Alcatel-Lucent aiming to double Enterprise revenues in LatAm in 5 years

Alcatel-Lucent expects revenues from the Enterprise unit in Latin America to double over the next five years as it focuses on cloud services, Luis Arriagada, Alcatel-Lucent Enterprise's Southern Cone director told BNamericas.

The French company closed on Wednesday the sale of its Enterprise subsidiary to China Huaxin Post & Telecommunication Economy Development Center for 202mn euros (US$254mn), a move which will provide the company with much needed investment.

Alcatel-Lucent Enterprise bills some US$70mn in the region, just under 10% of its sales worldwide.

The unit provides networking technologies for businesses that compete with the likes of Cisco Systems and Avaya.

Though Alcatel-Lucent will retain only 15% of the Enterprise business, China Huaxin will be more of a silent partner, leaving strategy, branding and general management of the business in the hands of Alcatel-Lucent.

The company will continue with its indirect sales model but will increasingly focus on forming partnerships with telecoms operators to sell its offerings as a service hosted in the cloud rather than hardware, said Arriagada.

The executive said the company would increasingly target industries such as hospitality and healthcare, claiming that the hotel business in South America has a long way to evolve compared to developed regions in terms of communications solutions.

Alcatel-Lucent will also start to focus more on mid-size companies as those are the earliest adopters of hosted services, which avoid them having to invest in expensive hardware and on-premise infrastructure.

"Banks have traditionally invested in private networks but they can connect to virtual private networks simply with an internet connection and don't need to worry about the infrastructure," Arriagada said.

The divestment is part of Alcatel-Lucent's commitments under The Shift Plan, launched in June 2013, to refocus itself as a specialist in IP, cloud and ultra-broadband access, while realigning its balance sheet, implementing cost savings of 1bn euros and generating at least 1bn euros through selective asset sales by the end of 2015.