Alcatel to exit handset business

French telecom major Alcatel is scouting for a partner in South Asia, including China, to either sell its 800 million Euro handset business or look for a joint venture partner.

"We are negotiating the terms with various companies. We have two options to exit from the handset business. Either we can sell this outright or enter into a joint venture with a company," Etienne Fouques, President (Mobile Communications), Alcatel, said.

Alcatel has been talking to various telecom companies, he said, adding that one of the Chinese companies has shown interest in buying the mobile handset segment.

Nanjing Panda Electronics of China is one of the companies, Alcatel is negotiating with, sources said.

Fouques, however, declined to give details about the financials being negotiated with the Chinese company but indicated that Alcatel may fetch up to 600 million Euro from the transaction.

Alcatel claims to have a market share of about 8 per cent in the mobile handset market worldwide.

The company, which is a worldwide leader in the GSM network business, is reworking its strategy with regard to India in a bid to re-enter the GSM mobile market.

As part of reworked strategy, the company is considering making investments in setting up of GSM-based mobile networks for the operators and earn profits by way of sharing revenues with the operators.

Fouques said that if the 'revenue share' model succeeded, the company would invest in India in a big way. Alcatel has already tied up with ITI to offer GSM network solution to the incumbent Bharat Sanchar Nigam Ltd.

Asked by when the final decision would be taken with regard to hiving off the handset business, Fouques said: "Talks are at an advance stage and the deal is likely to be finalized very soon."

Fouques, however, refused to confirm whether a joint venture route would be taken to hive off the mobile handset business or there would be an outright sale.

The mobile handset business has been dominated by players including Nokia, Samsung, Motorola and LG among others.

In India, even as Alcatel's mobile handsets have a price advantage, the company failed to make a significant headway in the wake of aggressive competition from the above mentioned handset suppliers.