Alcatel assimilates Lucent

, posted: 3-Apr-2006 07:17

The mega-merger between telco suppliers Alcatel and Lucent has come true, and a company with US$25.5 billion/NZ$45.5 billion annual sales stands to be created. Alcatel will own sixty per cent of the shares of the merged company, which will be based in Paris under Patricia Russo's CEO-ship, with Serge Tchuruk as the non-exec chairman. This is the second time the two have tried to marry each other; this time around it looks like the negotiations were succesful unlike five years ago, when nothing eventuated.

As always when mergers take place, there will be lay-offs. Indications are that between ten to fifteen per cent of the 88,000 to 90,000 employed by both companies will get the heave-ho, or in management speak, "be subject to review under a cost-reduction and rationalisation programme aimed at creating greater efficiency by taking advantage of existing synergies."

This may affect New Zealand employees; here, Alcatel handles all of Telecom's fixed-line networks, and Lucent takes care of the 027 CDMA mobile phone one. We'll see what happens when the two operations merge.

Alcatel has a significant presence in Australia as well, where it has won deals for building parts of Telstra's Next Generation IP network. Lucent on the other hand has trailed Ericsson across the Tasman and not enjoyed big deal wins, so while the merger is said to be between equals, there's no doubt that Alcatel is the dominant party.

A bigger Alcatel giant reinforced by a large Lucent, formerly AT&T, surely must tickle regulator interest worldwide. In NZ and Australia, Alcatel's dominant position as a supplier of critical infrastructure should by rights raise official questions. New Zealand's competition legislation is largely ineffective due to an ideological taint from the late eighties that asserts monopolies are fine, but the Australian ACCC watchdog may not be so pliant. The EU and US regulators are likely to be even more aggressive, so watch this space.

Update: What will the new entity be called?

  • Alucent
  • Lucatel
  • Alcacent
  • Lucentel
  • Alcatent

(With thanks to Speedoboy for some of the above suggestions.)

Also, what will happen to Lucent's infamous logo? The one one that makes staffers affectionately refer to the company as "The Cult of the Flaming Red A$$hole".

Update II: Bloomberg says Lucent's staff-slashing CEO Patricia Russo will move quickly to chop Alcatel's workforce by ten per cent - 8,800 all in all. She has already axed half of Lucent's labourers. This could mean redundancies in Australia/New Zealand as well, despite the skills shortage in that region.

Other related posts:
TDD vs FDD for LTE
Huawei TDD LTE demo aboard the Shanghai MagLev train
Apropos that new Telecom logo

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