Alcatel-Lucent, the telecommunications equipment company, on Wednesday said it had sold its call-centre services business to Permira, the private equity group, for $1.5bn. It is the same amount the company bought the business for in 2000.
The sale of the Genesys unit provides much-needed funding for the Franco-American business, which has made losses for the past five years and has invested heavily in a turnround strategy in the three years since the appointment of Ben Verwaayen as chief executive.
The company will, however, retain the rest of the Enterprise business, which it had considered selling this year. The remaining Enterprise business, which provides telecoms services to corporate customers, is slower-growing than Genesys, and employed larger numbers of people. A buyer would have had to make extensive redundancies to turn round the business, something which would have been difficult in France with the presidential elections approaching in 2012.
“With Enterprise, we have reached the conclusion that retaining it and strengthening it further serves Alcatel-Lucent and our customers best,” Mr Verwaayen said. At the end of June this year, Alcatel-Lucent had net debt of €376m.
Shares in Alcatel-Lucent fell 5 per cent to €2.01 in early trade, with analysts expressing mixed reactions to news of the sale. Although the cash injection removes concerns about Alcatel defaulting on its debts, without Genesys, revenue growth could suffer.
The Genesys business had revenues of about $500m a year, and has been highly cash generative for the company.
“The scope of the disposal is nevertheless worrisome and reflects a preoccupying longer term trajectory for the company. Alcatel-Lucent sold only the moneymaking part of their enterprise business and will have to keep in-house its traditional enterprise telecom equipment business that is in our opinion lossmaking and unlikely to get back to profits easily,” said Pierre Ferragu, analyst at Sanford Bernstein.
Alcatel-Lucent has promised to return to profitability this year, but analysts have estimated that it will lose about €100m a year in operating profit after disposing of Genesys.
Qatalyst Partners was sole adviser to Alcatel-Lucent, while Permira was advised by Goldman Sachs.
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