Orange Picks Alcatel, Nokia and Ericsson for Wireless
By Daniel Tilles
Paris, Oct. 26 (Bloomberg) -- Orange, Europe's second-biggest mobile-phone company, selected Alcatel SA, Nokia Oyj and Ericsson AB to supply equipment for building new wireless networks, with testing of services scheduled to start next year.
Orange, which is owned by France Telecom SA, selected the winners after more than 10 suppliers submitted bids earlier this year. While the value of the agreements was not disclosed, Didier Quillot, general director of France Telecom Mobiles, said the networks would cost ``several billions of euros'' to build.
With phone operators expected to spend some $200 billion for licenses to offer fast Internet access from mobile phones and the accompanying network gear, France Telecom and rivals are forcing equipment makers to share part of the financing cost. They have also established penalties in cases of late delivery of equipment or installation.
``All three suppliers offered very significant financing credits,'' Quillot said during a conference call.
Alcatel shares fell as much 3 percent to 72.15 euros. Nokia, the world's largest maker of mobile phones, fell as much as 3.9 percent to 45.7 euros. Ericsson shares rose as much as 3.6 percent to 129 kronor.
Other Countries
Quillot said all wireless companies in which France Telecom holds stakes benefited from financing and other proposals from the three suppliers.
Last Friday, Ericsson, the world's biggest market of cellular- phone networks, said it won a $1.35 billion order from MobilCom AG, Germany's fourth-biggest mobile operator for Universal Mobile Telecommunications System, or UMTS, equipment. MobilCom is 28.5 percent owned by France Telecom.
Stockholm-based Ericsson will help fund the network, supplying MobilCom with equipment, phones and services worth 2.4 billion euros ($2 billion), said MobilCom Chief Executive Gerhard Franz Schmid.
The German company, which expects to start a UMTS service by mid-2002, will pay Ericsson 1.6 billion euros in 2003, Schmid said. Ericsson faces penalties if it fails to deliver on time, with Schmid warning that MobilCom will not pay for what has been delivered if the work isn't completed as scheduled.
``There are penalties tied to late delivery of equipment and for volume,'' Benoit Eymard, France Telecom Mobiles development and operations director said during today's conference call. He declined to say how steep the penalties may climb.
``From a financial point of view, the risk is greater in the area of penalties for late delivery,'' said Antoine Joly, an analyst with Aurel-Leven who has ``buy'' ratings for France Telecom and Alcatel. ``The operators are putting pressure on the equipment makers for financing, but the equipment makers are in a strong position too because all the operators want their networks at the same time.''
Sarah Compton, a spokeswoman for Alcatel, Europe's second- largest phone-equipment maker, said the company has also been selected by Wind SpA, Italy's third-largest mobile-phone company to supply phones and network equipment. She declined to discuss financing arrangements being offered to France Telecom and its different mobile operations, which include Wind.
Shares in France Telecom rose as much as 2.4 percent to 120.1 after earlier rising as high as 125.5 euros. |
