Alcatel-Lucent merger: Region escapes job cuts

Telecoms giant looks to expand in the Middle East

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By  Published  December 8, 2006

The Middle East looks set to escape job cuts now that the merger between French telecom equipment maker Alcatel and US firm Lucent Technologies has been completed.

While the firm has already stated that 9,000 jobs, approximately 10% of the total workforce, will be cut globally, a representative of the company said last week that the 2,000-plus employees in the Middle East are likely to remain unaffected by the job cuts.

The job cuts will, however, be offset by the 1,700 employees of Nortel’s UMTS access business who are expected to transfer to Alcatel-Lucent, now that it has completed its US$320million capture of the business unit.

Vincenzo Nesci, vice president of the company’s regional unit in the Middle East, said the merger would enable Alcatel-Lucent to expand its presence in the region and increase its competitive edge.

“We expect the merger to give us the possibility to enlarge our footprint in the Middle East. We believe that we now have excellent complementarities of technologies and knowledge,” Nesci said in a statement to IT Weekly.

“Keep in mind that Alcatel has today a stronger presence in the Middle East compared to Lucent, but Lucent has also great experience in this part of the world,” he added.

The merger between the two companies, which has created the world’s leading communications equipment maker with combined sales of US$24.5 billion in 2005, has had a mixed reaction from industry watchers, with fears of the difficulties of blending two disparate cultures.

The marriage will be “difficult at best,” Associated Press reported Edward Snyder of Charter Equity Research as predicting. “You’re blending two cultures and you’re doing that on such a huge scale; there have to be layoffs and buyouts and that poisons the atmosphere.”

Former Lucent CEO Patricia Russo who has been appointed CEO of the new company is likely to have a tough task ahead of her in uniting the two organisations. Russo, a US citizen, is barred from doing business in Iran, which could prove a problem for the firm whose French side has a long history of working in the country.

“I am forbidden by law from being involved in business in Iran,” Russo said at a press conference held to mark the merger.

The newly-merged firm has representation in 19 countries in the region, with annual revenues here of US$831.3million.

After the restructuring, the Middle East will come under the Europe and South area, which should give the regional operations a significant degree of autonomy, Nesci said.

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