AT&T cuts suppliers to control cost and risk

AT&T plans to reduce the number of suppliers with which it deals, to cut costs and perhaps to reduce the risk of relying on financially unstable smaller firms. This is the finding of analysts at Morgan Keegan, which suggest the move may present a challenge to the carrier's midrange vendors.

AT&T held a meeting with most of its suppliers in mid-May as part of an effort to reduce the number of vendors it works with from 40 or so to 28, says the research note by Simon Leopold, citing multiple sources.
He indicates that AT&T wants to streamline its vendor roster to just two partners for each of 14 technology areas. However, if an existing supplier is deselected, its equipment will not be removed but the firm will be "encouraged" to partner with the chosen vendor for that area.

"The policy may favor larger and more diversified suppliers such as Alcatel-Lucent, Cisco and Ericsson yet could complicate business for smaller players such as Adtran, Ciena and perhaps Juniper," Leopold said.