AlcaLu to reduce managed services deals
27-07-2012
Could affect its business with Bharti, Reliance
Alcatel-Lucent, which reported a second-quarter net loss of ?254 million (US$309 million), is to review a quarter of its 68 managed services deals as it looks to exit unprofitable contracts as part of its new cost-cutting program
CFO Paul Tufano noted that 25 percent of AlcaLu's current 68 managed services deals will either be renegotiated, exited or not renewed when the initial contract period expires, and that 15 deals are already under review.
He also noted that "many" of the deals under review are set to be up for renewal between now and the end of 2013. The ones under the greatest scrutiny are those heavily focused on network maintenance.
Currently, AlcaLu's managed services contracts deliver annual revenues of ?1 billion (US$1.23 billion) and engage 14,000 of its staff.
AlcaLu isn't the only vendor to realize it needs to be more picky about its services deals: Nokia Siemens Networks is also being more selective about its managed services contracts and has already extracted itself from a major deal in Brazil.
AlcaLu currently conducts business in 130 countries but 96 percent of its revenues come from the top 60 markets and those are the markets AlcaLu is going to focus on, while many of the remainder will be exited. "We can't be in the bottom 40 markets that [deliver] 1 percent of the revenues," stated CEO Ben Verwaayen, who noted that the process of quitting countries will be "painful" but necessary.
In an associated move, the company has also outlined plans to use sales channels, rather than deal with customers direct, in some as yet unidentified countries.
Based on a report in LightReading
Alcatel-Lucent, which reported a second-quarter net loss of ?254 million (US$309 million), is to review a quarter of its 68 managed services deals as it looks to exit unprofitable contracts as part of its new cost-cutting program
CFO Paul Tufano noted that 25 percent of AlcaLu's current 68 managed services deals will either be renegotiated, exited or not renewed when the initial contract period expires, and that 15 deals are already under review.
He also noted that "many" of the deals under review are set to be up for renewal between now and the end of 2013. The ones under the greatest scrutiny are those heavily focused on network maintenance.
Currently, AlcaLu's managed services contracts deliver annual revenues of ?1 billion (US$1.23 billion) and engage 14,000 of its staff.
AlcaLu isn't the only vendor to realize it needs to be more picky about its services deals: Nokia Siemens Networks is also being more selective about its managed services contracts and has already extracted itself from a major deal in Brazil.
AlcaLu currently conducts business in 130 countries but 96 percent of its revenues come from the top 60 markets and those are the markets AlcaLu is going to focus on, while many of the remainder will be exited. "We can't be in the bottom 40 markets that [deliver] 1 percent of the revenues," stated CEO Ben Verwaayen, who noted that the process of quitting countries will be "painful" but necessary.
In an associated move, the company has also outlined plans to use sales channels, rather than deal with customers direct, in some as yet unidentified countries.
Based on a report in LightReading
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