Alcatel-Lucent rural U.S. LTE overlay contract may ease investors' concerns

Alcatel-Lucent appeared to address investors' concerns that its U.S. operation is too heavily reliant on large operators, with a deal to deploy an LTE overlay network for second-tier operator Pioneer Cellular.

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Michel Combes, CEO of Alcatel-Lucent

The Franco-U.S. equipment vendor will deploy the overlay network in the states of Oklahoma and Kansas--areas it said are currently underserved by the country's major operators. Alcatel-Lucent will initially enable 25 Pioneer Cellular sites to provide what the vendor calls 'ultra-broadband' access by the year-end, before gradually expanding the upgrade to cover all of Pioneer's network.

The contract may ease the concerns of investors after Alcatel-Lucent revealed that sales in the U.S. fell 2.6 per cent year-on-year in the second quarter of 2014. Analysts said investors were worried that the vendor was overly reliant on contracts from large U.S. operators, and that any slowdown in business from those companies could knock Alcatel-Lucent's restructuring programme--the Shift Plan--off track, sister publication FierceWireless:Tech reported.

Alcatel-Lucent said the LTE overlay will enable Pioneer Cellular to offer services including high-quality video, gaming, and internet connectivity to its subscribers. Charles Marsh, the vendor's Americas president, said the contract demonstrates "the importance of 4G LTE for Pioneer's customers and the rural marketplace in general."

Pioneer's general manager, Richard Ruhl, said the LTE overlay will enable the company to "provide the best service possible to our wireless customers in areas where most carriers have chosen not to provide advanced services."

Alcatel-Lucent cut its net loss from €887 million ($1.1 billion) in the second quarter of 2013 to €301 million in the recent period, as revenues increased 5 per cent year-on-year. The company also revealed it had cut its fixed costs by €94 million in the second quarter of 2014, taking the total amount saved to €572 million since it launched the Shift Plan in June 2013.

CEO Michel Combes noted the second quarter performance was the company's "fourth consecutive quarter of consistent delivery under the Shift Plan." He said the company is set to regain full ownership of its patents that it used as collateral for a loan in 2012, meaning Alcatel-Lucent can "close the first step of its transformation."

Combes added that Alcatel-Lucent is on track to return to "positive free cash flow in 2015" as part of the second stage in its restructuring programme.

For more:
- see Alcatel-Lucent's LTE overlay announcement
- view the vendor's Q2 results statement

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