Alcatel upbeat on Europe, sees risk in MidEast

4 Min Read

PARIS: Telecom gear maker Alcatel-Lucent is taking market share from rivals in Europe, but sees risks in some fast-growing Middle East markets because of political unrest, the executive who oversees the regions said.

"We are growing in Europe, even though the market isn’t and operators remain cautious," said Adolfo Hernandez, who runs the group’s Europe, Middle East and Africa unit, in an interview.

"In the Middle East, there is a period of uncertainty of that is obviously a challenge we’ll have to go through."

Hernandez told Reuters political unrest in the Middle East was not derailing investment everywhere, adding that operators in Saudi Arabia and the United Arab Emirates were proceeding with broadband and wireless buildouts.

Europe was a laggard for Alcatel-Lucent last year, with revenues down 2 percent overall, even as they surged 17 percent in North America.

Unlike in North America, where telecom operators like AT&T and Verizon have started massive buildouts of fourth generation wireless technologies, most European countries have not yet awarded their 4G licenses.

Hernandez said despite the climate, Alcatel-Lucent had won market share in recent months in Europe, overtaking larger rival Cisco in IP routers, and increasing against China’s Huawei in optics.

Alcatel-Lucent held the top spot in market share in IP edge routers and optics in EMEA last year, according to market research groups Infonetics and Dell’Oro Group. Both technologies allow operators to cope with the boom of data on mobile networks as consumers surf the web on smartphones, and are being heavily pitched by Alcatel and its rivals.

As a result, fourth quarter revenues in the region were up 8 percent from a year prior.

Alcatel-Lucent shares have climbed 67 percent since the beginning of the year, reflecting how some investors are increasingly confident that CEO Ben Verwaayen can deliver on his promised turnaround. The STOXX Europe 600 technology index, by contrast, is up just under 2 percent over the same period.

Asked about how the Japan earthquake would impact the global supply chain for semiconductors, Hernandez says the telecom gear sector would be affected but it was too early to know how much.

Japan makes one-fifth of the world’s semiconductors and more than half of the silicon wafers that go into everything from mobile phones to solar cells.

Hernandez said that Alcatel-Lucent had reconvened the crisis team of executives and engineers that was created last year to cope with a shortage of electrical components that hit the telecom gear sector.

That shortage left Alcatel-Lucent unable to satisfy customer orders in the first half of the year and forced it to spend cash to build up chip inventories.

"We are in the analysis phase to see, if, and how, and when, and how much the impact will be later in the year."

Hernandez said he did not know how long the product-by-product analysis would take.

Rival gear maker Ericsson recently said Japan’s quake would not have a material impact on its first-quarter sales, but that it could eventually affect the industry.


Share This Article
Leave a comment