Alcatel is selling DSL high-speed Internet modem business to Thomson Multimedia
for 9.5 million new TMM shares, valuing the deal at E456 million.
Shares in both groups fell, despite analysts describing the sale as positive
for both. Alcatel shares fell 2.27 per cent to E29.76 and TMM dropped 0.84 per
cent to E45.80.
Alcatel had a 6.4 per cent stake in TMM at the end of March. The 9.5 million
new shares are equivalent to 3.58 per cent of TMM before the capital increase
and Alcatel's stake will rise to 9.6 per cent following the share issue. The
deal is due to be finalised by the end of June and the transfer is expected
at the end of the year, forming part of Acatel's move to concentrate on communications
networks.
However, Alcatel will still make parts for DSL networks, including DSM multiplexers
where it has a 52 per cent market share.
DSM multiplexers boost transmission capacity by splitting communications lines
up into several frequency bands, so multiple data signals can be sent over a
single line.
Alcatel says it expects the modem market to evolve more into a retail business
model which would suit Thomson Multimedia. TMM is the biggest seller of TVs
in the United States and the fourth biggest consumer electronics company worldwide.
The comapny said the ADSL modem business would complement its set top box and
digital cable modem businesses, giving it a leading position in DSL modems.
TMM Chief Financial Officer Frank Dangeard said he expected the modem unit to
double its 2000 turnover of E220 million this year, although growth would retreat
to more normal levels - between 20 and 50 per cent - after that.
Dangeard also forecast that operating margins at the unit would rise to six
to eight per cent from five per cent last year.
Alcatel's DSL modems business had a market share of about 22 per cent last year,
with some 1.7 million units sold, and 28 percent in the first quarter of 2001.
The business is based mainly in Belgium, with some activities in France and
Germany. Alcatel General Secretary Jacques Dunogue said the sale would reinforce
technical and commercial cooperation and said the two groups would work together
on research and development.
