Lucent to get Cingular 3G Business


Lucent Technologies, it seems is closed to snagging a big portion of the $4-to-$5 billion 3G upgrade likely to be undertaken by Cingular/AWE. The news could be announced before the year is over. The new Cingular which is closing its merger with AT&T Wireless today, plans to upgrade to UMTS, also known as Wideband CDMA, which is based on the European GSM standard. Friedman Billings Ramsey analyst Susan Kalla thinks that the deal is actually worth about $3 billion over three years ($1 billion per year), and sees it as a “very major win for Lucent.” Also in 2005, Cingular will focus on building out its California and Nevada networks, which it divested to T-Mobile for about $2 billion as part of the merger agreement with AWE, Kalla adds. “The Cingular win would be major for LU, since Lucent has little market share in GSM,” says Kalla. In 2005, Cingular/AWE will try to catch up with Verizon Wireless and Sprint PCS. According to Kalla, the operating margins could be 25% in the first year of the contract, lower than LU’s customary 30% margins for wireless, but margins are likely to improve after the first year of the contract. The contract could start in early 2005.

Comments are closed.