Telecom Lead Asia: Alcatel-Lucent is set to exit from fixed-line and broadband managed services venture with Bharti Airtel.
India’s #1 telecom operator Airtel will buy Alcatel-Lucent’s equity stake in the joint venture which was announced on April 30, 2009.
Both the companies did not disclose the financial details.
According to Alcatel-Lucent website, the JV is owned by Alcatel-Lucent (74 percent) and Airtel (26 percent). It manages Airtel’s migration to Next Generation Networks (NGN) to offer advanced services such as high speed internet, triple play, VAS, MPLS, VPN for both retail – and corporate clients. The deal is estimated to be worth $ 500 million over five years.
Recently, Alcatel-Lucent, which will announced its financial result for Q4 2012 next week, said it will exit from non-viable markets and managed services deals.
Airtel said the entity would operate independently.
Airtel is looking at inviting other telecom operators for equity participation and bring the management of their broadband and fixed-line networks under the entity, Reuters reported.
Recently, Alcatel-Lucent won a $1 billion managed services deal from Reliance Communications. The contract covers Eastern and Southern India up to 2020 and involves the merger of the company’s landline and mobile networks.
To support the contract, Alcatel-Lucent will set up and operate next-generation OSS (operations support systems) and introduce real-time optimization tools to improve network performance across Reliance’s wireless, wireline, long-distance, fiber and utilities’ functions.
As per announcement on May 31, 2012, Airtel selected the Alcatel-Lucent to build IP-based access network technologies Carrier Ethernet (CEN) allowing the operator to deliver its customers a high-speed mobile broadband services.
Telecom analyst firm TBR predicted that Alcatel-Lucent may exit from some of the deals with telecom operators in the Middle East.
According to ABI Research, as the Indian market is expected to experiment consolidation in the next few years some vendors — Ericsson, Nokia Siemens, Alcatel-Lucent, Huawei, and ZTE — are likely to get squeezed out in the process.
“Ericsson and NSN will see increases in their market shares, as the traditional large operators will most likely continue their managed services relationships. There is always a chance of Huawei and ZTE competing on price, and while Ericsson and NSN might only see a squeeze in profit margins,” said Aditya Kaul, practice director, mobile networks at ABI Research.
Alcatel-Lucent is planning to slash nearly 1,000 employees, or 9 percent of its India workforce. The restructuring drive is aimed at reducing costs.