Reliance Awards $1B Outsourcing to Alcatel-Lucent

In Europe Alcatel-Lucent (NYSE:ALU, news, filings) has been under siege for a while now, looking to sell assets and cut costs to relieve some of the financial pressure they have been under from the twin pillars of the European economy and the invasion of Huawei. But today they got some very welcome relief from the subcontinent, of the billion dollar contract variety.

India’s Reliance Communications has awarded the Franco-American vendor an eight year, $1B contract to operate both its wireline and wireless networks across India. The giant outsourcing deal expands on an existing relationship, and will see some 4,000 employees move to from Reliance to Alcatel-Lucent.  It’s a major move for both companies, and reflects the fact that both are in need of a change of scenery.

Both companies have been under financial pressure and looking to sell assets and rationalize their balance sheets.  Earlier this year, Reliance tried to IPO its submarine cable division in light of current market conditions, but was forced to shelve the idea. If they get the chance, I expect they’ll try again though.  Today’s deal gives them a chance to get leaner and meaner, and perhaps more focused on what counts to boost their position against the likes of Bharti Airtel and their other Indian rivals.

Meanwhile, Alcatel-Lucent’s submarine cable division is said to be for sale, with various buyers including the French government itself considering bids. You know they’re worried about you when the government offers to buy your boats.  A $1B outsourcing contract in South Asia won’t solve all their problems, but it’s definitely not a mere drop in the bucket either.

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