Alcatel-Lucent Wants to Reduce Its Costs by 1 Billion Euros

Alcatel-Lucent Wants to Reduce Its Costs by 1 Billion Euros

The telecommunications equipment maker Alcatel-Lucent aims to cut costs of 1 billion euro and focus on the IP router business and mobile broadband. The “Shift Plan” unveiled on Wednesday by Michel Combes, the company’s new chief executive, will also include unspecified asset sales of above 1 billion and 2 billion euros in debt re-financing by 2015, followed by a further 2 billion in debt reduction that could include issuing new shares.

The key components of The Shift Plan include:

  • A refocusing of the Group’s R&D spending on IP Networking and Ultra-Broadband Access with an increased emphasis on co-development with major customers and partners, while at the same time significantly reducing spend on legacy technologies.
  • Euro 1 billion in targeted reductions in the Group’s fixed cost structure concentrated on actions to reduce sales, general and administrative (SG&A) expenses, refocus R&D and improve operational efficiencies.
  • Selective asset sales intended to generate at least Euro 1 billion over the period of the plan.
  • Aiming at reprofiling the Group’s debt (Euro 2 billion) and, once the Company has clearly demonstrated the successful execution of The Shift Plan, a future reduction in debt (Euro 2 billion), to guarantee over the long-term financial sustainability.

“It is an industrial group transformation passing a general telecommunications equipment in an industrial specialist IP networks and high-speed mobile access and fixed two essential to NGN activities,” said its CEO, Michel Combes, in a conference call. “At the end of this plan, segment revenues of heart activity networks represent more than 15% of sales” and from 6.1 billion euros in 2012 to more than 7 billion euros in 2015, while the operating margin from 2.4% in 2012 to more than 12.5% in 2015,” he assured.

The plan also provides for the restructuring of the group’s debt to the tune of 2 billion euros over the period 2013-2015, through active monitoring of the opportunities offered by the international capital markets.

The group also intends to take advantage of its rich patent portfolio adopting an entrepreneurial approach to licensing to generate a steady stream of income through a portfolio of over 30,000 patents and 16,000 applications.

Alcatel-Lucent also announced the imminent departure of its chief financial officer, Paul Tufano, who will step down once the “Shift Plan” is engaged, with the arrival of Philippe Guillemot as director of operations on July 1.

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Photo credit: Latok Neumann

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