Lucent Wins $5-Billion Contract

Lucent Technologies Inc. on Monday won a $5-billion contract from Verizon Wireless, the largest U.S. mobile-phone company, for gear that will increase the capacity of Verizon’s wireless network.

News of Lucent’s biggest wireless contract helped boost its depressed shares 20%.

The deal, designed to speed Verizon’s introduction of next-generation services, will make Lucent the largest supplier of high-speed, high-capacity wireless infrastructure to Verizon Wireless, a joint venture of Verizon Communications and Britain’s Vodafone Group. Lucent will supply 65% of Verizon Wireless’ network.

The contract marked a significant win for Lucent, which has been struggling for a year with massive losses, product-development problems and manufacturing constraints. Lucent edged out other vendors such as Nortel Networks Corp., which already provides some wireless equipment to Verizon.

With Lucent’s products, services and software, Verizon Wireless will introduce high-speed mobile Internet services without substantial investment in new base stations, the companies said.

Verizon Wireless, which has 27.5 million wireless voice and data customers, will begin to deploy the first phase of the next-generation technology in its coast-to-coast network this year. This upgrade could double the network’s voice capacity and increase data-transmission speeds by nearly 10 times.

Lucent’s contract with Verizon Wireless includes software and transmission equipment for cell-phone towers. The equipment is based on chips and patents from Qualcomm Inc., which developed the “code division multiple access” mobile-phone standard.

Verizon Wireless won 113 wireless licenses in a federal auction in January with an $8.8-billion bid.

Lucent didn’t lend Verizon money for the purchase, Lucent spokeswoman Mary Ward said. Lucent had to reserve $340 million in the fiscal first quarter to cover potentially bad loans to smaller phone companies.

Ending that practice contributed to Lucent’s 26% drop in sales in the quarter ended Dec. 31, Chief Financial Officer Debby Hopkins said in January.

Lucent shares jumped $1.98, or 20%, to $11.97 on the New York Stock Exchange. The shares have fallen 82% in the last year.

Shares of New York-based Verizon Communications rose $1.55 to $48.88, while Vodafone’s American depositary receipts rose $1.14 to $29.24, both on the NYSE.