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COMPANY PROFILE
They might be giants
As Alcatel Lucent heads into its third quarter as a merged entity, the industry and shareholders
are waiting with bated breath. Will the company prove itself, or will it be third strike and out?
�lcatel and Lucent Technologies
finalised their merger on
December 1st, 2006, uniting
two of the world’s largest telecommunications
equipment makers. The
marriage of the two giants ended
years of speculation, after Lucent
had previously spurned Alcatel’s
advances back in 2001.
Like all good romances, the companies
were ultimately driven together
by their environment, or in this case,
market conditions. By 2006 Lucent’s
sales had dropped more than 50 per
cent since 2001 and Alcatel’s had
fallen by almost half since the telecom
and internet bubbles burst.
At the time, the merger was widely
regarded as the union of two very
different cultures, but the companies
actually claim a common heritage.
French vendor Alcatel, then known
as Compagnie Generale d’Electricite
(CGE), acquired the international telecommunications
products business
of a company called ITT in 1989. ITT
was incorporated as International
Telephone & Telegraph in 1920 and
acquired the Bell Telephone Manufacturing
company from AT&T—Lucent’s
parent company—in 1925.
Lucent, including the prestigious
research facility, Bell Labs, was spun
off from AT&T in 1995, so the merger
of Alcatel and Lucent is actually a reunion
of telecoms divisions separated
some 80 years ago. Needless to say,
communications technology has come
a long way since the telegraph.
Today, Alcatel Lucent combines
Alcatel’s strength in fixed broadband
infrastructure with Lucent’s
leading position in the CDMA2000
space, not forgetting the mega vendor’s
acquisition of Nortel’s UMTS
access business in January of this
year to further bolster its presence in
the 3G mobile infrastructure space.
The vendor’s wireless technology
portfolio now encompasses CDMA/
EV-DO, WCDMA/HSPA, GSM/EDGE,
TD-SCDMA and WiMAX.
By way of integration, the company’s
WCDMA product line is mainly
based on the ex-Nortel platform,
so Alcatel-Lucent can address the
2.1GHz, 900MHz and 1800MHz markets
worldwide but with additional
elements coming from both Lucent’s
and Nortel’s portfolios to address the
850MHz and 1900MHz frequency
bands used in North America.
During the company’s second
quarter results announcement,
CEO Patricia Russo noted that the
company is also seeing the benefits
of revenue synergies through the
Alcatel Lucent company history
1869: Elisha Gray and Enos N. Barton form a small, Clevelandbased
manufacturing firm. Three years later the firm, relocated to
Chicago, is renamed the Western Electric Manufacturing Company.
1881: Alexander Graham Bell’s firm, American Bell, buys a
controlling interest in Western Electric, making it the exclusive
developer and manufacturer of equipment for the Bell telephone
companies.
1898: French engineer Pierre Azaria creates La Compagnie
Générale d’Electricité (CGE), which operates in various spheres,
including electricity, transportation, electronics and telecoms.
1925: Bell Telephone Laboratories formed from consolidation of
the Western Electric Research Laboratories, formed in 1907, and
part of the engineering department of AT&T. International Western
Electric Company subsidiary sold to ITT.
1980s: CGE buys the telecommunications arm of ITT and rebrands
as Alcatel Alsthom, becomes one of the first overseas firms to
establish a Chinese operation.
1984: AT&T agrees to divest its local Bell telephone companies.
The AT&T Technologies unit assumes control of the Western
Electric charter.
1995: Serge Tchuruk, chairman and CEO of Alcatel, refocuses the
firm solely on telecoms.
1996: AT&T launches and spins off Lucent Technologies.
2006: With both firms hit hard by intensifying competition and
consolidation, a merger, first mooted in 2001, is announced.
combined company portfolios. “For
example, Reliance Communications
selected us for both its GSM and
CDMA network expansions,” she
said, “marking our entry into the
GSM portion of Reliance’s network
and we have also been selected by
Telecom New Zealand to deploy our
WCDMA technology, along with our
existing CDMA contract.”
The Nortel acquisition also allowed
the vendor to add HSPA+ to
its roadmap, taking advantage of
Nortel’s work on HSoPA—combining
UMTS with OFDM—as part of
the basis for its LTE offering. Bell
Labs has a solid grounding in MIMO
development and the company has a
lot of know-how in the OFDM space
because Alcatel Lucent already has a
commercial WiMAX product.
WiMAX is big on the vendor’s radar
and Alcatel Lucent has also made a
significant commitment to the technology,
joining the board of directors of
the WiMAX Forum in February.
In common with most of the other
large vendors, the company’s interest
in WiMAX extends only to the
mobile-WiMAX 802.16e-2005 flavour
of the technology, although the
company also has an OEM deal with
Alvarion for fixed-WiMAX kit.
By year-end, Alcatel Lucent plans to
start shipping Wave 2 mobile WiMAX
equipment supporting both MIMO
and beamforming in both the main
WiMAX bands —2.5GHz and 3.5GHz.
The company is also collaborating
with major WiMAX players, including
Intel, KT, Samsung and C-Dot, the
Indian government’s telecoms-technology-development
centre.
As part of its global WiMAX strategy,
Alcatel Lucent created a joint
R&D centre in 2006 with C-Dot, to
accelerate the availability of WiMAX
for fast-growing markets, such as
India. In addition, it is looking to take
advantage of its strong position in
the fixed broadband infrastructure
market by integrating WiMAX into
Mobile Communications International | First for news, best for business
james.middleton@informa.com
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