Analysts spark rumours of European pull-out for Lucent

Tough market getting tougher...

Tough market getting tougher...

Lucent is the most likely player to pull out of the European GSM market as it continues its struggle for survival. Analysts at Gartner and the Yankee Group are predicting the troubled telecom equipment vendor will lose the battle for supremacy in the increasingly "difficult and competitive market." "GSM and GPRS contracts are drying up in Europe and the remaining market opportunities in emerging regions, such as China and Latin America, will become increasingly competitive," a Gartner research alert said. Lucent has suffered a recent catalogue of failures including losing out on a $826m Saudi Telecom contract to Ericsson, significant losses from the One.tel collapse and reducing its headcount by 40,000. Yankee Group went a step further in a recent research note stating "if we had to pick a vendor that is most likely to exit the European Infrastructure Market all together, it would be Lucent." The news comes as a consortium of banks agree to renegotiate Lucent's loan to cover its escalating restructuring costs. The company originally estimated it will need $4bn to help cut costs. However, last month's quarterly results indicated it will take a charge of up to $9bn. The original loan had not budgeted for such a steep write-down. The banks' generosity was fuelled by Lucent's apparent attempts to raise cash through a $1.9bn convertible preferred stock offering. Its fibre optic business is also on the market with a price tag of $2.75bn. A recent property sale, which included an executive golf course, saw the company raise $300m. In return for the loan renegotiation, Lucent's management had to agree to certain conditions such as spinning off chipmaker Agere Systems.