VoIP Systems

IPOs & M&A: London Gossip

LONDON – 21C World Communications Forum – Merger and acquisition chatter was rife on the show floor here, with the fallout of a potential marriage between Alcatel (NYSE: ALA; Paris: CGEP:PA) and Lucent Technologies Inc. (NYSE: LU) the main talking point. (See Alcatel/Lucent: The Domino Factor, Lucent & Alcatel: Quigley or Russo?, and Lucent, Alcatel Rekindle the Flame.)

Industry executives believe that, should the two vendors tie the knot, the challenge of integration could provide opportunities for rivals in the short term. But many vendors also believe the ultimate combination would create a powerhouse that could command a massive slice of global carrier capital spending.

Of course, neither of those two firms is commenting on anything, with Alcatel canceling media briefings while it ponders its future. (See Alcatel, Thomson in M&A Spotlight.)

So what else is being talked about? A number of senior vendor executives, requesting anonymity, believe a combination of Ericsson AB (Nasdaq: ERIC) and Juniper Networks Inc. (NYSE: JNPR) makes sense, while the possibility of Ericsson launching a counterbid for Lucent has also been noted as a possibility, though few see this as likely.

The future for Siemens
One leading executive commenting on the general M&A landscape was Thomas Ganswindt, the current president of Siemens Communications Group , which has reportedly been involved in multiple M&A negotiations of its own. (See Sources: Lucent, Nokia in Play for Siemens and Siemens Shuffles Top Deck.)

Ganswindt is taking a positive view of the current M&A activity among carriers and vendors, which he believes "shows that telecom is hot again, and that investors are interested in telecom again."

But his colleagues are less keen to comment on their own company's role. When asked during a press conference whether the Siemens Communications Group can survive on its own in the future, Christian Unterberger, president of fixed networks at Siemens Com, simply says, "We'll have to wait and see what happens -- this kind of talk has been around for five years."

He was also tight-lipped about Chinese vendor Beijing Harbour Networks Co. Ltd. , which was linked to Siemens in December 2005. "I'm not in a position to make a statement about Harbour," says Unterberger, adding that while Siemens works very closely with its IP router partner, Juniper, Siemens is always "looking for further capabilities." (See Will Siemens Sail with Harbour?)

But even if price pressures get worse and profits are hard to come by, the vendor's general manager of fixed networks in the U.K., Keith Harvey, says the fiscal power of Com's parent company, Siemens AG (NYSE: SI; Frankfurt: SIE), provides great financial stability. "We must be about the only vendor with an internal bank," he says, without mentioning Com's overdraft facility.

French fancies
With much of the M&A focus on Alcatel, VOIP systems firm NetCentrex SA is moving closer towards a planned IPO.

The company, which has been underpinning the VOIP efforts of Orange (NYSE: FTE), said last year it was considering listing on the public market. (See Europeans Eye IPOs and NetCentrex Hits 1M With FT.)

Now it's moving swiftly towards that goal, and is planning an IPO for this year, the company confirmed here today. The company's founder and CTO, Olivier Hersent, recently told French newspaper Les Echos that details such as a date or value of the share offering had not been decided, but that the company is anticipating sales of €60 million (US$72 million) this year, up from €40 million ($48 million) in 2005.

But with Ericsson due to become heavily involved in France Telecom's future VOIP plans, industry scuttlebutt suggests an acquisition would be a quicker and less problematic alternative exit strategy for the vendor's backers, and that NetCentrex is in talks with a suitor not known as a telecom infrastructure supplier. (See FT Picks Ericsson for IMS.)

Such an outcome would mirror the fate of its close rival and fellow French softswitch player, Cirpack, which was acquired last year by Thomson S.A. (NYSE: TMS; Euronext Paris: 18453). (See Thomson Buys Cirpack.)

NetCentrex declined to comment on any rumors related to potential acquisitions.

— Ray Le Maistre, International News Editor, Light Reading

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