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Operator spending on infrastructure to remain flat in 2010

Alcatel Lucent execs expect greater collaboration among vendors on the roll out of 4G technology LTE

Operator spending on infrastructure to remain flat in 2010
Alcatel Lucent has two LTE trials in the Middle East lined up.

Mobile World Congress, Barcelona: Operator spending on telecoms infrastructure equipment will not return to pre-recession levels this year, according to senior Alcatel Lucent executives, who say that they expect to see greater collaboration among vendors working on the roll out of potentially lucrative fourth generation wireless networks.

Alcatel Lucent's president for the Middle East and Africa, Amr El Leithy, said that compared to last year, he does not think 2010 will see an increase in capital spending from operators in the region.

"Whenever I go to our customers and service providers their objectives are to decrease expenses while at the same time remain competitive, and to increase their sources of revenue," he said.

According to figures compiled by the Financial Times this week, global capital expenditure on mobile phone infrastructure dropped from over 15% in 2008 to minus 2% in 2009, with a further contraction expected in 2010 to almost minus 5%.

Despite the tough conditions for vendors, Alcatel Lucent has targeted an 3% increase in market share over the next three years. El Leithy says that with operators looking to reduce costs, managed services is one area that the France-based vendor will continue to pursue as it looks to add to the managed services deals it has struck in the Middle East with UAE incumbent Etisalat and its KSA-based subsidiary Mobily.

Another potential area for growth being pursued by vendors is the move to fourth generation wireless technology LTE (Long Term Evolution).

Alcatel Lucent is currently involved in 19 LTE trials in the Europe, Middle East and Africa region, with trials in the Middle East with two unnamed operators due to begin in the next two months.

Alcatel Lucent's president for the EMEA region, Adolfo Hernandez, says he is confident that Alcatel Lucent will be able to turn the trials into contracts to roll out the technology.

And he says that the move to new technology will not only result in a raft of new applications and services for consumers, it will also lead to a new approach from vendors.

"I don't think there is going to be what we would call a mono supplier, and most operators will have a couple of suppliers," Hernandez said.

"We believe that you have the value chain to complete and that cannot be done just by one player so you need different parts of the value chain. Even in the network equipment piece, you have the radio part, the aggregation part, the core, and some customers are going to mix and match componenets so you will have to work with competitors and you will have to work with those that can enhance the value chain.

"I have spent the vast majority of my time in the IT industry, and this is looking more and more like the IT industry where it is heavily software dominated, with interchangeable components, and with more companies adding things to the value chain instead of being the vertically integrated model that has ruled telecommunications for the past 50 years."

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