ALCATEL'S DSL BUSINESS
Before anyones here gets excited about DSL growth, remember the following June 07, 2001 press release-
Alcatel Press release / Print
Thomson multimedia to acquire Alcatel's DSL modems activity
This new step in the cooperation between the two groups is in line with Alcatel's strategy to focus on network equipment and Thomson multimedia to reinforce its worldwide leading position in consumer broadband access technologies and products.
Paris, June 7, 2001 - Thomson multimedia (Paris Sicovam: 18453 and NYSE: TMS) and Alcatel (Paris: CGEP. and NYSE: ALA.N) today announced the signing of a Memorandum of Understanding (MoU) for the transfer of Alcatel's DSL (Digital Subscriber Line) modem activity to Thomson multimedia.
Under the terms of the Memorandum of Understanding, Thomson multimedia will acquire Alcatel's DSL modems activity, which holds a leading position in DSL's high growth market, in exchange for 9.5 million new shares of Thomson multimedia. At the average share price of 48 euros per share, the transaction is valued at 456 million euros. The final agreement will be submitted to the board of directors and the shareholders of Thomson multimedia, to the representative bodies of Alcatel's employees in the countries concerned, as well as to the relevant French and European authorities. The transfer of the activity is expected to be finalized before the end of 2001.
DSL technologies are essential to the development of high-speed Internet access. Alcatel and Thomson multimedia believe in the sustained growth of this market and see DSL as key for the convergence of voice, data and video. The transfer will help reinforce the technological and commercial cooperation already established in areas where the two groups are most complementary.
The agreement is in line with Alcatel's strategic repositioning on the network infrastructure market, in particular on the DSL multiplexers (DSLAM) where Alcatel holds a 52% market share, according to Dell'Oro. On the other hand, the DSL modems market is naturally bound to evolve toward a consumer industrial and commercial business model where Thomson multimedia has a unique expertise. The transfer of this activity to Thomson multimedia will ensure its future development.
Alcatel will continue to maintain its leading positions and technologies in DSL infrastructure, and specifically in the video services offering which is considered to have a promising future. The cooperation with Thomson multimedia will allow innovative end-to-end solutions by taking advantage of the complementarity between network equipment and consumer access products. In addition, Alcatel retains its DSL components manufacturing activity.
The acquisition will allow Thomson multimedia to immediately gain worldwide leadership, renowned technological expertise and a worldwide customer base on the high growth DSL sector. This activity also complements its leading positions in satellite set top boxes, digital cable modems and recent developments in digital terrestrial. The transaction will strengthen Thomson's leading position in consumer technologies and products for broadband access. The acquisition represents another step in the deployment of Thomson's strategy to become the digital transition leader by offering end-to-end solutions, on all types of networks, to access digital content and services for both consumer and professional customers.
Alcatel's DSL modems activity acquired by Thomson multimedia holds leadership position on a high growth market where 7.6 million units were sold in 2000. Alcatel sold about 1.7 million units in 2000. Dell'Oro assessed Alcatel's market share as 22% in 2000 and 28% in the first quarter of 2001. The product line covers all residential and professional applications whether Ethernet, USB or wireless LAN. Alcatel's modems are referenced by some of the most important telecom operators including SBC, Bell South, Telmex, France Telecom, BT, Telefonica, China Telecom, Telstra, …
The technological expertise of Alcatel's dedicated R&D team (150 engineers) is renowned worldwide and comprise particularly IC design expertise. The activity is mainly based in Kontich (Belgium), with two additional teams in Rennes (France) and Stuttgart ( Germany). It will be integrated in Thomson multimedia's Consumer Products division within the Broadband Products segment.
" Alcatel looks forward to this extended cooperation with Thomson multimedia which closely links two core activities of our companies. I have no doubt that the agreement will help accelerate the development of the modems activity as well as bring end-to-end solutions expected by the market in order to move toward interactive video", said Serge Tchuruk, Chairman and CEO of Alcatel.
" Our expertise in video technologies and our focus on high growth digital consumer markets are ideally complemented by this reinforced partnership with Alcatel. With satellite, cable and today DSL, Thomson intends to be a strong leader to enable the consumer to access digital content and interactive services", said Thierry Breton, Chairman and CEO of Thomson multimedia
Certain statements in this news release, including any discussion of management expectations for future periods, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from the future results expressed or implied by those statements. For a description of such factors, please review Thomson multimedia's filings with the U.S. Securities and Exchange Commission.
About Alcatel
Alcatel builds next generation networks, delivering integrated end-to-end voice and data networking solutions to established and new carriers, as well as enterprises and consumers worldwide. With 130,000 employees and sales of EURO 31 billion in 2000, Alcatel operates in more than 130 countries.
About Thomson multimedia
With sales of 9.1 billion Euros (U.S. $ 8.3 billion) in 2000 and 73,000 employees in more than 30 countries, Thomson multimedia (Paris Sicovam: 18453) (NYSE: TMS), provides a wide range of technologies, systems, finished products and services to consumers and professionals of the entertainment and media industries. To advance and enable the digital media transition, Thomson multimedia has five principal activities: Digital Media Solutions, Displays and Components, Consumer Products, New Media Services, and Patents and Licensing. The company distributes its products under the popular THOMSON, RCA and TECHNICOLOR brand names. For more information: www.thomson-multimedia.com.
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