Alcatel-Lucent Looks To Sell Enterprise Unit – Again

Alcatel-Lucent is exploring the sale of its enterprise switch and communications equipment division, and has brought in Lazard Ltd to advise on the matter, according to a report.

The sale effort is part of chief executive Michel Combes’ “Shift Plan” to turn the company around by the end of 2015, according to a Reuters report, which cited people familiar with the matter. Under that plan, Alcatel-Lucent is looking to sell off 1 billion euros (£840m) in assets and to cut annual operating costs by the same amount, at the same time boosting its investment in faster-growing technologies.

Sale attempts

The French company has made two other attempts to sell the enterprise unit in the past three years. In 2011 it put the entire enterprise business on the block but in the end succeeded only in selling the growing call centre part of the unit, Genesys, to private equity firm Permira for $1.5bn (£945m).

Reuters’ sources suggested that the unit may again need to be split up in order to find a buyer. The main challenge for a potential buyer, in 2011 as now, would be the costs involved with restructuring the corporate telephony part of the unit, which is based in Europe and involves unionised labour with associated pension obligations.

Alcatel-Lucent’s enterprise telephony services might seem outdated compared with cloud-oriented competitors such as RingCentral and 8×8, according to one of Reuters’ sources.

The unit competes with companies including Avaya, Mitel Networks and Unify (formerly Siemens Enterprise Communications).

Alcatel-Lucent did not immediately respond to a request for comment.

The company has announced several rounds of job cuts in recent months, including a plan to shed 10,000 jobs announced in October, in part as a way of making its assets more attractive to potential buyers.

Nokia link

Nokia, which is in the process of selling its handset business to Microsoft and has bought Siemens’ half of the companies’ joint venture, is now considering a tie-up of some kind with Alcatel-Lucent, including a possible purchase of its wireless assets, according to recent reports. Nokia and Alcatel-Lucent are both looking for ways to better compete with Ericsson as well as Chinese giants Huawei and ZTE. A combination of Nokia Network Solutions and Alcatel-Lucent’s wireless business would control more than 30 percent of the global wireless infrastructure market, according to analyst estimates.

Alcatel-Lucent chief executive Combes said recently the company was “actively working” on asset sales, and last week announced a capital increase and high-yield bond aimed at raising $2bn. Credit rating agencies Moody’s and Standard & Poor’s last week upgraded their outlooks on the company as a result.

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