According to Italian business news daily Il Sole 24 Ore, rival telecom equipment makers Alcatel (NYSE:ALA) and Cisco (Nasdaq:CSCO) are both interested in acquiring a majority stake in Italian softswitch vendor Italtel SpA. Italtel reported a 2003 net loss of €24.2 million on sales of €691.2 million.
As reported on that daily on Tuesday, US private equity firm Clayton, Dubilier and Rice, which has owned the stake (48.8 percent) for more than four years, now wants to sell it after the company put plans for an initial public offering (IPO) on hold due to market conditions. Alcatel has made an offer for the stake and Cisco, which already owns 18.4 percent of Italtel, has indicated it wants to increase its shareholding.
Italtel's main client is Telecom Italia (NYSE:IT), which accounts for 65 percent of its revenues and holds 19.37 percent of its capital. According to the article, the Italian telco has no preference between Alcatel and Cisco and only wants Italtel to be "effective and competitive".
Two great sources on this story are a Light Reading (The Daily Payload) article and a piece written by Om Malik on his blog, Om Malik on Broadband. The Daily Payload entry examines the various pros and cons for Cisco and Alcatel to make the acquisition. Om, as usual, is a step ahead of the curve and looks at the final outcome, believing that the loser of the Italtel sweepstakes might go after another softswitch vendor (his guess is Veraz Networks).