Alcatel: Does our business look big in this?

Introducing ‘The Shift Plan’, a three-year plan designed to slim down Alcatel-Lucent and return the company to profitability.

That's the news coming out of Paris, as the telco plans to rejig the balance sheet - in a bid to cut around US$1.3 billion in annual costs across the business.

"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 capitalise on our many strengths," said Michel Combes, CEO, Alcatel-Lucent.

“With The Shift Plan, which is designed to be self-funding, we are aligning realistic and deliverable ambitions with our core competencies.

"Over the next three years we are targeting Euro 1 billion of fixed costs savings, and carefully defined and timed asset sales expected to generate at least an additional Euro 1 billion.

"It is fundamentally an industrial plan that also addresses the group’s operational and financial challenges by putting in place a strong and fully accountable leadership team with clear goals and the appropriate levers to deliver on these goals and on our commitments to all stakeholders.”

With a goal of making the company cash-flow positive by 2015, Combes said the Shift Plan will mobilise the full range of Alcatel-Lucent’s assets and resources to achieve a "decisive shift in the group’s industrial focus."

As a result, the restructuring will concentrate the company on the priorities of its telecommunications customers as they "deploy next-generation networks to address the explosive growth in bandwidth-hungry data traffic."

Launched to focus on IP networking and ultra-broadband access, Combes said this side of the business will represent over half of revenue and profit for the company within two years.

The key components of The Shift Plan include:

• A 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

• Euro 1 billion in targeted reductions in the Group’s fixed cost structure concentrated on actions to reduce sales, general and administrative (SG&A) expenses, refocus R&D and improve operational efficiencies

• Selective asset sales intended to generate at least Euro 1 billion over the period of the plan

• Aiming at reprofiling the Group’s debt (Euro 2 billion) and, once the Company has clearly demonstrated the successful execution of The Shift Plan, a future reduction in debt (Euro 2 billion), to guarantee over the long-term financial sustainability.

To read the Shift Plan in more detail click here

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