Mobile revenues up, profit down
Alcatel’s mobile results stood up well in the first quarter 2005, although profitability was hit by the launch costs associated with the vendor’s next generation products.
Revenues from the mobile business in the first quarter were EUR789 million compared to EUR617 million for the same quarter last year, an increase of 27.9% year on year. However, there was less good news on operating profit, which was down to EUR66 million against EUR80 million the year previously.
Alcatel said that radio infrastructure growth was strong in China, Russia, India and Brazil. It also said that market for 3G indoor coverage is developing in Western Europe, with Telefonica Spain selecting Alcatel to deploy its 3G Indoor
Solutions.
In mobile core, “very strong activity in the traditional MSC
technology” was registered to support the capacity expansion of the installed base and the upgrade of traditional networks to 3G. In NGN-IMS, “in addition to the strong success in the U.S. for 2G and 3G with T-Mobile, Cingular, and Dobson, very significant commercial activity was registered outside the U.S. with twelve field trials and many positive prospects” the vendor said.
Alcatel also said that sales of mobile applications grew “significantly”, driven by worldwide video/music services deployment in 2.5G and 3G, as well as sustained growth in convergent payment solutions
Serge Tchuruk, Chairman and CEO, said that the operating profit has been impacted by EUR20 million impact of NGN core launching costs following the acquisition of Spatial Wireless which represented a 2.5% negative impact, as well as a less favorable geographical mix of the business. R&D resources have also been increased for customer adaptation in several countries including China, Russia,
France in order to meet the strong demand.
Operating margin for the quarter was just over 8% but Tchuruk said, “We expect strong revenue growth to continue in the second quarter, with a return to double-digit operating margins.