Alcatel-Lucent CEO to Step Down Sept. 1

The decision comes amid hopes the $16.6 billion acquisition by Nokia may happen earlier than expected, and Alcatel-Lucent's restructuring continues.

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Michel Combes, who as the new CEO of Alcatel-Lucent in 2013 implemented the latest restructuring of Alcatel-Lucent and then oversaw its proposed sale to rival Nokia Networks, will step down from the CEO post Sept. 1 as the merger comes closer to completion.

Combes and Alcatel-Lucent's board of directors announced several executive changes July 30, including Combes' upcoming departure. He will be replaced by Philippe Camus, who currently is board chairman, on an interim basis.

It's no surprise that Combes is stepping down. When Nokia's $16.6 billion bid for Alcatel-Lucent was announced in April, it was announced that Nokia President and CEO Rajeev Suri would take over as head of the combined company. Combes at the time announced he eventually would step aside, and now has put a date on his departure.

There have been unsubstantiated reports that Combes would take an executive role with French cable group Altice, though there was no discussion about the CEO's eventual destination during the conference call July 30 to talk about Alcatel-Lucent's executive changes and second-quarter financial numbers. Both Alcatel-Lucent and Nokia reported solid quarterly numbers July 30, with Alcatel-Lucent generating $3.45 billion in revenue and Nokia $3.2 billion.

During the call, Combes said two of the key reasons for leaving in September were that the key goals of the Shift Plan—the initiative implemented by Combes two years ago to streamline Alcatel-Lucent's business efforts and to reduce expenses by $1.36 billion—have almost been met, and that the work to bring Nokia and Alcatel-Lucent together is moving ahead a little faster than expected.

The deal was expected to close in the first half of 2016, and during the call, Combes said it would happen in the earlier part of next year or possibly by the end of this year.

Given all that, "it appears reasonable to accelerate the work in terms of integration in order to be ready and to be well-prepared for this integration," he said, according to a transcript on Seeking Alpha. "So it appeared to the board and to myself that to facilitate this acceleration of this integration work—which is done under the leadership of Rajeev—it would be easier if I was to step down and not to interfere in this next phase and to have the guys [who] will be part of this next phase really in power."

The two networking companies have cleared a number of regulatory hurdles already. European Union antitrust regulators approved the deal earlier this month, and the U.S. Department of Justice the month before granted the vendors early termination of the United States' antitrust waiting period, which gave Nokia the go-ahead to proceed with the deal.

A number of other countries also have given their blessing to the deal, including Brazil, Canada, Russia, Serbia and Columbia.

The merger will create a larger networking company that will be better able to compete with the likes of Ericsson, Huawei Technologies and Cisco Systems in a market that is rapidly changing due to the rise of such technologies as software-defined networking (SDN) and network-functions virtualization (NFV). At the time that the deal was announced, officials with both Alcatel-Lucent and Nokia said the combined company—based on 2014 numbers—together had $27.5 billion in sales and $2.45 billion in profits, more than $5 billion in R&D (including funding for Bell Labs and Nokia's FutureWorks program) and net cash of almost $7.9 billion. Nokia officials said the company's addressable market will increase by 50 percent, to more than $138 billion.