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Lucent Linked to Cingular Deal

Lucent Technologies Inc. (NYSE: LU) is tipped to continue its success at Cingular Wireless with a network consolidation services contract worth up to $500 million over two years.

The contract is related to Cingular's acquisition of AT&T Wireless Services Inc. (NYSE: AWE). The $41 billion megadeal was completed in October and created the largest wireless carrier in the U.S. with a subscriber base of approximately 47 million (see Cingular Buys AT&T Wireless and Cingular Completes AT&T Deal).

Cingular is now in the process of integrating its combined total of 44,000 GSM (Global System for Mobile communications) cell sites and decommissioning the overlapped portions of the two networks. Ralph de la Vega, COO of Cingular Cingular's COO, told analysts last week that he hoped to eliminated all such overlaps by the end of 2006. “It’s an ambitious schedule but we think we can do it,” he said.

The consolidation services contract covering this work is worth $500 million over two years, according to a research note from UBS AG analyst Nikos Theodosopoulos.

The analyst flags Lucent as "a likely favorite to win a majority position of this services opportunity given their strong position in services. We believe Lucent has been pursuing this opportunity with Cingular for almost a year and has performed some initial integration and network audits.”

Such a deal would lean on Lucent’s Worldwide Services business and involve the vendor’s OSS (operational support system) and network management kit.

Lucent certainly seems an obvious candidate. Last week Cingular confirmed the U.S. vendor as a supplier of its nationwide 3G UMTS (Universal Mobile Telecommunications System) network, following months of speculation (see Lucent Flagged for Cingular 3G, Lucent Closes on Cingular 3G, and Lucent Grabs Cingular Action).

Cingular’s president and CEO, Stan Sigman, has also publicly stated that the carrier is keen to strike deals with U.S.-based suppliers. “Our vendor relationships will not only benefit Cingular, but will benefit America,” he told a Lehman Brothers conference in May. “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.”

As well as Lucent, Cingular’s other 3G suppliers are Swedish player Ericsson AB (Nasdaq: ERICY) and German vendor Siemens AG (NYSE: SI; Frankfurt: SIE). (See Ericsson Supplies Cingular 3G and Siemens Wins Cingular 3G.)

Lucent was not available for comment at press time.

— Justin Springham, Senior Editor, Europe, Unstrung

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