Cisco, Alcatel likely to win AT&T edge: analyst

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Cisco, Alcatel likely to win AT&T edge: analyst

By Jim Duffy

Network World, 03/29/04

Cisco and Alcatel are likely to win an AT&T contract for multi-service edge routers, valued at up to $100 million annually, according to UBS Warburg.

In a bulletin issued this week, UBS Analyst Nikos Theodosopoulos said Juniper “faired well” in the technical evaluation phase of the AT&T bid but that AT&T appears to favor Cisco as the primary supplier and Alcatel as the secondary vendor for this buildout.

“A Cisco/Alcatel decision by AT&T would be setback for Juniper,” Theodosopoulos states. “We believe the lack of an existing strategic position in AT&T and a relatively weaker executive level relationship with AT&T led to the Alcatel/Cisco selection.”

Alcatel bid the edge router it obtained via a recent acquisition of TiMetra Networks.

UBS values the contract at $50 million to $100 million per year and expects Cisco and Alcatel to begin taking revenue in the second quarter.

For VoIP, AT&T appears to favor existing supplier Sonus or another supplier over Lucent and Nortel for media gateways, Theodosopoulos states. UBS values this business at less than $25 million annually.

AT&T will be deploying the media gateways as a VoIP overlay to its legacy Class 4/5 switch infrastructure instead of replacing the older switches with softswitches, according to UBS.

“We view this architecture decision by AT&T as setback for Lucent given its large installed base of close to 150 voice switches in AT&T,” Theodosopoulos states. “Lucent and Nortel… will not get any upgrade business from their installed circuit switches at AT&T.”

UBS believes AT&T is spending “well below” its full year capex guidance of $2.4 billion.

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