Alcatel-Lucent may eliminate 10,000 jobs to save $1.4 billion

The loss making telecom equipment vendor Alcatel-Lucent may eliminate 10,000 jobs to save $1.4 billion by 2015.

Reuters reported – based on reports in Les Echos and Le Figaro newspapers on Monday – that Alcatel-Lucent, which employs 72,000 staff worldwide, will reduce 15,000 posts but create 5,000 new jobs globally.

In July, Alcatel-Lucent announced its intention to save $1.4 billion by 2015. Alcatel-Lucent’s job cut reflects dip in telecom Capex in coming months.

Earlier, Ovum said telecom service provider (SP) revenues will grow more modestly over the next few years, forcing SPs to conserve Capex and pursue cost-saving techniques such as network sharing. In 2017, revenues and Capex will likely reach $2.25 trillion and $346 billion, respectively.

Telecom analyst are suggesting that the job cuts will hit Alcatel’s Optics (-7 percent Y/Y in Q2), Focused Businesses (serves non-telecom clients, -18 percent), and Managed Services (-15 percent) units. Many of the new jobs could go into the IP (switches/routers, +21 percent) and Platforms (telecom software, +23 percent) divisions.

Job cuts will impact most of the regions. The job cuts would hit all regions, with 4,100 planned in Europe, the Middle East and Africa, 3,800 in Asia, and 2,100 in the Americas. Alcatel-Lucent has a major presence in India. It is not known what will be the impact in India, the second largest telecom market — based on mobile subscribers — in the world.


Alcatel-Lucent CEO Michel Combes, who took the helm of the telecom equipment vendor in April from Vodafone, announced its Shift Plan strategy to streamline the company to focus on fewer products so as to reverse losses.

The company is likely to make an announcement on job cuts on Tuesday.

The job indicates that the telecom infrastructure market is yet to revive.

ITU, an international telecom body under the aegis of UN, said on Monday that telecommunication operators’ capital expenditure (Capex) peaked in 2008 with global investment totalling $290 billion, followed by two consecutive years of decline. Despite the upturn in 2011, 2008 investment levels have not yet been restored.

According to ITU, sluggish investment levels after 2008 are consistent with an overall economic environment of restricted access to capital markets, which may limit the capacity of operators to raise funds for new investments. With the expansion of global operators into new markets, many operators are active in both developing and developed countries, with the adverse financial environment in the developed world likely impairing investments in the developing world.

The group, which competes with rivals such as Ericsson, Huawei, ZTE and NSN has posted five straight quarters of net losses. In 2012, Alcatel-Lucent posted net loss of 1.2 billion euros, largely because of a writedown on its mobile unit and restructuring costs from an earlier plan to lay off 5,000 workers.

In autumn 2012, it announced moves to trim 5,000 workers from its base of 76,000 at the time, with the heaviest burden falling in France.

Alcatel-Lucent’s rival NSN is currently in the process of eliminating 17,000 jobs. Companies such as Ericsson, Huawei, ZTE, etc. are yet to announce a job cut officially. Cisco, which has revenue streams from telecom business, is also eliminating jobs.

Baburajan K
[email protected]