Investment

Alcatel-Lucent to ink $1.68b Chinese deal

By Wang Xing (China Daily)
Updated: 2010-11-05 07:46

Paris-based company to provide network, application solutions

BEIJING - Telecom equipment maker Alcatel-Lucent SA said on Thursday it will sign a 1.18 billion euro ($1.68 billion) deal with Chinese telecom operators, as China's booming economy creates increasing demand for communication equipment.

The contracts with China Telecom, China Mobile and China Unicom, valued at 343 million euros, 530 million euros and 305 million euros respectively, will be signed on Friday during Chinese President Hu Jintao's visit to France, Alcatel-Lucent said.

The Paris-based company will provide network and application solutions for the Chinese carriers in network construction and upgrading.

"China is a booming market for us," Ben Verwaayen, chief executive officer of Alcatel-Lucent, said in a telephone interview with China Daily.

He said the Chinese telecom operators' spending on networks has slowed in the first half of this year after billions of yuan of network investment in 2009, "but clearly you can see China's market is coming back".

In the third quarter, Alcatel-Lucent swung to a net profit of 25 million euros, compared with a loss of 182 million euros last year, according to a company report released on Thursday. Revenue in the three months ending Sept 30 rose to 4.07 billion euros.

The group, which has been trying to claw its way back to profitability since the merger in 2006 between Alcatel and the former Lucent Technologies, has not posted year-on-year revenue growth for more than two years.

Verwaayen said on Thursday that Alcatel-Lucent's business in China grew 8 percent last quarter, making China contribute about one-fifth of the company's total revenue.

The former head of UK telecom company British Telecom Group said China still has huge potential for growth in terms of telecom users' growth and the country will play an active role in 3G and 4G telecommunication deployment.

China is the world's largest mobile market, with more than 830 million subscribers, according to official figures. Last year, the Chinese government issued 3G licenses to telecom carriers, unleashing billions yuan of investment in network construction.

According to figures from the Ministry of Industry and Information Technology, Chinese telecom operators invested 161 billion yuan ($24.17 billion) to construct 3G networks in 2009. In the first half of this year, the investment figure slowed to 19.2 billion yuan.

Chinese telecom operators have slowed their national network construction but China's active pace in deploying the 4G network as well as the government's recent efforts to encourage broadcasters to provide telecom services will create new equipment demand in the country, Verwaayen said.

"That made me very optimistic about the China market in 2011," he added. Alcatel-Lucent has about 14,000 employees in China, with more than 6,000 in research and development.

Verwaayen said the company plans to continue expanding its R&D forces in China in the following quarters.

China Daily