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Alcatel-Lucent plans IPO for submarine cable business

Alcatel-Lucent plans IPO for submarine cable business

Alcatel-Lucent announced plans to pursue an initial public offering of shares in it submarine cable business, as the company continues to exit low-growth businesses. The company would maintain a majority stake in the business, while the IPO would provide resources to expand the business further into the oil and gas market. The listing is expected to take place in the first half of 2015.The announcement came alongside second-quarter results showing revenues of EUR 3.279 billion, up 0.7 percent at constant exchange rates and excluding the impact of divestments. Excluding its managed services business, where it’s been exiting a number of unprofitable contacts and countries, revenues were up 5 percent year-on-year, helped by a growing number of LTE contacts, especially in the US and China.

The gross margin improved by 140 basis points from a year ago to 32.6 percent of revenues, helped by another EUR 94 million in cost savings in the quarter. Adjusted operating profit totaled EUR 136 million or 4.1 percent of revenue, up from 1.3 percent a year ago. Alcatel moved to a positive operating cash flow of EUR 96 million versus a negative EUR 41 million in the year-earlier period, helped by a return to profit at its Access division.

Free cash flow was still an outflow of EUR 205 million,and the group had a net loss of EUR 298 million or EUR 0.11 per share. During the quarter, Alcatel completed its debt refinancing outlined in its Shift Plan, with all maturities until 2017 reimbursed or pre-financed. CEO Michel Combes said this completes the first phase of the company’s restructuring, freeing up the resources to focus on growth and innovation and return to positive free cash flow in 2015.

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