Large vendors, including Cisco, expected to win AT&T “domains”

Cisco is expected to make the cut as customer AT&T pares its vendor roster to cut costs. Previous reports had AT&T winnowing down its list of vendors from 150 to 40, but investment firm UBS says domestically the carrier is looking to deal with about 16 equipment suppliers.

UBS issued a bulletin this week on AT&T’s plan. In it, the firm says the carrier is looking to set up eight product or project “domains” — optical, access, IP, etc. — and deal with two vendors per domain. This is down from its current 14 domains, according to UBS.

AT&T is doing this to reduce costs associated with vendor management and to create a more stable supplier environment:

AT&T Domain vendors will likely handle service/support (e.g. RFPs, inv mgmt,

spare parts, returns …) for all products w/in the Domain, inc other supplier parts.

We believe T hopes to cut costs by ~15% in all aspects of vendor mgmt (not

necessarily equip price), moving from buying “boxes” to “solutions.” Winners

likely need large service/integration operations, and tech specific capabilities.

UBS believes large vendors, including Cisco, Alcatel-Lucent, Fujitsu and Ericsson, to win a number of domains. Smaller vendors such as Adtran, Tellabs and Ciena may eventually become “detached” from the carrier’s technology selections as domain winners push their own products, the firm states. But they could experience an upside if they work with large vendors globally and can reap overseas revenues from those relationships, UBS states.

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