AlcaLu's Small Cell Menu: Stake and Chips
Alcatel-Lucent confirmed its new "redefined partnership" with Qualcomm Inc. Tuesday morning, noting that the deal is set to be the first of a number of such relationships. (See AlcaLu, Qualcomm Team on Small Cells.)
News of the relationship first broke late Monday and was confirmed as AlcaLu reported its second quarter financials. (See Report: Qualcomm to Take Small Cell Stake in AlcaLu and Charges Slam AlcaLu's Q2.)
The two companies are to collaborate on the development of multimode (3G, 4G, Wi-Fi) small cells designed to enhance wireless broadband coverage and capacity in dense urban areas and inside buildings. They are jointly investing in a small cell R&D program that brings together AlcaLu's lightRadio radio access network (RAN) architecture with Qualcomm's small cell chips.
AlcaLu is not divulging any financial details but is not disputing the Financial Times report that Qualcomm's R&D investment will be worth more than €100 million ($133 million). That R&D investment is separate from the equity element of the new relationship: Qualcomm is buying a small stake in Alcatel-Lucent, a move that does not involve the issue of any new shares. But as the stake is smaller than 5 percent, the company is not obliged to share any details.
So are there any other similar R&D-plus-equity investment deals in the pipeline? On Tuesday's second quarter conference call, CEO Michel Combes noted that he had envisaged between three and five relationships, but added that he is focused "on the content of the partnerships rather than the number of them ... the driver is the industrial logic."
Further collaborations are likely to be announced "with other industry names" in the coming quarters, he added, noting that the aggregate equity stake sold through such relationships would not total more than 5 percent of AlcaLu's capital.
Combes added that the Qualcomm relationship should result in a faster time to market for multimode small cells, initially for enterprise deployments, followed by products for residential deployments and later, possibly, even for metro area products.
"We expect to be quicker to market with a best in class product. Qualcomm has a very efficient chipset with low power consumption. We expect to be first to market with multimode small cells," added the CEO. (See SpiderCloud: Cisco 'Naïve' on Small Cells.)
So which other "names" might end up with a small stake in AlcaLu? Spokesman Simon Poulter told Light Reading that while there are no specific names that can be shared currently, he noted that AlcaLu is looking for further "redefined partnerships ... taking an existing relationship to a new level."
— Ray Le Maistre, Editor-in-Chief, Light Reading