AT&T picks Alcatel, Cisco, Juniper as key suppliers

Thu Jul 29, 2010 3:40pm EDT
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NEW YORK (Reuters) - Top U.S. phone carrier AT&T Inc on Thursday named Alcatel-Lucent, Cisco Systems Inc and Juniper Networks as key suppliers for its networks.

The three companies already sell network equipment like routers and switches to AT&T, but their selection as "domain suppliers" establishes them as key players which will work with the carrier to ensure its voice, video and data traffic work smoothly.

AT&T's choice of industry leader Cisco came as no surprise, given its breadth of products, and analysts said it was bigger news for the other two.

Cannacord Genuity analyst Paul Mansky reiterated his "buy" rating on Juniper, saying its inclusion was a "ringing endorsement."

"Confirmation of the company's selection as an AT&T domain supplier lifts the 'tweener' concern ... that Juniper was too small to be a domain lead while too big to be a compelling subordinate," he said.

The deal covers AT&T's IP (Internet Protocol), MPLS (Multi Protocol Label Switching), Ethernet and Evolved Packet Core (EPC) networks. Financial terms were not disclosed.

AT&T has said it plans to spend around $18 billion to $19 billion in capital spending in 2010, up about 5 percent to 10 percent from a year earlier. Much of the spending, however, is expected to concentrate in its wireless business.

Juniper said on Wednesday that it expects its selection as a domain supplier to help it gain business with AT&T. Its shares fell 0.5 percent to $27.67 in late-afternoon trade on the New York Stock Exchange. Shares of much-bigger rival Cisco edged down 0.3 percent to $23.33 on Nasdaq.

Alcatel-Lucent's shares slipped about 1.5 percent in Paris.

(Reporting by Ritsuko Ando; Editing by Maureen Bavdek and Richard Chang)