Another Chinese Contract for Alcatel - Analyst Blog

Alcatel Lucent SA (ALU) was selected by China Telecom Corp. Ltd. (CHA) to support the latter's LTE-TDD and LTE-FDD deployments in 12 provinces. The financial details of the contract were not disclosed. Alcatel is among the top three suppliers for China Telecom in supporting its LTE TDD and FDD modes.  

Prior to this, Alcatel Lucent had signed two important contracts with China Mobile (to support its TDD LTE solution and 4G LTE Network, which is supposed to be the world's biggest ultra broadband network) and with Sprint (to support its new ultra-broadband TDD-LTE mobile access network).  

As per the contract with China Telecom, Alcatel will be installing 9,892 base stations for the easy deployment of the network. This contract will further help Alcatel to establish itself in the high potential and immensely profitable Chinese telecom market. The Chinese market is currently the world's largest market in terms of subscribers, mobile data services and smartphones. This market is increasing at a rate of more than 50% annually.

China Telecom currently has more than 181 million mobile customers throughout the country and is also the world's largest wireline telecommunications provider. In order to meet customers' demand for high speed mobile Internet, the company has decided to deploy its LTE network. In particular, China Telecom has preferred Alcatel-Lucent's lightRadio LTE Radio Access Network (RAN) as a primary infrastructure for its nationwide installation of ultra-broadband mobile access network.   

Through this contract, Alcatel further re-emphasizes the fact that it has repositioned itself as one of the leading providers of IP Networking and Ultra-Broadband Access, as per its Shift Plan. In the third quarter of 2013, Alcatel-Lucent's revenues increased 7.0% year over year and 3.1% sequentially. Revenues during the quarter were driven by strong growth in the IP revenues, Wireless and fixed-networks, which were partially offset by the company's older technologies.

Alcatel-Lucent currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the communications components industry include Envivio, Inc. (ENVI) and TESSCO Technologies Inc. (TESS). Both these stocks carry a Zacks Rank #2 (Buy).