Sunday, April 02, 2006

Alcatel and Lucent to merge

The weekend meetings between the two telecom equipment giants have clearly proved productive as Alcatel and Lucent have agreed to merge.

Alcatel's boss will become Chairman and Lucent's head will be CEO. The company will be based in Paris and have combined revenues of $25bn and a global workforce of 90,000, which will shrink by 10% as they gain merger efficiencies.

It has taken the two companies 5 years to actually manage to put a merger together - and the fact that they have to now proves how much the telco landscape has changed in the last 5 years as their customers, such as Verizon and AT&T have bulked up and put pressure on their suppliers margins.

Alcatel and Lucent have also been forced to merge with the entry of lower cost competition from the Chinese and from the entry of Cisco to the market with their new fangled Internet gear for operators.

So the telecomms equipment market starts its path to consolidation, mirroring that of their telcco customers. The only question is who will merge next - Siemens, Ericcson or Nortel? I wonder...

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