In his last year as operational pattern of Alcatel, Serge Tchuruk multiplies the mergers and acquisitions. After the merger with Lucent and operation Thales, Alcatel buys for $ 320 million Nortel activity in the European standard UMTS third-generation mobile networks. According to analysts, the assigned activity loses about $ 200 million, on a turnover of 500 to 600 million. Specifically, the transaction relates only to part radio (transmitters), as well as on patents and the customer. As numbers (1,500 people, including 1,100 engineers), "a significant majority" will be taken over by Alcatel. Nortel retains the second-generation (GSM), the heart of UMTS network and its work in the fourth generation (4 G).
UMTS was one of the weak points of the French manufacturer, which, to catch up with its technological backwardness, married successively to different partner (Interdigital, Motorola and Fujitsu then). It claimed 20 contracts, but no major, except with subsidiaries of Orange. The situation of Lucent was worse, with Cingular for single client UMTS. In the face, the Canadian manufacturer claims 15 customers, but much more important: Vodafone, Deutsche Telekom, O2, Orange, Telefonica, Bouygues Telecom...
The President of the mobile activities of Alcatel Marc Rouanne, said he was going to combine the functionality of three UMTS of Alcatel, Lucent and Nortel products in a single software. He said to become "the provider of a UMTS operator in four, third networks UMTS behind Ericsson and Nokia-Siemens provider and the leading provider of third generation networks", with 25 of the market. To reach this last classification, it includes Lucent activity in us technology to third-generation CDMA 2000. Assertion challenged by Ericsson, claiming 35 of the market of 3 G. All generations confused, Alcatel claims "the rank of third supplier of mobile networks, with net sales EUR 9 billion, or 20 of the market".
Refocusing with Nortel
Mike Zafirovski, President and CEO of Nortel, explained that its UMTS business "did not the sufficient size to become profitable." This transfer is part of a strategy of "disengagement" of the activities which are not a sufficient payback or a leadership opportunity. The CEO wants to focus on three activities up to 20 of the market: equipment for businesses, services and applications and the 4 G. The Canadian promises to be "leader" in this 4 G, which will use different technologies (OFDM) that provides control.
The announcement was welcomed by a decline in the course of 0.61 of Alcatel and a gain of 0.46 of Nortel. WestLB, "this redemption is negative for Nortel, which aborts an activity growing'." ". "To run three different platforms in an industry where speed is critical is a recipe for cooking for a commercial failure", said Dresdner Kleinwort, which has degraded his opinion on French "keep" to "sell". But Merrill Lynch as Chevreux welcomed the price, lower than expected for Alcatel. "It is very good news for Alcatel, ensures Chevreux". UMTS was the only niche where Alcatel Lucent did not have the critical size, with 6 of the market. With Nortel, market share will be approximately 14.
The integration will be even more "easy" repeated activities are largely based in France. Mike Zafirovski was however excluded to withdraw totally from the hexagon. The Protocol of agreement "non-biding" (non-binding), announced Friday, must be formalised to here "in late 2006 or early 2007. This requires the formal agreement of Lucent, but Marc Rouanne has assured that the U.S. the "supported totally."