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Optical/IP

Lucent Scores $5B Verizon Deal

Lucent Technologies Inc. (NYSE: LU) has secured a monster deal worth “at least $5 billion” with Verizon Wireless for the future upgrade of the carrier’s national voice and data network (see Lucent Wins Verizon Contract).

The deal includes the $525 million contract Verizon awarded to Lucent in March this year for the deployment of its CDMA2000 1xEV-DO (Evolution, Data Only) network (see Verizon Has $692M for EV-DO, Verizon Picks Lucent, Nortel, and Verizon Repeats on 3G).

But aside from the EV-DO deployment already announced, what exactly is Verizon spending the cash on? A joint release from both companies states that Lucent will supply kit “spanning its entire portfolio, including Bell Labs-developed wireless, optical, and data networking equipment along with network management and applications software.”

“This is a frame agreement,” adds Lucent spokesman Ichiro Kawasaki, “meaning Verizon Wireless can spend the money however they like. That could mean increasing voice capacity by adding new cell sites and expanding coverage, or building out additional markets with EV-DO. It is a pretty open agreement focused on increasing coverage and capacity.”

Lucent is also prepared to deploy EV-DV (Evolution, Data and Voice) technology at a future date, should Verizon choose to rollout a network. “We are going to have DV available for trials late 2005, and commercial availability will follow in 2006.”

Verizon was unavailable for comment at press time.

Analysts have been quick to talk up the importance of the deal to Lucent. “While a $5 billion contract should normally be a big enough positive for any company, this contract is doubly so for Lucent,” writes Lehman Brothers’ Steve Levy.

“Compared to the first $5 billion contract signed in March 2001, Lucent’s total revenues have declined by approximately two thirds, and thus this contract is much more meaningful. This contract [also] looks to cover a more comprehensive set of products and services than the original contract did. In particular, we note that Lucent Worldwide Services will now support non-Lucent markets with network optimization, integration, planning, and design and deployment services.

“Given the lowering of all carrier capex spending, and the likelihood that Verizon could spend the full amount in much less than the six years, and the use of the term ‘at least,’ we see this as a big positive for Lucent.”

Lucent shares have risen on the back of today’s deal, up 9 cents to $3.47 per share at press time.

— Justin Springham, Senior Editor, Europe, Unstrung

tsat 12/5/2012 | 1:27:28 AM
re: Lucent Scores $5B Verizon Deal Any word on how much of this capex might go to Juniper through Lucent re-sell?

-tsat
45rpm 12/5/2012 | 1:27:27 AM
re: Lucent Scores $5B Verizon Deal Lucent wireless has a partnership with Cisco; Lucent wireline has the partnership with Juniper.
CanMan 12/5/2012 | 1:27:20 AM
re: Lucent Scores $5B Verizon Deal rumor has been that Juniper will get a very small portion of the deal. Maybe 200-300 mil, so less than half a percent for some of the router work.
Small in the overall scope of the deal but not a bad size deal for a company the size of Juniper
iprouting 12/5/2012 | 1:27:18 AM
re: Lucent Scores $5B Verizon Deal Does this put Lucent "Back to the Future"?

sunra 12/5/2012 | 1:27:15 AM
re: Lucent Scores $5B Verizon Deal When they announce a Lambda Xtreme deal it's time to put some skin in the game.
flam 12/5/2012 | 1:27:07 AM
re: Lucent Scores $5B Verizon Deal I don't get it - the old contract with VZ hasn't run out, they renegotiate and suddenly the Lu has another $5B contract?!?

The only new thing about this is the added emphasis on EVDO - skeptics in VZ in 2001 did not want to go down this road. So Bill Stone won that round.

Lu Mobility uses Cisco in the FMS frames.

VZ already has most of the service nodes (from Alcatel OR Ericsson ... don't know which).

Juniper probably doesn't win anything here.

Cisco won this deal at the expense of Springtide (remember that POS?) at Verizon's insistance.

hrdhtr 12/5/2012 | 1:27:04 AM
re: Lucent Scores $5B Verizon Deal Quit whining, they won the contract because they can provide the solution ans services required by Verizon.

You skeptics are always looking to minimize the accomplishments of this company's turnaround.

Way to go LU
2nd.Harmonic 12/5/2012 | 1:27:03 AM
re: Lucent Scores $5B Verizon Deal Glad to hear that LU is picking up some serious business. As ex-Lucent (got thrown over the side a while back along with lots of other good people), I still have LOTS of Lucent options at a prices of $60, and $48, and $36, and $12.
Haven't yet recycled them for toilet paper. Guess I'm keeping them for historical reasons.

- 2H
manoflalambda 12/5/2012 | 1:26:53 AM
re: Lucent Scores $5B Verizon Deal 2H: You still have active options? After we were FMPed here in NJ, they consolidated a bunch of our > $7 options, marked them all around $1.78 or so and then, since we were out, gave us 90 days to do something with them. Think Lucent was around $2 at the time... (Repriced on Nov 25 02, expired Feb 23 03)

Salute,
Manoflalambda

Glad to hear that LU is picking up some serious business. As ex-Lucent (got thrown over the side a while back along with lots of other good people), I still have LOTS of Lucent options at a prices of $60, and $48, and $36, and $12.
Haven't yet recycled them for toilet paper. Guess I'm keeping them for historical reasons.
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