Insight on Alcatel-Lucent's Plan to Sell Submarine Cable Business

According to news from REUTERS on Nov. 2, Alcatel-Lucent is weighing selling its submarine cable business and a unit that sells telephone systems to big companies as part of its effort to shore up its balance sheet. The construction of new submarine cable projects is slowing down, can Alcatel-Lucent Submarine Networks survive for the next investment surge?

Alcatel-Lucent Submarine Networks is one of the key players in the submarine cable industry, offering a wide range of services, including not only the full set of terminal equipment, power feeding equipment, submarine cables and repeaters, but also turnkey solutions, as well as marine installation and marine maintenance worldwide.

After a surge of investment in submarine cable networks worldwide during 2008-2012, the construction of new submarine cable projects is slowing down and the deceleration is widespread worldwide, reported on the recent Submarine Networks World 2012 by Alan Mauldin, Research Director of TeleGeography.

The most significant new submarine cable projects in the coming couple of years may be SEA-ME-WE 5, a new transpacific cable and another cable linking Asia-Europe-Africa. It was supposed that the SEA-ME-WE 5 led by Singtel and France Telecom was in the pocket of Alcatel-Lucent Submarine Networks. But it is now challenged by Huawei Marine Network since several Chinese carriers have seated in the SEA-ME-WE 5 cable consortium and are playing important roles in the project. 

Not only Alcatel-Lucent Submarine Networks is struggling for new projects, another traditional key player TE SUBCOM seems no better. The almost secured 350-million-dollar project Pacific Fibre has ceased operation as at August 1 2012. The Pacific Fibre was one of the most significant projects TE SUBCOM acquired in recent years after their winning of TPE project.

For the traditional submarine cable system suppliers, it seems only NEC keeps stable, with the strong support by Japanese carriers and new projects initiated or led by them. While the rising supplier, Huawei Marine Networks, becomes more and more outstanding in the industry.

There is not only challenged on new cable projects, on the other hand, there are more competition on running system upgrades, new suppliers can offer solutions for the upgrades.  For example, Ciena and Xtera acquired several milestone upgrades recently.

With fewer new projects and more competition on upgrades, suppliers and manufacturers for submarine cable industry have to improve their competitiveness in the decelerating market and survive for another surge.

Comments (2)
1Saturday, 19 January 2013 12:13
Update 1: according to Reuters, France Telecom has expressed its interest in principle in Alcatel Submarine Networks (ASN), citing that France Telecom has been looking for months at how ASN and its FT Marine unit could work better together.

Update 2: according to Reuters, France's sovereign wealth fund FSI will bid on Alcatel-Lucent's submarine business at 600-700 million euros. The French government is concerned about Alcatel-Lucent's intellectual property could fall into the hands of foreign banks.
2Thursday, 01 January 2015 18:07
Update 3: according to Reuters, Alcatel-Lucent plans for IPO of submarine network unit in the first half of 2015.

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