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I have a habit of being the best in class for customers: Alcatel-Lucent’s Michel Combes

Alcatel-Lucent has embarked on a path of refocussing on IP and ultra high speed broadband access, refinancing debt and turning profitable.

, ET Bureau|
Sep 16, 2013, 04.02 AM IST
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In his first interview to the Indian media after taking over as the global CEO in April, Michel Combes tells ET that the Indian telecom market is on the verge of a recovery thanks to recent regulatory announcements by the government.
In his first interview to the Indian media after taking over as the global CEO in April, Michel Combes tells ET that the Indian telecom market is on the verge of a recovery thanks to recent regulatory announcements by the government.
French telecom equipment maker Alcatel-Lucent has embarked on a path of refocussing its operations on IP and ultra high speed broadband access, refinancing debt, reducing its debt load and turning profitable by 2015. In his first interview to the Indian media after taking over as the global CEO in April, Michel Combes tells ET that the Indian telecom market is on the verge of a recovery thanks to recent regulatory announcements by the government, after a period of low investments by telecom operators. He is also hopeful of continued growth in the US and ‘reigniting’ of investments in Europe, which will form the backbone of the company’s path to recovery after making losses for nearly a decade. Still, the task ahead is huge and arduous for Alcatel Lucent, admits Combes. Edited excerpts:

What is your view of the current state of the Indian telecom industry?

Today, I sense more optimism in the telecommunication industry in India, driven by new government announcements. Predictability for the environment will allow the operators to restart investments. We went through a low level of investments in India due to the framework; consolidation was not allowed. The balance sheet of the operators was under pressure with a lot of debt. However, I now have a feeling that the situation is starting to evolve, that consolidation might take place. It would take a few quarters.

Where does Alcatel-Lucent fit in the next phase of the Indian telecom industry?

I have sensed optimism and willingness to invest in order to bring ultra broadband services in India. I refocused Alcatel-Lucent when I joined on two major areas — IP (internet protocol) networking, which is around bringing IP technology into network to unlock data traffic; and the second area called ultra broadband access or fibre to the closest point to the homes to bring the highest speed in terms data to the customer (for wireline) and LTE (for broadband wireless). My understanding by discussions I had with most customers is that they really want now to accelerate investment in IP on one side and ultra broadband access on the other side. We have a portfolio which is extremely consistent with the expectations of the customers.

How do you compete in India against rivals from China who offer much cheaper products?

Of course, it’s a very competitive and price sensitive market. I think a long-term quality network is the key for operators to allow them to differentiate, which means that usually the best network allows you to get the best customers and to increase your revenue. Of course, price is a major element but quality of the services is the key.

How critical is India as a market to you?

It’s an important country. The level of absorption of smartphone is moving significantly. You have the biggest middle class in the world with about 150 million people.

How will your restructuring impact jobs in the company — in India and globally?

I am not giving the precise figures. What is for sure is that on one side we have to conduct a restructuring at Alcatel-Lucent because of which there will be some impact on the number of employees around the world. We will have to discuss with my internal unions and do the adjustments.

On what aspects are you working with Reliance Jio?

We are part of what Reliance Jio is trying to achieve and leveraging our strong assets. Where are we good at — IP, optics, ultra broadband access. So, you can expect that in this project that Reliance has, which is a brand new broadband infrastructure, our products are very relevant.

 
What gives you the belief that the restructuring plan will lead Alcatel-Lucent to recover after posting losses for nearly a decade now?

Our clear choice is IP and ultra broadband access which are very consistent with what customers are expecting. We are fixing balance sheet issues, because on one side, the maturity of our debt was too short, and we extended it by renegotiating, and we want to reduce the absolute amount of debt. So, this plan should alallow Alcatel in 2015 to be a strong company, with focused growth, profitable and a balance sheet which will allow us to seize any opportunity we find in the market place going forward.

You still trail Ericsson and Nokia Solutions and have stiff competition from Huawei in terms of market share. How do you plan to bridge the gap?

I do not have a religion of market share, I have a religion of being the best in class for customers. I have the religion to be profitable. Nevertheless, it’s just the beginning of the journey. We still have tough decisions in front of us.

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