Alcatel-Lucent’s new CEO Michel Combes (pictured) has announced his strategy for turning around the ailing telecoms manufacturer, and it involves a focus on high-speed wireless services and IP networking as well as cost-cutting, asset sales and debt-reduction measures.
The vendor will focus its future investment on those markets with the most potential for growth, while reducing spending on legacy technologies. That means growth areas such as LTE as well as fixed fibre, said Combes. Another area of focus will be IP networking.
These areas will represent 85 per cent of the vendor’s R&D investment in 2015.
As well as looking at fewer, high-growth markets, the new strategy also involves €1 billion in cost savings in 2013-15, as well as asset sales of more than €1 billion over the same period.
This latest strategy for a three-year turnaround is dubbed The Shift Plan by the company.
Other financial targets include €2 billion in debt refinancing by 2015, followed by future debt reduction of €2 billion. The latter could include the issuing of new shares or further asset sales.
“With The Shift Plan, which is designed to be self-funding, we are aligning realistic and deliverable ambitions with our core competencies,” said Combes, who was appointed CEO earlier this year.
The company wants to grow its revenue from networking by more than 15 per cent from €6.1 billion in 2012 to over €7 billion in 2015. It also wants to lift operating margins in this area from 2.4 per cent in 2012 to more than 12.5 per cent in 2015.
Over the same period, Alcatel-Lucent expects to deliver positive operating cashflow of more than €250 million in 2015 from its wireless and fixed access businesses.