Lucent wins deals from Reliance Info and Tata Tele

CIOL Bureau
New Update

By Jim Christie

SAN FRANCISCO: Lucent Technologies Inc. said on Tuesday it signed deals with two Indian telecommunications companies to provide wireless equipment and services estimated to be worth hundreds of millions of dollars over the term of those contracts.

Lucent said it had signed a five-year contract with India's Reliance Infocom to deploy a wireless network designed for voice and high-speed data services. As currently planned, the network will stretch across India, Lucent said. Murray Hill, New Jersey-based Lucent also said it had signed a contract with Tata Teleservices to deploy high-speed wireless networks in several Indian states.

Lucent did not disclose financial terms for either deal, but said it would supply Tata with base stations and mobile switching centers. The Reliance Infocom contract covered base stations, mobile switching centers and other network infrastructure, and design and consulting services as well as installation and maintenance support, Lucent said.

Sources close to the battered U.S. telecom gear maker said the deals taken together would generate hundreds of millions of dollars in revenue. But analysts said the deals will only help Lucent slightly because the key U.S. wireless market's growth is slowing and carriers are slashing capital spending.

"It's good to see new contracts," said CIBC World Markets analyst Stephen Kamman, who does not own Lucent shares but whose firm has done investment banking for Lucent. "But it's probably over a couple of years and what it doesn't offset is the simple fact that most wireless revenues come out of the United States, and the outlook for the U.S. market is very questionable right now."

Lucent posted $21.3 billion in revenues in last fiscal year and analysts expect the company to generate about $12.2 billion in sales in the fiscal year ended in September because of the sharp decline in telecom capital spending.

U.S. telecom carriers, facing heavy debt loads and overcapacity, are expected to hold the line on new investment for another year or more, driving communications equipment vendors such as Lucent to lean more on the growth markets of China and India in a bid to reverse a decline in their sales, analysts have said.

The India announcements followed an equipment contract on Monday worth more than $400 million for Lucent to upgrade the CDMA-standard mobile network of China Unicom, China's second largest mobile service provider. Tata Teleservices is a unit of the sprawling Tata business group. Reliance Infocom is a unit of the Reliance group, India's largest private business conglomerate.

Lucent shares closed on Tuesday at 72 cents, down a penny, or 1.4 percent. Lucent last week said it would seek shareholder approval for a reverse stock split intended to raise its stock price and avoid delisting from the NYSE.

© Reuters