Middle East woe goes on for Alcatel-Lucent

Regional sales at telecoms vendor continue to fall amid political unrest

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Middle East woe goes on for Alcatel-Lucent Arab unrest has hit Alcatel-Lucent
By  Daniel Shane Published  August 1, 2011

Middle East revenues at telecoms infrastructure provider Alcatel-Lucent have fallen again amid political upheaval.

In the Paris-based vendor's 2Q11 financial results, Alcatel-Lucent revealed that quarterly sales slumped 7% year-on-year in the MENA region. Revenues derived from the region had already fallen 8% in 1Q11.

"[In the] Middle East, and you will understand that, especially when it comes to new build, [this] was not a particularly inspiring quarter for us," said CEO Ben Verwaayen in a conference call with investment analysts. "But given the political unrest, that should not be a surprise to anyone."

Verwaayen added that Alcatel-Lucent's performance in MENA had "primarily [been] affected by North Africa".

The vendor has in place several existing agreements with telcos in North African nations impacted by the so-called ‘Arab Spring'. In 2008, it signed a deal with Libyan ISP LTT to supply its first commercial WiMAX network. A year later, Alcatel-Lucent agreed a multimillion dollar contract to provide Libyan government-owned telecoms carrier LPTIC with optical fibre infrastructure.

Alcatel-Lucent has, however, reaped some benefits in post-revolutionary North Africa. In April 2011, for example, the company signed a deal with Tunisian mobile network provider Tunisian to transform its network to an IP-based one. Tunisian president Zine El Abidine Ben Ali was ousted following a popular revolt in January 2011.

On a global basis, the picture at Alcatel-Lucent was only marginally better, with the group posting a 2.4% year-on-year rise in revenues to €3.9 billion, missing analysts' forecasts. Net income was up to €43 million, compared to a loss of €184 million in the same quarter the previous year.

CEO Verwaayen was also coy regarding the future of Alcatel-Lucent's enterprise business, which sells IP phones and switches to the enterprise segment. In recent months, there has been speculation the company could be looking to offload the unit, which includes Genesys, a subsidiary that makes contact centre software.

"We have communicated to the market that we are looking into our options that we have for our enterprise business," he said during the conference call. "Enterprise is a great business. Genesys is a great business, but we're looking to our options with the objective to do what's right for the business, because it's good business and what's right for Alcatel-Lucent. And no decision [has] been taken."

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