Adds giant China Telecom contract to China Mobile. I'm glad I can break some good news for Alcatel. China Telecom is upgrading 60,000 towers to LTE, a network larger than Verizon or any western European network. Alcatel-Shanghai Bell was one of the three big winners along with Huawei and ZTE. They are the purple segment on this chart from C114, a very useful Chinese site. http://bit.ly/15ZsJpp No prices were announced, but this may well be a multi-billion dollar deal. Datung, Nokia and Ericsson also won part of the contract. I believe I'm the first to report this in English.
Alcatel-Shanghai Bell also won a substantial share of China Mobile's giant 207,000 site TD-LTE rollout. China Mobile's contract is for at least 3 times as many towers as any other network build in the world. PR below. Alcatel is also working closely with China Telecom on vectored VDSL. There's no public announcement yet but CT is likely to deploy tens of millions of vectored lines over the next few years.
Alcatel remains among the best in the world.
The prior two management teams have not been forthright about the restrictions on the repatriation of cash from China, that held by Alcatel-Shanghai Bell.
Russo left with zero credibility.
Ben and Paul finally acknowledged that they would ask their Chinese partner if they could get some cash.
I saw that Combes mentioned that the company was able to receive 200 million (Euros?) of "restricted" cash, and can only presume with out some massive reading that finally some money from the Chinese operations was repatriated, and that was requested about one year ago.
It is great that China is granting sales (obviously approved by their government) but, is ALU ever going to get the cash out of China?
Otherwise, the only two things we gain from all this is
(1) Chinese manufacturing enjoys larger production scale to drive the cost of products manufactured there down, therefore lowing the cost of technology products manufactured in China and exported to the rest of the world, and
(2) a temporary profit on system components manufactured outside of China and imported to China. However, the Chinese will continue to monitor imports and if the product is viable to be manufactured in China, ALU will be forced to manufacture in China.
Remember, China is a very restricted market. Imports to China are forced to be converted to Chinese production, and cash generated by Chinese operations is only repatriated with the consent of the Chinese partner and of course the Chinese government.
I have been around Bell Labs since the '60s.
I am long ALU and am looking forward to gauging new management's honesty by seeing how they address restrictions on imports and cash exports in China.
Sentiment: Strong Buy