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Analysts Offer Opposing Views on Alcatel/Lucent MergerTMCnet Contributing Editor The term merger is nearly synonymous with telecommunications. The latest merger talk has been between Alcatel, a provider of communications solutions to telecommunications carriers and Lucent Technologies, a designer and supplier of the systems, services and software that drive next-generation communications networks.
The combined company is positioned as the first truly global communications solutions provider with the broadest wireline, wireless and services portfolio in the industry. The merger is a result of a strategy to generate significant growth in revenues and earnings based on market opportunities for next-generation networks, services and applications. There are opposing views in the industry on whether or not this merger is a positive event for the industry. Stephane Teral and Jeff Heynen, analysts with Infonetics Research, Inc., each shared their view on this impending merger.
Teral, Directing Analyst, Service Provider Next Gen Voice and Mobile Core, shared the opinion that if Alcatel (News - Alert) thinks they will change the leadership of the next-generation voice landscape by merging with Lucent, they are misguided. While Teral acknowledges that Lucent solidifies Alcatel’s position in the broadband and optical markets, they fall short in the next gen voice space.
Nortel, Siemens and Huawei are leading the$2 billion trunk gateway and softswitch market, noted Teral. Lucent and Alcatel are not even present on the leader board. Teral is anticipating that even in the best of circumstances, the combined company will only move up to number 6 or 7. The only way they will gain market share and become a leader in this space is to acquire a strong independent like Sonus.
“Meanwhile, Cisco is strong in trunk media gateways but weak in softswitches, so if they want to be big in the carrier next gen voice market, they need a softswitch player to fill the gap,” added Teral. “Cisco is watching what Nortel (News - Alert) and Siemens (News - Alert) are doing, the number – one and –two players in the combined trunk media gateway and softswitch market.”
Teral also indicated that Siemens may get rid of its communications group and Nortel is in deep trouble. However, a Siemens and Nortel combination could create a VoIP equipment giant.
Jeff Heynen, Directing Analyst, Broadband and IPTV (News - Alert), took a slightly different approach, saying that in the world of broadband, the Alcatel/Lucent merger is a match made in heaven. Heynen contributed this to Alcatel’s lead position in the wireline broadband access deployments and Lucent’s strong wireless CDMA deployments. Together, the companies are a solid player in the fixed wireless convergence field.
“With service providers fully committed to converging their fixed and mobile networks, and high-speed data and video services being deployed across both networks, the combined entity of Alcatel and Lucent will become a one-of-a-kind one-stop shop for service providers around the world,” concluded Heynen.
The full impact of the merger on the industry as a whole has yet to be determined. There are sure to be organizations across the board re-examining their strategies to determine what threat the combined companies pose.
If Teral is correct and Alcatel and Lucent are misguided in their motive, it may be a while before that is evident. On the other hand, even a sixth or seventh place on the leader board will still cause unrest among the competitors with repercussions likely to be significant. Regardless of the end result, this merger will have an effect across the industry.
Susan J. Campbell is a contributing editor for TMC and has also written for eastbiz.com. To see more of her articles, please visit Susan J. Campbell’s columnist page.
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