[ BT Westell/ALA/Fujitsu ]
Mark made a good point, let me post the entire article. These types of relationships aren't delevoped in a few month... they take years. Do we listen to Mark's theories or Nikos Theodosopoulos theory of 9 months ago... which is coming true.
telechoice.com
UBS Securities Equity research, Nikos Theodosopoulos (212) 821-6951
Alcatel and Fujitsu/Westell emerge as the ADSL suppliers to British Telecom
Westell to supply the ADSL modems and DSLAM to Fujitsu and possibly Alcatel
BT plans to deploy 10,000-20,000 ADSL units beginning in late 1997 and early 1998 with volume ramping up to potentially over one million over the next 3-5 years.
We believe that Alcatel and Fujitsu have emerged as suppliers to British Telecom for its ADSL network. As we had stated in our First Call on December 18 we believed that the list of three vendors (Alcatel, Fujitsu, and Northern Telecom (NT-71-Buy)) would be narrowed to two with a final decision coming in mid-to-late January. We had also stated that BT wanted two ADSL vendors and that Westell (WSTL-14-NR) was in good position to win business at BT since Westell was a primary supplier to Fujitsu and Northern Telecom and was the secondary supplier to Alcatel. We now believe that both Alcatel and Fujitsu will supply ADSL modems and the DSLAM. We do not believe that a decision has been made between Alcatel and Fujitsu regarding the backbone portion of the network, which would include equipment such as ATM switches and SONET gear. For the ADSL portion, Alcatel will supply DMT ADSL modems and the DSLAM while Fujitsu will supply Westell's CAP modems and Westell's DSLAM. It is still possible that Alcatel may sell some Westell products to BT also, although this may only be relevant for CAP.
Why did Nortel Lose Out?
We believe the reason that Nortel lost on the business is because the company was not willing to share some of the risk of deployment of this new service that BT was asking the vendors to take. Specifically, BT wanted the equipment vendors to enter a partnership for this technology where BT would need to put a lower cash outlay for the equipment and in return payments would later be made to the vendors based on the revenues generated from the service. It appears that Nortel may not have been willing to comply with what BT was asking for in this deployment.
Additionally, it is not surprising that Alcatel and Westell were chosen since BT's current ADSL 2,000 home trial includes Westell modems and Alcatel as the systems integrator. If Fujitsu is not chosen for the backbone piece of the network, it may end selling just the Westell modems and DSLAM. We believe that BT wants to maintain and perhaps enhance its relationship with Fujitsu, especially if BT/MCI expand operations into the Asia/Pacific area. Additionally, BT's CEO, Sir Peter Bonfield, was previously the head of ICL, the computer group that is controlled by Fujitsu.
What This Means To Alcatel, Fujitsu, and Westell
BT plans to deploy 10,000-20,000 ADSL units beginning in late 1997 and early 1998 with volume ramping up to potentially over one million over the next 3-5 years. Given these objectives, we value the 1997/1998 opportunity for the ADSL vendor(s) to be $10 million with a potential multi-year opportunity of $500 million if BT proceeds with its plans. It is unclear at this point what portion of these revenues Westell would derive.
Why can't the next phase be 10,000-20,000 lines... the present trial is for 2,000 lines? Does anyone have an opinion on the duration of this contract? BA's trialing will run upto mid-98, but the contract is for a number of years... until later. |
