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Alcatel Shares Gain on IP Deployment News

Zacks Equity Research

Leading communications provider Alcatel-Lucent, S.A.’s (ALU) shares rose 5.7% on Sep 25 after announcing that it will deploy IP-based mobile backhaul network to support Korea-based SK Telecom’s (SKM) LTE-Advanced services. Alcatel’s share prices, having consistently increased since then, now stands at $3.53 per share.

Alcatel-Lucent’s IP mobile backhaul solution will be linking SK Telecom’s cell sites and is expected to be deployed in October. The scope of the deal requires Alcatel-Lucent to deploy its proven routers including 7750 Service Router (SR), 5650 Control Plane Assurance Manager and the Alcatel-Lucent 5620 Service Aware Manager (SAM).

This network will be supporting SK Telecom’s LTE-Advanced, LTE and other services and will also lead to increased customer satisfaction by introducing new mobile services. SK Telecom expects to provide premium broadband services with LTE-Advanced, which is about ten times faster than 3G networks and has about twice the speed of the conventional LTE.

This deal is in line with Alcatel-Lucent’s ‘The Shift Plan’ that was formulated to transform the company from being a telecom generalist to a specialist in IP networking and Ulltra-Broadband services. The company’s investment strategy is customer centered and is focused on consistent development of the IP-industry to meet the customers demand while providing them with faster and more efficient services.

Alcatel-Lucent currently carries a Zacks Rank #3 (Hold). Relatively better players within the similar sector worth mentioning include SeaChange International Inc. (SEAC) and Envivio Inc (ENVI), both carrying a Zacks Rank #2 (Buy).

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