Telecom Lead India: 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.
In February 2012, TelecomLead.com reported that Alcatel-Lucent India posted 41 percent decrease in 2011 revenue primarily because of uncertainties about telecom investment in the country. Alcatel-Lucent CEO Ben Verwaayen has expressed concerns about uncertainties in Indian telecom market. Alcatel-Lucent’s APAC revenues were down 4 percent for the full year. Revenue in China was up 7 percent for the full year. India was down 41 percent, and Australia was up 14 percent. In Q4 2011, revenues in APAC region grew 9 percent.
In August 2012, TelecomLead.com reported that Alcatel-Lucent launched The Performance Program, which will reduce the company’s cost structure and improve margins by the end of 2013. It will also exit from non-viable businesses and countries.
On Monday, Economic Times reported that the reduction in manpower is likely to impact Alcatel-Lucent India’s key business support functions and its people-centric managed services vertical where nearly 7,000 employees are engaged primarily in managing Reliance Communications’ CDMA and GSM networks and Bharti Airtel’s landline and broadband networks.
Last week, TelecomLead.com reported that Alcatel-Lucent may lose its managed services contract with Reliance Communications. Aditya Kaul, practice director, mobile networks at ABI Research, indicated that Alcatel-Lucent is in a vulnerable position of losing business with their Reliance Communications contract.
“We are concerned to see stories in the press today saying that Alcatel-Lucent has plans to cut 1000 employees in India. Alcatel-Lucent has made no announcements yet on where headcount reductions will occur around the world as part of The Performance Program,” said Alcatel-Lucent in a statement.
“The only statement we have made on this topic is that issued on July 26th in which said that we would reduce our global headcount by around 5,000 people across all geographies. As said at the time we will not comment further until we have completed legally-required consultation with workers’ representatives in a number countries where we are legally required to do so. India is an important research and development center and market for Alcatel-Lucent globally. Our commitment to building India’s broadband infrastructure remains unchanged,” the statement added.
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.
Due to the 2G scam and Supreme Court cancelling 122 mobile licenses, foreign operator partners like Etisalat, S Tel, Batelco, and probably Telenor are expected to leave the market.
Huawei and ZTE are amongst the vendors who won managed services deals with many of the operators that have had their licenses cancelled.
Latest indications suggest that the re-auction of the 2G spectrum waves is expected to take place in 2013. Large portions of the re-auctioned spectrum are expected to be gorged up by the large operators, and possibly by Mukesh Ambani-promoted Reliance Industries.
“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.