Alcatel Lucent SA (ADR) (ALU) Signs Deals Worth 8.12 Billion Yuan To Develop Chinese Infrastructure


Alcatel Lucent SA (ADR) (NYSE:ALU) has tapped in for two network development and upgrade contracts in China worth 8.12 billion yuan. The company inked deals with China Mobile and China Unicom for 4.53 billion yuan and 3.59 billion yuan, respectively. The contracts involve upgrading the networks of the carriers by 2017 to comply with certain regulatory requirements.

The network upgrade by Alcatel Lucent SA (ADR) (NYSE:ALU) will enable the Chinese carriers to have a much smoother transition to the cloud network. Additionally, Alcatel Lucent will also help the telecommunications providers to align their networks with China’s Broadband initiative. Under the initiative, the country intends to have full broadband coverage by 2020.

According to China’s Minister of Industry and IT, residents of cities and many of the non-urban households should be able to enjoy broadband speeds of 100Mbps by 2017. In major cities, the average broadband speed is expected to be 30Mbps by that year. Further network upgrade guidelines call complete 4G coverage in the urban and rural areas.

Investment on network upgrade

Chinese carriers are spending a lot of money on network upgrades. Earlier this year, China Unicom signed U.S.-based Akamai Technologies, Inc. (NASDAQ:AKAM). The deal with Akamai is aimed at enabling more Chinese businesses to expand their online footprint globally.

China Mobile, the nation’s largest telecom carrier, early this year recorded its largest annual profit since at least 1999. The slump in profits was linked to the company’s increased spending on network upgrades and development, all in efforts to comply with regulatory requirements.

Major beneficiary

As Chinese carriers update their networks, Alcatel Lucent SA (ADR) (NYSE:ALU) has been a major beneficiary. Besides the latest deal with China Mobile and China Unicom, the company also last year signed some deals with the major Chinese carriers. Alcatel Lucent was picked for some exclusive deals for Ethernet routing by China Mobile and China Unicom. Additionally, the company was tapped by China Telecom to supply routing gears for two of the carrier’s five regions.

Pending union

Alcatel Lucent SA (ADR) (NYSE:ALU) and Nokia Corporation (ADR) (NYSE:NOK) are working out a merger deal that will see the companies combine in a 15.6 billion euros transaction. If all goes well, the merger of the companies is expected to conclude in early 2016.

Neha Gupta

Neha Gupta has been in the financial space for over six years now. Gupta earned her MBA degree from Symbiosis Centre of Distance Learning in 2009 and her passion for finance led her to pursue Chartered Financial Analyst (CFA) course. She has successfully completed Level II of her CFA. She is a veteran in article writing, which is depicted in her numerous pieces published on SeekingAlpha, Nextiphonenews, InsiderMonkey, MarketWatch, and Techinsider. Her crisp and eloquent writing finds its best place in Researchcows, where emphasis is given on developing rich content for various websites, products, business plans, trainings, and book writing.

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