Since June 1, Nortel has issued public statements on 27 major contract awards, of which just three were from companies in North America, -- deals with Cox Communications Inc. (NYSE: COX), MCI (Nasdaq: WCOEQ, MCWEQ), and a couple of domestic wireless carriers (see MCI Vouches for Nortel's VOIP, Cox Chooses Nortel and Nuera, and Nortel Cuts Q2 Losses).
The transglobal trend isn't new for Nortel. In its last earnings report, the company reported more than 50 percent of new revenue coming from outside North America (see Nortel Still Profitable in 2003). In particular, Nortel execs have repeatedly stressed the opportunity they see coming from the Asia/Pacific region.
Nortel doesn't want to be pigeonholed as having an Asia/Pacific focus, however. Spokeswoman Ann Fuller says the company sees "new growth areas as particularly important," as Nortel "continues to broaden its approach in becoming a truly global company. This includes investing in, and deepening our commitments to, strategic countries around the world, both large and small."
Of the announcements made in June, July, and August of this year, more than half came from Asia/Pacific, including the recently announced agreement for Nortel to supply KT Corp. with VOIP gear (see Nortel's Korean Deployment: How Big?). Five deals were signed with customers in Latin America and the Caribbean; and four in Western Europe.
Table 1: Nortel Announced Contracts, Summer 2003
|8/20/03||Korea Telecom||OPTera Long Haul|
|8/18/03||Centennial Dominicana (Dominican Republic)||Wireless|
|8/11/03||Telef�nica Group (Brazil)||OPTera Metro, Passport|
|7/30/03||Western Wireless (Dallas)||Wireless|
|7/29/03||China Telecom||Shasta, Passport|
|7/25/03||Asia Pacific Broaband Wireless||Wireless|
|7/22/03||AT&T Wireless, Ericsson||Wireless|
|7/21/03||Cable & Wireless Jamaica||Wireless|
|7/17/03||Bangladesh Telegraph and Telephone Board (BTTB)||Digital telephony|
|7/16/03||Hong Kong Broadband Network Limited||Succession|
|7/10/03||COLT Telecom Group plc (London)||OPTera Metro and Long Haul|
|7/7/03||Taiwan Fixed Network||Passport|
|7/7/03||KPN (Amsterdam)||OPTera Metro, Passport|
|6/27/03||NTT Communications||OPTera Metro|
|6/27/03||Antigua Public Utilities Authority PCS||Wireless|
|6/24/03||Shaanxi Telecom (China)||Passport, Shasta|
|6/24/03||British Telecom||OPTera Metro|
|6/18/03||China Netcom, China Railcom, China Telecom||Shasta, Passport|
|6/17/03||Development Bank of the Philippines||Meridian|
|6/17/03||Orange NL (Netherlands)||OPTera Metro and Long Haul|
|6/16/03||The Bahamas Telecommunications Company Ltd.||Wireless|
|6/10/03||China Campus Networks of Western Universities Project||Passport|
|6/2/03||Midwest Wireless (Minnesota)||Wireless|
|Source: Nortel press releases|
Of Nortel's recent contracts, nearly one third are for wireless gear. Nortel also seems to be selling a lot of multimedia equipment with voice capabilities. Indeed, VOIP and softswitching were key to a recent win in China, as reported in our sister publication Boardwatch (see Nortel Wins China VOIP Kit Deal). VOIP gear was also instrumental in winning the MCI deal announced June 3.
In contrast, Nortel's not burning up the road when it comes to long haul. Just two contracts -- the recent win at KT and one with Colt Telecom Group plc (Nasdaq: COLT; London: CTM.L) mention long-haul equipment (see Colt Prefers Nortel).
On the whole, the wins reflect overall trends in the market away from long-haul and toward IP-based multiservice networks. The deals also may point up Nortel's own strengths and weaknesses. Progress over the next couple of quarters will help determine whether the company can continue to rely on overseas business.
Nortel's not alone in ranging the world for business as a domestic slowdown continues. Lucent Technologies Inc.'s (NYSE: LU) summer saw about 25 major contract announcements: 12 from Asia/Pacific; seven from Eastern and Western Europe; three from North America; two from Latin America; and one from the Middle East -- the company's recently announced deal to rebuild Iraq's telecom network (see Bechtel Picks Lucent to Rebuild Iraq).
Like Nortel, Lucent balks at implications that its international focus is new or that it favors Asia/Pacific. Spokeswoman Mary Lou Ambrus says the company continues to focus on expanding services, business partnerships, and government work, and that recent contract announcements reflect the progress of this strategy worldwide.
— Mary Jander, Senior Editor, Light Reading