AT&T-SBC Fallout: Winners & Losers

Light Reading: Who wins, who loses? Hardware perspective from Light Reading.

Adtran Inc. and Sonus Networks Inc. could benefit from the merger, while Lucent Technologies Inc., Nortel Networks Ltd, and Avici Systems Inc. may suffer. Deployment of SBC’s fiber initiative, Project Lightspeed, could be pulled back as the company expends resources to integrate the AT&T network, the brief states. If so, DSL equipment vendor Adtran might find more opportunities in advance of SBC’s eventual move to fiber. Alcatel might also lose some fiber equipment sales but could recoup with increased DSL gear sales.

Merrill Lynch adds, “Potential SBC/AT&T consolidation could depress combined US wireline capex by 10%, or $2bn. We estimate that SBC and AT&T were separately planning to spend ~$7bn on wireline capex in 2005. A combination could impact this number by 30%, or $2.1bn, which is 10% of the estimated $20bn annual US wireline capex. In addition, a lower capex by SBC could also motivate Verizon to spend less, thereby depressing capex further.”