Lucent, Alcatel Merger to Trigger Consolidation
By Melanie Reynolds -- Electronics Weekly, 4/12/2006
The merger of Alcatel and Lucent Technologies marks the start of real consolidation in the telecoms industry and will push other companies to move forward with merger and acquisition plans, according to industry analysts.
“It most importantly triggers the rationalization process, long awaited in this industry, whereby the other large diversified equipment vendors will need to either specialize or reach critical mass that now stands above the $20 billion [infrastructure] revenue mark in order to survive,” said Julien Salanave, head of telecom equipment practice at analyst IDATE.
According to Salanave, vendors with revenues above $20 billion, such as Cisco Systems and Ericsson, should be fine. However, he proposes the most likely future consolidation scenarios as: a merger of Siemens and Nortel; Siemens/Nokia; Nortel/Motorola; or Huawei acquiring a North American firm, such as Nortel or Motorola’s infrastructure division.
Yankee Group agrees the merger will drive other companies to accelerate plans in the next six months. Nick Maynard, senior analyst of service telecoms strategies at Yankee, believes it will also drive companies to “acquire smaller vendors to fill in any geographic or product gaps to counteract the competitive advantages the new combined entity may create.”
One of the effects driving consolidation is the selection criteria now being applied by operators to their suppliers, as witnessed by BT’s selection method for its next-generation network (NGN).
“Carriers need vendors that can provide comprehensive, integrated solutions spanning fixed and mobile infrastructure systems and professional services,” said Maynard.
Both Alcatel and Lucent are already signed as approved suppliers for BT’s NGN and the combined Alcatel/Lucent will be “the leading fixed NGN supplier in both North America and Europe and would create increased scale and product development efficiencies,” according to Maynard.
Electronics Weekly is the London-based sister publication of Electronic News. |
