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Alcatel-Lucent Outlines Major Restructuring Plans

Alcatel-Lucent has announced a revamp of its operations under its new CEO, that will aim to reduce costs by EUR 1 billion over three years, and see the disposal of at least EUR 1 billion of assets in the short term, and a possible sale of a further EUR2 billion of assets in the future.

The new plans will also see a major refocusing of the Group’s R&D spending on IP Networking and Ultra-Broadband Access with an increased emphasis on co-development with major customers and partners, while at the same time significantly reducing spend on legacy technologies.

Commenting on The Shift Plan, Alcatel-Lucent’s CEO Michel Combes said: “Today we are taking comprehensive action to position Alcatel-Lucent at the heart of the digital ecosystem, a place from which we will be able properly to capitalize on our many strengths.”

Under The Shift Plan, Alcatel-Lucent is planning to grow its revenues in Core Networking by more than 15%, from EUR6.1 billion in 2012 to over EUR7 billion in 2015, while lifting its operating margins in this segment from 2.4% in 2012 to more than 12.5% in 2015.

Over the same period, a strategic focus on cash management in wireless, fixed access and other businesses — emphasizing investment in LTE, vectoring and fiber-based access systems while significantly reducing R&D spending on legacy technologies — is expected to deliver positive segment operating cash flow of more than EUR250 million in 2015.

Michel Combes, who was appointed CEO on April 2, 2013, also announced that effective July 1, Philippe Guillemot is joining Alcatel-Lucent’s Leadership team as Senior Executive Vice President, Operations.

Pending the appropriate information and consultation processes in a number of countries, Alcatel-Lucent’s management structure will be reorganized into four main business lines: IP Routing & Transport, IP Platforms, Wireless and Fixed Networks. These businesses will be supported by group-wide functions focused on Operations, Sales and Strategy & Innovation.

The company also plans to put more effort into generating an income from its portfolio of around 30,000 patents.

On a cash basis, The Shift Plan is expected to be self-funding over the 2013-2015 period.

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