Alcatel CEO Quells China Takeover Fears

Published on September 21, 2009 by brooks | This story has been viewed 761 views

PARIS — The risk of a takeover of a Western telecommunications-equipment maker such as Alcatel-Lucent SA by a Chinese rival has been overplayed, Chief Executive Ben Verwaayen said in an interview, adding that the Franco-American company is “extraordinarily happy” with its position in China.

Mr. Verwaayen, speaking Thursday in his office in Paris, having recently returned from a World Economic Forum in Dalian, China, said the risks of a takeover by a Chinese competitor are “not more than yesterday or the day before.” His comments follow recent speculation in the French media linking Alcatel-Lucent with China’s Huawei Technologies Co. or peer ZTE Corp.

Huawei earlier this month said it wasn’t in talks with Alcatel-Lucent about forming an alliance, though a spokesman for the company said it was open to “cooperation opportunities,” without elaborating. ZTE has also said it isn’t interested in buying a stake in Alcatel-Lucent.

Some Western network-equipment providers have been struggling as mobile operators have cut back on spending to preserve cash flow, trying to combat the impact of regulatory pressure, increased competition and the recession.

Compounding the slowdown, Alcatel-Lucent and Nokia Siemens Networks, a joint venture between Nokia Corp. and Siemens AG, have also had to contend with issues arising from their internal integration efforts. In July, Alcatel-Lucent posted its first quarterly profit since its creation in 2006.

These challenges have led to speculation that the pace of consolidation in the segment may quicken. Market leader Telefon AB L.M. Ericsson recently said it would pick up parts of bankrupt Nortel Networks Corp.’s infrastructure business, consolidating its top position. There has been further market speculation that a merger between global No. 4 Alcatel-Lucent and No. 2 Nokia Siemens Networks might aid their defense against Ericsson and fast-growing Chinese rivals such as Huawei, the No. 3 player, and ZTE.

Operators are also teaming up closer to home. Most recently, Deutsche Telekom AG and France Telecom SA announced the tie-up of their mobile activities in the U.K.

Alcatel-Lucent, Ericsson and Nokia Siemens Networks have been fighting for market share in China, where growth is still rapid and billions of dollars’ worth of contracts are up for grabs as third-generation mobile networks are rolled out in the country.

Alcatel-Lucent has provided a third of the country’s fixed-line and mobile infrastructure, Mr. Verwaayen said, adding that China represents more than half of Alcatel-Lucent’s activities in the Asian-Pacific region.

Mr. Verwaayen said the network-gear industry is more focused on transformation than consolidation.

“The only strategy you have to understand is your own strategy — never adapt to the other guy’s,” Mr. Verwaayen said, citing Arsene Wenger, the manager of London-based Arsenal Football Club. “I’m a big fan,” he said.

Still, Mr. Verwaayen said it would be wrong to believe that the major network-gear players will always be European or U.S.-based.

“There are new players on the block,” he said. “The whole idea is, ‘We have our Western players and they’re the only ones there.’ Well, think again.”

Possibly Related Posts:


Filed under: Shenzhen
Tags:

You must be logged in to post a comment.