More Missives on AT&T's Long Haul
This potential contract from AT&T -- probably the largest purchasers of DWDM gear in North America -- has long been closely watched. So far, it's dashed startup hopes and frustrated many (see AT&T DWDM Hope Dwindles and Corvis Deletes Message Poster).
For its part, AT&T has already dismissed the Siemens chatter as "rumor," though it didn't go so far as to deny that some sort of deal was in place (see AT&T Smacks Siemens Rumor).
RHK says Siemens has nailed down the deal in exchange for some of its telecom services.
"The real surprise was that AT&T has selected Siemens for its ultra-long-haul (ULH) project -- setting aside the rumored selection of Ciena Corp. (Nasdaq: CIEN), Corvis Corp. (Nasdaq: CORV), or Lucent Technologies Inc. (NYSE: LU)," wrote RHK's analysts less than a week ago. The note suggests that the real winner of the deal is AT&T. "AT&T will receive a steady revenue stream from Siemens, as the German firm moves its global telecom and network services to AT&T, and AT&T gets low-cost pricing for next-generation ULH gear."
Previously several Wall Street analysts close to the long-haul equipment vendors said that AT&T did give some kind of nod to Siemens in the long-haul space, but that it hadn't made a decision regarding its much broader long-haul network upgrade. At this point, RHK seems to be the only firm saying there was only one AT&T long-haul deal and Siemens won it all.
"An interesting data point we learned was that the oft-talked about AT&T ultra long-haul DWDM contract has not yet been awarded, and in fact, has not entered trials," wrote J.P. Morgan Chase Bank & Co. analyst Ehud Gelblum in a June 4 note to clients. "It will be at least 9-12 months before a contract is awarded." In emails to Light Reading Gelblum adds that the anticipated contract is low-margin, thanks to the pricing pressure AT&T is applying to vendors, and that the whole deal is expected to be worth between $50 million and $100 million.
— Phil Harvey, Senior Editor, Light Reading