, as well as lower operating expenses as a result of the aggressive actions we have taken to preserve profitability as we manage a difficult operating environment.
To that end, our synergy and cost-saving actions for the year continue to track ahead of plan. We continue to expect to exceed our stated goal of an annual run rate cost-saving synergies of $150 million ahead of the third anniversary of the close of the transaction. Finishing up the P&L, book net interest expense was $153.6 million, excluding the amortization of debt issuance costs and an OID of $7.9 million, cash interest expense was $145.7 million. The adjusted effective tax rate in the quarter was 20.7% versus our expected range of 27%-28%. The favorability in the fourth quarter was the result of lower than expected U.S. tax costs on foreign earnings. Adjusted net income in the quarter was $106.6 million, or $0.46 per diluted share as compared to adjusted net income of $99.8 million or $0.51 per diluted share last year.
Moving on to our segment results. Connectivity Solutions segment sales for the fourth quarter decreased 9% year-over-year to $606 million. Sales were soft across all geographic regions, most significantly in the Asia Pacific region as well as in Latin America. As expected, results were negatively impacted by softness in the network cable and connectivity business. This was driven by spending declines by international cable operators and the continued trend of capital spending reductions on major projects by large North American carriers. This trend was partially offset by continued strengthening within the North American cable operators in tier two and three carriers. Within enterprise, sales declined most significantly in copper markets, particularly in China, as local brands continue to take preference as a result of geopolitical tensions.
Despite this decline within the overall segment, our hyperscale business continued its momentum with double-digit growth as we delivered key wins with major customers in their global data center build-out. Turning to profitability, adjusted EBITDA was down about 32% year-over-year to $91 million, with adjusted EBITDA margins of 15.1%. The decline was primarily due to unfavorable mix, with lower sales in our higher-margin fiber connectivity portfolio and lower volumes given the high fixed cost nature of our connectivity supply chain. Moving on to Mobility Solutions. Segment sales for the fourth quarter decreased 6% to $366 million, primarily impacted by a pause in spending related to the T-Mobile and Sprint merger. This order delay impacted fourth quarter mobility sales by over 7%.
While macro tower sales declined primarily due to the merger uncertainty and our decision to continue exiting unprofitable business in India, we delivered continued growth in our DAS and metro cell businesses. Operators continue to focus spend on densifying their networks, and this led to triple-digit growth in metro cell deployments in the fourth quarter. We've now deployed more than 10,000 metro cell solutions in the U.S. and expect to continue building on our momentum in the next decade. In the quarter, Mobility adjusted EBITDA decreased over 11% to $55 million, or 15.2% of sales. Adjusted EBITDA declines were primarily driven by lower pricing and volume, partially offset by favorable geographic mix and manufacturing cost reductions. Turning to slide nine. CPE fourth quarter net sales were $824 million, a decrease of 25% from the prior year.
While revenue declined year-over-year, adjusted EBITDA increased 48% to $72 million, resulting in EBITDA margin expansion of 430 basis points to 8.7% of sales. The margin expansion was the result of continued lower material costs and aggressive actions to contain costs while sales volumes are pressured. CPE revenues were impacted by increasingly weak demand from both tier one carriers and tier one cable operators. For Network & Cloud, fourth quarter net sales were $366 million, a decrease of 32% year-over-year. Adjusted EBITDA was $97 million, a decrease of 36%, while adjusted EBITDA margins declined to 26.5% of sales. The Network & Cloud sales continue to be attributed to the lower levels of cable operator spending.
As the demand for bandwidth in both the uplink and the downlink continues to grow at a 30%- 50% rate, recent operator commentary confirms that their shift of CapEx will start to migrate back to network infrastructure investments going forward. We remain confident that Network & Cloud sales bottomed in 2019. With underlying consumer bandwidth demand continuing to grow, coupled with our investments in virtualized and distributed access architecture platforms, we remain in a strong position to guide operators through the 10G network infrastructure investments that they will deploy for the coming decade. Moving on to Ruckus . Fourth quarter net sales were $138 million, a decrease of 9% from a year ago. Adjusted EBITDA was $8 million, an increase of approximately $9 million from the prior year.
Despite lower sales volume and what's been historically a very high fixed cost business, adjusted EBITDA margins of 5.8% improved over 600 basis points from the prior year from favorable mix, as well as cost savings and efficiency plans that we've executed over the year. We expect trends such as the introduction of Wi-Fi 6 and cloud-based architectures to positively impact the business in 2020 and beyond. Returning to our consolidated results, I address our cash flow on slide 10. For the full year 2019, we generated $596 million in cash flow from operations and $793 million in adjusted free cash flow. During the fourth quarter, cash flow from operations was $336 million, and adjusted free cash flow was $323 million. These amounts exclude cash paid for transaction and integration and restructuring costs.
Adjusted free cash flow also reflects a $78 million benefit from certain payments that would normally have occurred in the fourth quarter of 2019, but were made in the first quarter of 2020 because of the timing of the holiday. Despite our sales headwinds, the team's done a remarkable job delivering significant cash flow above our original expectations. While a portion of the cash flow benefit is associated with one-time working capital improvements that we don't expect to repeat, driving working capital primarily through inventory management will be a continued critical focus throughout 2020. Given the significant cash generation in the second half of the year, we redeemed over $500 million of long-term debt since the close of the ARRIS acquisition, which has resulted in annualized interest savings of over $25 million.
As we continue to aggressively pay down debt, the EPS accretion from the reduced interest burden will only continue to grow and become more meaningful over time. Now let's dig a little bit deeper into our capital structure. As we close the quarter with a net leverage of 6.3x combined company adjusted EBITDA. For this purpose, adjusted EBITDA includes $113 million of synergies and other cost actions that we expect to realize over the next two years. Because of the significant cash flow generation during the fourth quarter, we redeemed $300 million of our 5% senior secured notes due in 2021 throughout the quarter, as well as a mandatory $8 million principal payment on our term loan in late December.
Subsequent to the end of the fourth quarter, we redeemed an additional $100 million of the 2021 notes, leaving a balance of $50 million outstanding, which we expect to fully redeem over the first half of 2020. Our original expectation was that debt repayments in 2020 wouldn't begin until the second quarter, we're pleased to be ahead of that schedule. With that, I'll provide some perspective on our 2020 qualitative outlook. Before I begin, as a reminder, we announced a new operating model where we condensed our five previous segments into four. This new operating model went into effect on January 1st of 2020. These four new segments are Broadband Networks, Venue and Campus Networks, Outdoor Wireless Networks, and Home Networks, which was previously called CPE. On slide 12, you'll find the underlying business units that comprise each of these four segments.
You can find 2019 pro formas for our new segment structure in the appendix of our earnings presentation found on our investor relations website. Turning to our full year assumptions. For Broadband Networks, we expect modest growth in 2020. We expect growth in the major geographic regions, most pronounced in North America and Europe. Within the underlying business, we expect growth across most business units as operators tick up their network investments in 2020. While we don't expect any snapback to the 2018 levels of spend, we are encouraged by this growth trend as operators begin to chew through the overcapacity that was built out in 2018. Given these factors, we expect to grow Broadband Networks EBITDA, driven by the volume shift associated with an increased focus in network capital spending by operators, as well as efficient execution of our cost reduction initiatives. As we've previously stated.
We expect the operators' short-term focus to be concentrated on densification efforts, which will benefit our metro cell solution significantly. This will precede the more intensive efforts of upgrading their macro cell towers as more spectrum is released and the upgrade refresh cycles begin to play out in 2021 and beyond. As a result of this dynamic, we expect Outdoor Wireless sales to be modestly down for the year, as the growth in densifying the metro layer doesn't offset the cyclical shift from the macro site for 2020. In addition, we now expect FirstNet orders to moderate more than originally expected, given the program is expected to be completed early. That being said, the earlier the T-Mobile-Sprint merger closes, the more potential upside it could provide in 2020, given the network investments required to deploy the Sprint spectrum.
Lastly, we also expect to return to more normal seasonal trends within the year, as 2020 will be less first half-weighted than 2019. From a profitability perspective, we expect to offset a significant portion of the volume, mix, and pricing impact of the macro cell tower to metro cell shift through our profit improvement plans. These will be particularly focused on optimizing margin and production processes of our highest growth areas in the metro cell and other fiber products. However, when factoring in operating expense headwinds, this will result in an overall EBITDA decline for the segment. Regardless, we remain very excited about the opportunities ahead as carriers prepare their networks and launch their competitive campaigns to build out 5G services.
The early 2020s will provide for deeper engagement and partnership with OEMs, familiar tier one carriers, as well as some aggressive new faces in the quest to build out the greatest network infrastructures the world has ever seen. Our Venue and Campus Networks segment is bolstered by the growth pillars of hyperscale data center builds, Era distributed antenna systems, ONECELL small cells, and Ruckus Wi-Fi and switching. With 80% of data consumption taking place indoors, our venue on-campus business will provide licensed and unlicensed solutions, and the required cabling, connectivity, access point, and switches, essentially a one-stop shop for stadiums, office buildings, hospitals, college campuses, and other enterprise applications. Therefore, we expect sales to grow in the mid-single digits for 2020. This growth potential requires us to concentrate not only on the current year, but more importantly, investing for the future.
We expect the sales growth to be outpaced by the R&D investment costs, resulting in an overall EBITDA decline for the segment for the year. Now to our Home Networks. Home Networks faces a significant challenge this year as operators and carriers continue to deal with material subscriber losses. While we're optimistic at the eventual offset and shift of growth to broadband gateways and modems, we realize that DOCSIS 3.1, DOCSIS 4.0, and PON growth drivers won't begin to drive improvements until the second half of 2020 and beyond. Given these dynamics, we expect Home Networks sales to be down about 20% this year, which is a larger decline than our initial expectations. As Home Networks top-line trends are challenged, the team is taking every available action to maintain profitability.
While EBITDA margins are expected to be relatively flat over the year, considering the anticipated top-line decline, we expect Home Networks EBITDA dollars to decline this year. Taking all of these segment assumptions into account for 2020, we expect total sales to modestly decline on a consolidated basis. Consolidated gross margins are expected to expand due to performance results within each of the segments and from the favorable mix impact that results from lower Home Networks sales. In addition to gross margin expansion, we expect operating expenses to benefit from cost synergies and cost reduction actions. In 2020, we expect to make additional investments in high-growth areas of the portfolio that will better position the company to capitalize on future market opportunities. These strategic investments, combined with natural expense inflation, will result in operating expense growth year-over-year.
Bringing it all together from a profitability perspective, we expect total EBITDA margins to expand, and we expect EBITDA dollars to be consistent with last year on a combined company basis. That being said, the company is working with a renewed sense of urgency to accelerate cost savings and deal synergies where appropriate, with the goal of maximizing profitability across the organization. In 2020, we expect adjusted free cash flow of around $400 million and debt paydown of around $450 million. As a reminder, our fourth quarter cash flow was better than expected and also benefited by $78 million from a payment that would normally have occurred in the fourth quarter of 2019, but for the timing of the holiday. Finally, a few additional assumptions to help you model for the year.
In 2020, we expect an adjusted effective tax rate of 26%-27%, a fully diluted share count of approximately 237 million shares, capital expenditures between $110 million and $130 million, cash interest expense between $570 million and $580 million, cash taxes between $130 million and $150 million, integration transaction restructuring cash expense in the range of $60 million-$70 million. Moving on to our guidance for the first quarter of 2020. From a segment standpoint, in the first quarter, we expect Broadband Networks sales to sequentially decline in the upper single digits in line with normal networking cloud seasonality, but with a mix of more hardware than software. Venue and Campus Networks sales will modestly decline quarter-over-quarter. Outdoor Wireless Networks sales will increase sequentially around 20%, and Home Networks sales will decline quarter-over-quarter between 25% and 30%.
While Home Networks sales normally seasonally decline in the first quarter, this pressure is continuing to be exacerbated by spending declines at a large North American carrier. In addition, in reference to our guidance range, given the substantial uncertainty regarding the coronavirus situation, we're providing a wider than normal guidance range in the first quarter. Today, we're operating at about 40%-50% capacity, and we're slowly ramping back to more normal staffing levels. We anticipate volumes to recover as we move throughout the year. Given the fact that a portion of our raw materials and products are sourced directly from mainland China and a significant piece of our international shipments are also manufactured in China, we are factoring in an approximately $60 million adjusted EBITDA negative impact from the coronavirus in the first quarter. We would expect to recover the majority of this impact as the year progresses.
Based on these assumptions for the first quarter, we expect revenue between $1.9 billion and $2.1 billion. Non-GAAP adjusted EBITDA between $180 million-$250 million, non-GAAP adjusted earnings per share between $0.03 and $0.18. Additional assumptions include an adjusted effective tax rate between 25% and 27%, a weighted average diluted share count of approximately 236 million shares. With that, I'll turn the call back over to Eddie for some final remarks.
Thanks, Alex. The upcoming year will be a mix of challenges and opportunities impacting our business. That being said, we're focusing on making improvements across the business to strengthen the organization, our go-to-market strategy, and our product portfolio. We have repositioned our portfolio to capitalize on key shifts in the marketplace, including Wi-Fi 6 and the ongoing shift to 5G. By focusing on our customer needs, we've developed unique and innovative products to further differentiate CommScope from our competitors and have armed our go-to-market team with powerful solutions. As we look ahead to 2020, we'll take the same approach to address and capitalize on the market dynamics, remaining committed to aggressively cutting costs while not sacrificing investment in the business. Importantly, we're ahead of schedule on our cost reduction targets and debt repayments and expect to continue paying down debt in 2020 given our free cash flow generation.
With a dedicated and talented team, a portfolio of innovative products, and a clear roadmap in place, we're well-positioned to lead the next phase of communications connectivity. With that, I'll turn the floor open for questions.
Ladies and gentlemen, if you have a question at this time, please press star and then the number 1 on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. Your first question comes from Simon Leopold with Raymond James.
Great. Thanks for taking my question. Appreciate all the detail you've offered. Wondering if maybe we could drill down a little bit in helping us understand some of the patterns for the biggest North American operators, particularly AT&T's CapEx tends to have a lot of moving parts in vendor financing and interest expense and FirstNet, and you're obviously a relatively small part of that overall spending. If you could help us understand the trend there as well as your comments and maybe your thinking on the T-Mobile Sprint, what you're assuming in terms of how that combination affects your business through the year. Thank you.
Okay. Thanks, Simon. AT&T, while we are a small part of their overall build, it is an important customer to us, and we sell them product throughout their portfolios. We're impacted by what happens at DirecTV from the standpoint of our ARRIS business. That's not a positive indication from that standpoint. We also are a primary antenna supplier to them, both in FirstNet as well as their network as a whole. When we first started talking about FirstNet maybe four years ago, we said this was going to be a three-to-four-year project. I think we're in that range and going toward the end of that. We still see revenue for certainly the first part of the year, but declining.
I think I've said on some of these calls before, it's hard for us, in many cases, to know if we're selling a FirstNet deployable antenna or one for their traditional network because the antennas are extremely similar. We expect continued presence in that marketplace and ready to deploy new and upcoming antennas. I think, as I said in my remarks earlier, the ability to put more frequencies inside a radome of the same size is hard to do. I think we have unique skill in doing that, and so we look to continued improvement in that relationship, and I think the relationship with them is extremely good. We see great opportunities with ONECELL. It's fully approved at AT&T.
We've had the trial is a 1 million sq ft deployment. That's a large trial to start with, we have a lot of possibilities in the queue right now that we're working on as they see, we believe that this is a unique game changer in the in-building environment as well as small venues. That's something that we think will be a good part of the business during the course of this year. We are well positioned throughout the entirety of the AT&T network. As it relates to T-Mobile and Sprint, I think what we have said is that we sort of put this thing sort of down the middle of the fairway as to what this year would be, not knowing when approval. We anticipated approval, not knowing when it would happen, we're getting closer.
If it starts in the early months or the early quarters, this could be an upside for us, because we just assumed sort of a middle-of-the-road position. As with the other U.S. carriers, we are a major supplier to them for not just antennas but other products in their network. Our position is well-established, and I think the relationship's excellent. We've been working with them on new antenna designs, anticipating this merger happens, and so I think as it comes, we're ready. It was a negative indicator in the end of the year as they stopped spending, awaiting the merger. As soon as it happens, we would expect some pickup there.
Great. Thank you very much.
Okay.
Your next question comes from Sami Badri with Credit Suisse.
Hi, thank you. There's been a lot of industry discussion around CBRS, and you are a founding member of the CBRS Alliance, but what are some of the implications of CBRS growth in the rest of your product portfolio as this product group begins to ramp, and you're hearing a lot of CBRS partners starting to come up and emerge? Just trying to understand, what are some of the implications, some of your other product lines as this segment begins to ramp up?
Well, as opposed to just being a product supplier, we operate a SaaS, and so we will be one of the companies that maintain the integration of the network and how it flows, the information flows, and how each of the participants in the network are able to access the network, working with the government. We're ready for that. We are a major provider for the capability of private networks, which for CBRS will be a game changer. I think from a hardware standpoint, we're well-positioned. From the operation of a SaaS and understanding what is happening in the network, I think we're well-positioned as well. I think we have the full complement of being a provider of service as well as a provider of product.
Thank you. Just on debt paydown cadence through 2020, could you give us any kind of color, maybe this is a question better for Alex, any kind of color on cadence throughout the year? Should we think of this as a similar path to 2019, is it going to look a little bit different in 2020?
Yeah. A couple of comments on both 2019 and 2020 as it relates to cash generation and debt paydown. 2019, we worked the balance sheet extremely hard. We took a lot of inventory out of the system. We really tightened up our discipline around working capital. We'll continue as we get into 2020 to continue to deploy all of our tools, managing inventory very tightly. Obviously, ultimately, cash generation requires EBITDA growth. To the extent we're looking at a relatively flat year-over-year comparison from EBITDA growth, we would not anticipate the same working capital benefits. In terms of cadence through the year, it's pretty back-half weighted. We typically see a seasonally weak first quarter. It strengthens as we go through the year. We would anticipate that trend this year as well. The only real exception is that there's some significant growth.
If you look at the sort of quarterly cadence of earnings, we expect the year-over-year growth to accelerate as we get into Q3 and Q4, which will require some additions to working capital. You likely won't see as strong a fourth quarter as you did this year. Put all that together, you say, okay, weak Q1 from a cash flow generation standpoint, strengthening in Q2, peaking in Q3, and then probably weak in Q4.
Got it. Thank you. My last question is to do with the Ruckus business and campus and even the launch and release of Wi-Fi 6 products. How is that materializing? Are customers taking in Wi-Fi 6? Are they testing it? Is it starting to ship en masse? Maybe could you just give us any real color on traction for specifically the Wi-Fi 6 standard and all the boxes that were recently released?
I think we're pleased at what we're seeing. I think we were the first live introduction of Wi-Fi 6 product in the marketplace. I think the acceptance rate is good. We have the capability providing the connectivity for these access points as they go into market because they need throughput at a different pace. I think we're pleased at the start of this deployable, and I said earlier, both here in the U.S. and international markets.
The only thing I'd add, Sami, to Eddie's comments, which isn't necessarily a Wi-Fi 6 specific comment, but I think it's important for you to recognize, is that we're now in the market with a cloud solution to manage all of the access points and all of the architecture in the network. This is extremely exciting because that's really where the market's heading. Being able to offer a highly competitive, highly differentiated cloud solution with all the analytics and machine learning capability embedded in it's something that really provides a strong growth tailwind for 2020 and beyond.
Got it. Thank you. Thank you for the color.
Your next question comes from Amit Daryanani with Evercore.
Yep. Thanks a lot, guys, for taking my question. Two for me as well, I guess. First off, on the March quarter guide, I think you're implying sales are down about 13% sequentially. That seems more severe, I think, than what Core, CommScope, or even ARRIS historically. Could you touch on what's driving that, and how much of a headwind on the revenue side are you embedding from coronavirus implications?
I guess the first point on the weakness for Q1 is really related to the decline in spending from one of the large North American operators that Eddie was referring to earlier. It's really predominantly focused in the Home Networks side of the business. We do have just some normal seasonal softness. Q1 tends to be one of our softer quarters sequentially, particularly in the Network & Cloud business. There's a lot of capital flush happens at year-end. You see that phenomena as well. The coronavirus impact is very fluid at the moment, I would say. We're modeling into our guidance about $100 million top-line impact. The factory, as I mentioned in my remarks, is operating somewhere between 40% and 50%.
As people come back to work, to the extent we can get that to more normal capacity levels, we expect we can recover all of that lost revenue and margin over the balance of the year. China's a significant piece of our manufacturing footprint. That's where we basically manufacture all of our products for non-North American markets. Roughly a third of our cost of goods sold is represented there. It is a material market for us, and we're trying to factor that into our guidance as best as we can, given what we know today.
We follow what's happening there on a every other day basis. Basically, representatives from throughout the company, Alex and I, are on those calls. We want to monitor the health and safety of our workers, as well as the health and safety of our suppliers and customers. It's something that we certainly hadn't planned for. We will address it as best we can. If we have to make shifts to anticipate happenings there, we will. It's a tragic thing.
No, that's extremely helpful. If I just follow up, when I think about your calendar 2020 statement, especially on EBITDA dollars being flat, I think year-over-year, can you just help me understand, and perhaps even quantify, A, how much are you thinking in terms of growth that you talked about and investments you're making in some of the areas? What's that growth dollar number look like, and where are you investing those dollars, really? Then secondly, how should we think about the restructuring savings that are expected in calendar 2020, if you could quantify that as well?
Yeah. In terms of investments that we're making, one of the places that we're most excited about is really, call it, the intelligent enterprise space. This is all the venue campus in building opportunities that we have. These are products like ONECELL, where we're actively investing in making that 5G ready and compatible with millimeter wave-type deployments. We're making investments in the metrocell layer, where a lot of the densification work is going to happen. We're making investments with some of the OEMs on active antennas, which are going to be extremely relevant as we get into the higher frequencies. Those are just a couple of examples. Those would all be embedded within a combination of the outdoor wireless portion of the business, as well as the venue and campus portion of the business.
Within Ruckus , we're continuing to invest in these advanced analytics and cloud platforms. We're investing in CBRS, which was one of the questions earlier. All of these are multi-year investments that'll position the company for very strong growth as 5G gets deployed. In total, those investments are in the order of, call it $50 million-$60 million incremental. That's one of the reasons why you see some of the flat trends despite growth in some of our higher margin businesses. We think that's the right thing. We're positioning the company for longer term growth, and that's really the right thing to do.
Perfect. Thanks a lot, guys.
Thank you.
Your next question comes from Jessica Voll with Nomura Instinet.
Yes. Thank you, gentlemen. Let me ask a question and then a follow-up. The question is, we've heard some more encouraging things out of the U.S. cable community, as you referenced on the call. How much of that have you included into your outlook for that particular segment? Is that something that happens really more beyond the first quarter and into the second and the back half of the year?
I would say that spending at the large operators, we anticipate to be stable year-over-year. I think if you look at most of the public commentaries in aggregate on their CapEx outlook, it would look that way. We are anticipating growth in our predominantly the former Network & Cloud business as operators are beginning to invest in capacity in their networks and coming back to more normalized spending. We don't anticipate that really springing back to 2018 levels, in 2020. We do anticipate the growth rates accelerating as we get through the year, predominantly Q3 and Q4. We do anticipate that business returning to growth. There are some headwinds against it, which you'll see in the consolidated results, those are really related to a large North American telecommunications operator that essentially completed the build-out of one of their network strategies.
Another telecommunications operator who's really not continuing to drive fiber all the way to the home. Those factors will offset, but in aggregate, we do anticipate, call it, low single-digit growth from the operator spending this year.
Okay. Secondly, could we clarify the Sprint T-Mobile pickup? I wasn't clear if you were expecting a pickup right after close and that theoretically could even be as soon as the beginning of the second quarter. More deeply on that, to what extent your share position should benefit from the merger?
They exited the year very soft. I think we talked about that, I think, at the last call as to what we saw coming. They've entered the year likewise. We expect now with approvals basically being done, that will start to pick up as we get closer. Our position is very strong at T-Mobile. We had a position at Sprint as well, although they spent a lot less. Our position at T-Mobile is very strong. We've been designing antennas specifically for their networks for the bulk of the year in anticipation of this. If it's early on, as I said before, that's a positive thing for us because we anticipated this sort of a down the middle, and no huge increase in the projections that we put together.
Okay. Thank you both very much.
Your next question comes from Meta Marshall with Morgan Stanley.
Great, thanks. Just trying to put a wrapper around what downticked from your expectations around from last quarter. Is it really FirstNet finishing quicker than expected or DirecTV spending being net incrementally down? Just trying to from where you were expecting last quarter, what changed? Then maybe just a second question, just on the hyperscale penetration. Is that something where you really feel like your share could continue to grow this year or just expectations for what you're seeing as far as you've improved your position, but could that improve further? Thanks.
Yeah. I'll take a couple of your questions, I'll turn it over to Eddie on some of the other issues. In terms of what changed in our expectation, the biggest thing is obviously the coronavirus pressure that I think nobody could have anticipated the threat of a global pandemic impacting the supply chain as severely as it potentially could. That obviously is something that we're trying to factor into our outlook, and we're actively developing contingency plans to mitigate that. I think the other big piece is within the Home Networks side of the business. As you know there's pretty significant decline in one of the major tier one telecommunications players in terms of the CPE that they're deploying. I think also the video subscriber losses across all the tier one operators is pretty severe.
I think that's really a headwind that's probably bigger than what we anticipated. We do have areas that I think are developing much better than we anticipated. I would point to the metrocell business, the triple-digit growth or double-digit growth in the hyperscale business. I think all of the areas that we're positioning the company for 5G are actually on track to exceeding our expectations but really just haven't gained the full momentum quite yet. I'll let Eddie comment more on the specific hyperscale dynamic.
On hyperscale, Meta, what we've talked about and openly, I think, as to where we are in the market, we were and are still not the leader in that market. We were late to the market because of portfolio. We had to develop a portfolio that was sellable to this large customer or the large base of big customers. I think we've done a great job in doing that. We've put a lot of emphasis on taking care of the customer and their needs, as I talked about earlier in the prepared remarks. We are gaining position relative to the market. We believe our geographic footprint and now the portfolio that we have of products are what the customers want.
I think vis-a-vis others in the market, I think our position is growing, and I think we'll see that during the course of this year in a strong way. I think we will continue to appoint as we become a more relevant player in the market. We're excited about it, that as well as the multi-tenant customer base, which has been a long-term customer of ours. It's very similar architectures in many cases. We think it is going to be a continuing and growing market, and we're happy for our international presence that gives us strength in it.
Great, thanks.
Your next question comes from Samik Chatterjee with JP Morgan.
Hi, thanks for taking the question. If I can just follow up firstly on the coronavirus guidance that you have for the first quarter, how are you thinking about the spillover effects of the supply chain disruption here into 2Q? I think last quarter you had mentioned that by end of 4Q, most of your set-top production would be out of China. I'm just curious which segment should we think the impact is more pronounced in 1Q?
As Alex said, it's more international business than it is domestic. We shifted because of, I guess, our issue of last year with the trade and tariffs. We shifted much of the U.S. production certainly of antennas to India. China's used primarily for other places, as we don't want to absorb the tariffs which are still in place. What Alex said is that the impact on the profit side in the first quarter is about $60 million. That equates to something greater than $100 million in revenue, based upon what we see today and some estimations of when work gets back in place. A lingering concern that I would have is we know where our factories are, and to date, they're not in the problem areas.
We have a supply chain that is very strong in China that supports a lot of our businesses that is all over the country, no different than anybody else that buys things and makes things today. We'd like to see some stability of the virus as it spreads or maxes out or whatever as to how that will be impactful going forward. This is not a good thing for business because of the importance of that supply chain. I think that we're no different than any other player in the market, so.
Got it. If I can just follow up on your antenna business. You are a major player in North America. What's your market position in Europe and how are you thinking or kind of what's the situation on the ground as you compete with Huawei there and given some of the recent scrutiny, what is the opportunity that you're seeing there?
I think we're seeing some improvement in Europe. Some of the new designs that we have and outside of North America and Europe, Huawei is more of a competitor. That's the challenge is the antenna business that we used to do in a lot of Asia is smaller, but I think we still have a good presence in the CALA region, and we'd expect that to continue. North America certainly is our strongest region as we have significant positions with the four carriers today turning to three and then probably back to four. We'll still maintain that. Europe's becoming a more important market. I think the consolidations that we've seen there have helped us and we're working with some of the OEMs to partner with some new designs that I think for the long term will help us.
Great, thank you. Thanks for taking my questions.
Yeah.
Your last question comes from Jim Suva with Citigroup.
Thank you. I have two questions, and I'll ask them so you can take them in any order. The first is, can you comment on pricing? Has it been kind of more historical, normal, a little bit better or a little bit worse? In the history of CommScope, there's been a lot of periods of normal, and then there's been some pretty big hiccups sometimes. Can you just talk about the pricing environment? My second question is, you mentioned a goodwill impairment on ARRIS. It seemed like last year a lot of your commentary was the integration is going well, it's going well, it's going well, and now we get a big write-down. Help us understand and bridge the comments of going well to now a big write-down. Thank you.
Sure. On pricing, it's definitely within the range of what we would expect normally. I think we've built into the plan, call it 1.5%-2% pricing pressure. We generally offset that with a mix combination of new product introductions as well as productivity improvement. I think if you were to look at the results in terms of margin expansion, you'd certainly see that we've more than delivered on our commitments to preserve margins, even when you see just kind of a natural pricing dynamic. We don't see anything different from what we've historically communicated and historically experienced. Regarding the impairment. I think this is probably obvious to most people on the call, but just to make it explicit, when you close a deal, you have zero headroom in terms of the value that you're carrying the business on the books.
As you get farther away from the close date, you start to build up headroom over time. Because of that sort of phenomena where you have zero headroom at the time you close the deal, any softness in outlook versus the expectations that you underwrote the transaction on would call into question the carrying value. Obviously, the decline in major North American operator spending that we've experienced over the course of 2019 has created a headwind in those reporting units, particularly all three of those reporting units. I think we've been pretty explicit that the progression of the business out of the gate is certainly not what we anticipated. That being said, we continue to believe in the strength of the long-term strategy. There's nothing in our long-range plan that would indicate anything different than what we've communicated.
We're extremely well-positioned to take advantage of the 5G trends that are beginning to develop. We're extremely well-positioned to take advantage of the intelligent enterprise space. We believe that the intersection of the licensed and the unlicensed spectrum gives us a product portfolio that nobody else in the world has. We think the ability to serve the cable operators with an end-to-end optimized network solution as they move to DOCSIS 4.0 and PON is extremely competitive. This is really largely an accounting exercise that you're required to do at year-end, but really doesn't reflect the long-term prospects. I guess the last point I'll make on progress of the integration is, we are in fact on track to over-deliver on the commitments we've made. What we said originally was we'd deliver $150 million in synergies by the end of the third year anniversary.
We've now said we'll deliver greater than $150 million in advance of the third year anniversary. I think Eddie and I both feel extremely good about how we're doing on the cost side of the equation. If you were to talk to Morgan and the R&D and the technical team, I think what you would hear is that we've identified much greater than anticipated revenue synergies as we bring these technologies together and make some of the investments that I described earlier. I think this is largely an accounting exercise. It's a non-cash issue. It is something that we have to do given the softness we've experienced right out of the gate. Eddie, would you add anything?
No, I think that covers it. We are pleased and feel supportive of the thesis of doing this over the long term. Certainly, we're not happy as to how this started out, but we have full focus and commitment of our people, and that's what it takes to win. So I have no concerns about winning.
Thank you so much for the details.
Thank you. We thank each of you for your interest in CommScope and your good questions this morning. We look forward to talking to you next quarter. Have a good day.
Ladies and gentlemen, this concludes today's conference. Thank you for your participation, and have a wonderful day. You may all disconnect.