AlcaLu, Reliance Form Joint Venture
Alcatel-Lucent (NYSE: ALU) is forming a joint venture (JV) with Reliance Communications Ltd. (RCom) to provide managed network services to fixed and mobile operators and large enterprises in India and, eventually, worldwide, targeting a market the new partners believe is worth $16 billion a year.
AlcaLu will own 67 percent and Reliance 33 percent of the new entity, which does not yet have an official name. [Ed note: Relucatel?]
AlcaLu, which will control and fully consolidate the new venture, expects to release details about the management structure of the venture in the coming week. The new company will have 1,000 staff at its inception, rising to between 2,000 and 2,500 within the first 12 to 18 months, according to a spokesman for the vendor giant. AlcaLu has 24,000 staff in its Services group globally.
The new venture's first deal is a five-year contract to run Reliance's GSM and CDMA networks in India. It is estimated that the deal will be worth $500 million in revenue to AlcaLu over the course of the contract.
Reliance is India's second largest mobile operator, with 45.8 million wireless -- mostly CDMA -- customers. It also runs a fixed line network, offering Ethernet-over-fiber services to enterprise customers, and is set to offer IPTV services using technology from AlcaLu partner Microsoft Corp. (Nasdaq: MSFT). (See Reliance Profits Rise 47%, India Crosses 10M Mobile Adds in March, India's Hot for Ethernet, A Guide to India's Telecom Operators, and Microsoft Seals $500M IPTV Deal.)
Although no other projects have been defined, further work from the Indian operator's international unit, Reliance Globalcom , appears to be in the pipeline: "The joint venture will support the expansion and growth of Reliance Communications, within and outside India," noted the new partners in their official statement announcing the venture.
Reliance Globalcom comprises Ethernet services player Yipes Enterprise Services Inc. and global subsea network operator FLAG Telecom Ltd. . The ambitious carrier has also recently expanded into Africa, where it plans to invest $500 million building a new IP-based network. (See Reliance Integrates Global Services and Reliance Makes African Acquisition.)
AlcaLu, meanwhile, is one of a group of equipment vendors, including Ericsson AB (Nasdaq: ERIC), ECI Telecom Ltd. , Huawei Technologies Co. Ltd. , Nokia Solutions and Networks , and Nortel Networks Ltd. , chasing managed and hosted services deals from carriers worldwide in a bid to boost recurring revenues and profits. (See Huawei Wins at Mobily, NSN Wins in Indonesia, Nortel, Tandberg Team on Telepresence, AlcaLu: The Network Integrator, ECI Announces Reorganization, DT Outsources to NSN, Orange Outsources, Ericsson Manages DT Network, and AlcaLu Answers Outsourcing Critics.)
AlcaLu, which recently formed a 4G wireless joint venture with NEC Corp. (Tokyo: 6701), has just announced another quarterly loss and is believed to be looking for a successor to its current CEO, Pat Russo. (See AlcaLu Posts Loss, Warns on Full Year, Is AlcaLu Seeking a New CEO?, AlcaLu's Next CEO?, and AlcaLu, NEC Team for 4G.)
The vendor's share price was up $0.10 (1.44%) to $7.06 in early afternoon trading on the New York Stock Exchange (NYSE) Monday.
— Ray Le Maistre, International News Editor, Light Reading