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Lucent Flagged for Cingular 3G

Light Reading
LR Mobile News Analysis
Light Reading
5/26/2004

Lucent Technologies Inc. (NYSE: LU) has emerged as a surprise contender for the eventual supplier of Cingular Wireless’s UMTS (Universal Mobile Telecommunications System) network.

UMTS is the 3G upgrade to the GSM (Global System for Mobile Communications) standard, using a wideband-CDMA (W-CDMA) air interface on top of the GSM core network to increase voice capacity and boost data-transfer speeds to a theoretical 2 Mbit/s.

Despite the vendor’s dearth of commercial UMTS network wins, analysts at Lehman Brothers state that they have “confirmed a significant opportunity for Lucent to be a supplier for that carrier’s UMTS buildout when it occurs.”

This "significant opportunity" appears to be based on the release of a statement from Lucent late Wednesday afternoon announcing it is to deploy a trial network with the carrier in Atlanta "this summer" (see Cingular Trials Lucent UMTS).

Cingular’s president & CEO, Stan Sigman, also hints that the carrier would welcome the opportunity to work with a U.S.-based network supplier for its commercial 3G rollout. European vendors Nokia Corp. (NYSE: NOK) and LM Ericsson (Nasdaq: ERICY) currently supply kit for Cingular’s GSM network.

“Our [future] vendor relationships will not only benefit Cingular, but will benefit America,” he told a Lehman Brothers conference this week. “These vendors are critical in getting Cingular to our goal of becoming the most highly regarded wireless company. But many of these vendors are headquartered and maintain their operations overseas. We need these vendors to support us right here in the U.S. with employees living here, not from some timezone halfway across the world. Our vendors must be close to us and react quickly to our needs.”

A Cingular win would be a major deal for Lucent, in light of the vendor’s two piddly W-CDMA contracts to date -- a huge contrast to its CDMA (Code Division Multiple Access) market dominance and past success in the GSM space (see Lucent's 3G Bit Part, Lucent Does 3G in Seville , and Lucent Falls Wide).

“This would be a big boost for Lucent as it could help establish the company in an important segment where expectations are essentially zero,” add the Lehman siblings.

Analysts further note that Cingular’s UMTS plans “appear to have a 2007 timeline.”

Lucent itself was unable to return calls by press time.

Last February, Cingular announced its intention to acquire AT&T Wireless Services Inc. (NYSE: AWE) in a $41 billion megadeal (see US Deal May Hurt Vendors). AT&T Wireless has already announced its own bullish plans for UMTS network rollout (see AT&T Sticks to Its Guns on UMTS and AT&T W to Launch UMTS).

— Justin Springham, Senior Editor, Europe, Unstrung

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