Alcatel Gains On China Mobile's Deal

LONDON - Struggling French network supplier Alcatel-Lucent got a much needed boost on Tuesday following news that it had won a major contract involving the third-generation mobile-phone standard being developed by China Mobile.

Alcatel-Lucent closed up 5.1%, or 22 euro cents (34 cents), at 4.55 euros ($7.05) in Paris on Tuesday, after it confirmed late Monday that it had signed a $1.0 billion contract for 2008 with China Mobile . The deal was made through Alcatel-Lucent's Chinese unit Alcatel Shanghai Bell.
The president of the division, Olivia Qiu, said the contract reinforced Alcatel's position as a "trusted partner" of China Mobile. "China Mobile relies upon our network solutions and services to meet their growing demand for mobile, and now fixed services, and in advancing China's telecommunications industry."

Paris-based Alcatel-Lucent will provide China Mobile with mobile and wireless network gear. But most important of all, according to Nomura analyst Richard Windsor, is the fact that it will supply equipment for the snappily named Time Division-Synchronous Code Division Multiple Access, a 3G standard being developed by China Mobile.

China wants to wean the country's growing telecom industry off its supposed dependence on foreign technology, and China Mobile has been tasked with developing the new standard, which is different than the two main versions used in the rest of the world. 3G phones promise fast communications, the ability to easily download videos and music, and other innovative applications.

China Mobile company started running commercial trials for its system in eight cities in April, and is hoping to roll out the technology in time for the Olympic Games in August.

Since Alcatel merged with America's Lucent in 2006, the company has been struggling with profitability, releasing a string of profit warnings and operating losses. In April the company warned that it expected the market for telecom equipment to be stagnant for the year. Its shares have lost more than half their value over the past year.

(Forbes)