It’s the outage that keeps on giving.
In its half year result announced this morning, Telecom earnings were boosted by a $14 million “supplier compensation” payment.
Telecom was coy on the source of the payment, but it can only be from the company’s bungling XT network partner, Alcatel-Lucent.
Last quarter, Telecom recorded a $27 million payment, labelled as settlement from a supplier which, again, could only have been Alcatel-Lucent.
$41 million – and more to come
That means, so far, the Franco-American telecommunications infrastructure company has paid Telecom $41 million in compensation for outages that plagued XT between December 2009 and February 2010.
“So far” is the operative phrase here.
Industry scuttlebutt (Telecom won’t comment) holds that Alcatel-Lucent has agreed to total reparations of $100 million.
This morning, at Telecom’s results briefing, analysts repeatedly asked if more “supplier settlements” were on the way.
“There will always be supplier settlements from time-to-time,” Telecom chief executive Paul Reynolds said at one point. “I think we're going to have some more in future."
FLASHBACK: February 26, 2010: Telecom chief executive Paul Reynolds (centre, flanked by Gen-i boss Chris Quin, left, and retail head Alan Gourdie) puts Alcatel-Lucent "on notice".
$15 million in kind to customers
Telecom offered its customers a total $15 million in compensation after the four major XT outages, some of it in the form of a 50% discount that only applied if a customer stayed “loyal” for at least three months.
The company also suffered brand damage, slower than anticipated XT uptake, and in some instances took a revenue hit as big customers leveraged the incident to gain better contract terms.
Didn't touch the sides
Assuming the supplier payments came from Alcatel-Lucent (and Telecom has no other supplier approaching its scale, or with such reason to pay), they didn't touch the sides.
Overnight, Alcatel-Lucent announced it had earned reported a net profit of euro340 million for its December quarter, up from €46 million in the year-ago period.
Revenue rose 23% to €4.9 billion.
Full-year revenue €15.98 billion (up 5.5%). The company made a net full-ear loss of €334 million - it's fifth straight year in the red, but a better than the €524 million loss reported last year.
According to one newspaper's count, a culmulative €9 billion has been lost since New Jersy-based Lucent merged with the Parisian Alcatel iin 2006.
Ambition: to become normal
Alcatel-Lucent chief executive Ben Verwaayen - whom conspiracy theorists often note was Dr Reynolds boss during his time at BT - was quoted in the FT saying he was “more confident than ever in our ability to transform into a normal company”.
Under the circumstances, what's $100 million between friends?
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