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Technology Stocks : Lucent Technologies (LU) -- Ignore unavailable to you. Want to Upgrade?

To: Dolfan who wrote (8397)	6/29/1999 5:29:00 PM
From: William Hunt	Respond to of 21876

Thread---Lucent Technologies Inc. Dow Jones Newswires -- June 29, 1999 DJ Spain Telefonica-Lucent IP Network Deal Seen As Win-Win By Margarita Palatnik SAO PAULO (Dow Jones)--Telefonica SA's (TEF) naming of Lucent Technologies Inc. (LU) as its strategic supplier for building an Internet Protocol network worldwide is seen as a win-win pact, with a greater scope than the $200 million price tag may suggest. "The contract is greater than the money exchanged," said Juan Fernandez, a telecommunications specialist with Frost & Sullivan, a consulting firm. As reported, Spain's Telefonica signed a contract with Lucent for the installation of an IP network to service corporate clients in Europe, Latin America and the U.S. The network will allow Telefonica to offer such products as virtual communities management, voice over IP and multimedia services. "It's the first-known contract of this kind that is global, which gives Lucent a strategic position," Fernandez said. He added the deal might signal a coming trend, with global suppliers clinching pacts to provide companies with multiple foreign subsidiaries. Lucent Becomes Major Player In IP Services Lucent has moved quickly to secure such business, having bought Ascend Communications Inc. last week for $20 billion and then announcing the purchase of Nexabit Networks - a closely held company that makes high-speed Internet switching gear - for $900 million in stock. "Lucent has been positioning itself through a series of acquisitions to offer a complete solution" beyond telephone equipment, Lucent do Brasil President Jose Roberto Campos told Dow Jones Newswires. Lucent managed to win the Telefonica contract over Cisco Systems (CSCO) - which boasts a virtual monopoly of IP network switches worldwide - and Nortel Networks (NT), another strong contender. "The contract confirms our expertise in data packet technology, an area relatively less developed for Lucent," said a Lucent spokesman in Sao Paulo. Competitors weren't taken by surprise when Telefonica gave the nod to Lucent. "They have invested a lot in the relationship with Telefonica," said an executive at a rival firm. "They are present at every Telefonica global tender." Telefonica Blazing Trail In Latin America The launch of an IP network could mean a competitive advantage for Telefonica, holder of the prime concession of Sao Paulo state and the largest telephone carrier in Latin America. "The move is in the right direction, and they're at the forefront of the transition," said Raul Katz, a telecom specialist at consutancy Booz, Allen & Hamilton. Lucent's Campos predicted Telefonica's market will "explode." Observers also note Telefonica's decision to launch its network in Sao Paulo, rather than in Spain. The announcement is seen as underscoring the company's strategic push into Latin America and in particular Brazil, the region's fastest growing and largest market. "In five years Telefonica will have greater revenues in Brazil than in Spain, so Brazil is its priority market," said an executive at a telecom equipment manufacturer. In less than one year, Telefonica has installed more than 1 million phone lines in Sao Paulo alone. "Telefonica is taking a step in the direction the whole industry is going to take, but they're doing it more aggressively in Brazil," added Booz, Allen's Katz. Industry participants note that Brazilian corporate clients - said to make up 20% of the customer base and 80% of revenues for wireline carriers - are demanding more sophisticated services. And with the price of traditional phone service pressured by competition, they add that there's no way to go but IP. "With competition starting, and demand for services from business users, (carriers) have to offer services with value added, and the data area is what sets them apart," predicted Lucent's Campos. Telefonica, which Tuesday launched a program to encourage corporate customer loyalty through discounts, will start to compete for toll calls on July 6, when users will be allowed to chose their carrier. Telefonica's moves come as a Competitive Local Exchange Carrier - or so-called mirror company - prepares to start operations in Sao Paulo by year's end. BEST WISHES BILL