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MENA sales slump at Alcatel-Lucent

Political unrest in Middle East continues to plague telecoms vendor despite turning first ever yearly profit

It's not been a good year for Alcatel-Lucent in the Middle East
It's not been a good year for Alcatel-Lucent in the Middle East

Middle East and North African sales at Alcatel-Lucent slumped by 13% in the telecoms vendor's most recent financial quarter, although the company did turn the first annual profit in its history.

On a global basis, the Paris-headquartered company posted revenues of €4.26 billion in the fourth quarter, down 11.2% year-over-year, and sales of €15.7 billion for full-year 2011. For the full year, Alcatel-Lucent recorded profit of €1.1 billion - its first since it was formed in a transatlantic merger in 2006.

In the Middle East, however, the company has seen its business impacted by political unrest caused by the so-called ‘Arab Spring' uprisings in countries like Egypt and Libya. As a result, the company has been cautious over investments and partnerships in the region.

"If you look to Middle East and Africa, clearly, in the Middle East, we have to deal with some political environment that makes all of those steps very cautious, but that is already taken into account," said CEO Ben Verwaayen in a conference call with investment analysts. "The rest of Africa is doing very, very well."

Verwaayen added that he expected growth in the region to resume as the political situation cooled. "We saw in our Middle East and Africa group 13% erosion. That is primarily due to the fact that we were heavily concentrated in North Africa, given the events in North Africa over the course of the last year," he continued. "That was the primary reason for the falloff. Hopefully, as stability resumes in that region, you'll see growth in 2012."

Elsewhere, Alcatel-Lucent said that its wireless business experienced a "double digit decline" as a result of lower spending after several quarters of strong activity. Meanwhile, its software, services and solutions business decreased at a mid-single digit rate, but with high single digit growth in managed services.

The company also reduced its operating expenses, which decreased 12.3% year-over-year. Alcatel-Lucent said that the decrease was a result of its actions to improve operational efficiency.

In 2011, Alcatel-Lucent sold of its Genesys call centre business for to private equity group Permira Partners for $1.5 billion.