BARCELONA Feb 23 Alcatel-Lucent said
it would stay out of a brewing price war in the telecom
equipment market and set itself apart with better service and
new products, including those from a new partnership announced
on Sunday with Intel Corp.
Chief Executive Michel Combes said Alcatel-Lucent wanted to
gain market share but not at any cost, as it entered the second
year of a three-year turnaround aimed at restoring regular
profits and cutting 1 billion euros of costs.
Analysts predicted that competition could intensify this
year among telecom equipment vendors after Nokia's NSN unit
forecast lower operating margins as it tries to
rebuild revenues lost after a bout of restructuring. A newly
aggressive NSN could spark reactions from Sweden's Ericsson
and China's Huawei.
"All the players in the sector have understood that
competition based on price was not the right answer," Combes
said on the sidelines of Mobile World Congress, the wireless
industry's largest annual conference.
"Differentiation is the right way. Each company must find
its areas of excellence and deliver on the services promised to
customers," he said.
To that end, Combes unveiled a partnership with chip maker
Intel, under which the two will share the costs of research and
development on cloud computing and security.
Known as "network function virtualization", the technology
allows telecom operators to rely more on software to run their
networks and less on hardware, which can over time bring down
It is the second R&D partnership announced since Combes took
over as CEO in April 2012, and he pledged more to come.
Mobile chip maker Qualcomm took a undisclosed stake
in Alcatel in July 2013 as part of a research partnership on
so-called small cells, which are small mobile antennas to help
operators cover urban areas.
The Intel partnership does not involve any direct purchase
of Alcatel's shares, but Combes said the two would invest
"several hundred million euros each" with the aim of possibly
launching products for sale this year.
"We can be first to market with products by working with
partners," said Combes.
Alcatel-Lucent halved its net loss last year as Combes'
turnaround plan kicked in, helped by a capital increase and bond
to shore up the company's balance sheet and 10,000 layoffs.
The shares have more than tripled in value in the past year
and closed at 3.15 euros on Friday, giving the company a market
capitalisation of 8.77 billion euros.
(Reporting by Leila Abboud; editing by Andrew Roche)