Alcatel to sell DSL modem business

French telecommunication equipment maker Alcatel SA has agreed to sell its DSL (digital subscriber line) modem business to consumer electronics manufacturer Thomson Multimedia SA. The sale will help Alcatel concentrate on its core business, network equipment, while the DSL line will complement Thomson's strength in consumer broadband access, the companies said in a joint statement Thursday.

"We're focusing on the carriers, the service providers, and in a business which is moving naturally toward a consumer kind of business model, which is (the case with) the DSL modems. It doesn't make sense for us to keep that business within our perimeter," said an Alcatel spokesman.

He added that Alcatel will continue its manufacture of DSL chip sets, and of DSL access multiplexers (DSLAMs). The company holds a 52 percent share of the DSLAM market, according to figures from market researcher Dell'Oro Group.

Alcatel is taking steps to prevent compatibility problems once it no longer controls the modem business, he said. "Thomson Multimedia will freely access our patents for DSL. We want to be able to continue to provide end-to-end solutions, and we need the modems, when it's necessary and required by our customers, and for that we must be sure everything goes fine in terms of standardization and interoperability and the future."

Thomson will issue 9.5 million new shares in exchange for the business, valuing the deal at some 456 million euros (US$387 million). The sale is slated to be completed by the end of 2001.

Alcatel's new focus on network equipment comes after several months of cost-cutting measures, including job cuts and temporary halts of its mobile telephone handset manufacturing operations.

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