Alcatel says not in talks with big rivals

* Alcatel-Lucent CEO says not in M&A talks with big rival

* Rejects speculation industry to shrink to 3 big players

CAMBRIDGE, Mass., Sept 23 (Reuters) - The chief executive of telecommunications equipment giant Alcatel-Lucent ALUA.PA said his company is not in merger talks with any of its rivals, dismissing speculation a deal might be in the works.

“There is nothing going on,” Alcatel-Lucent CEO Ben Verwaayen told Reuters in an interview.

Trading in Alcatel-Lucent shares has been volatile in recent weeks amid speculation it might be a takeover target for Chinese equipment vendors like Huawei [HWT.UL] or ZTE Corp 0763.HK or one of its European rivals, Nokia-Siemens networks.

The telecom gear industry underwent a period of consolidation in 2006 that was supposed to reduce competition and improve margins for the remaining players. But the outlook remains tough and some analysts believe another round of consolidation is in the cards.

Today there are five major telecommunications equipment companies. Some industry executives, including the incoming CEO of Nokia-Siemens, and analysts have said there is only room for three players.

But Verwaayen said that he believes that analysis is simplistic. “They should be looking to a much more complex picture than ‘The world will go with three,’” he said.

“It’s the same as with any other industry. You have global players. You have niche players. You have players who are growing in certain areas and players who are making different changes,” he said.

“It’s not ‘One picture, one size fits all,’” he added.

Verwaayen said that he is sick of talking about the issue of industry consolidation.

“It’s like oil. You take an olive, you press it once. You call it virgin oil. You press it a second time, then you knead it, you press it again and at the of the day it is dry. This subject is dry.”

Still some analysts believe that Alcatel-Lucent is a likely acquisition target among the top five because it has not posted a profit since it was created with a merger three years ago. Market No. 2 Player Nokia Siemens Networks is struggling to reach profitability. Only market leader Ericsson ERICb.ST can boast of strong profits.

So far this year Alcatel-Lucent shares have almost doubled, compared with a 25 percent increase for market leader Ericsson and a 29 percent gain for the DJ Stoxx Technology index .SX8P.

The head of the Franco-American company spoke to Reuters while visiting Cambridge, Massachusetts, to speak at conference at MIT.

(Editing by Steve Orlofsky)

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