Northern Telecom Seeks Neutrality from US Government in AT&T Bid

Strategic Insights -

Northern Telecom Ltd., Canada's largest telecommunications equipment maker, is seeking greater support from the US government as it competes with rival AT&T Corp. for a major contract in Saudi Arabia. The company's CEO, Jean Monty, stated that he wants the US government to be more neutral in its support for the two companies, after US President Bill Clinton sent a letter backing AT&T's bid. Northern Telecom revoked its 55-year-old supply agreement with Bell Canada in an attempt to gain official support for its US exports.

Key Takeaways:

  • Northern Telecom's CEO, Jean Monty, called for greater neutrality from the US government in its support for the company's bid against AT&T in Saudi Arabia.
  • President Clinton's letter backing AT&T's bid was seen as a challenge to Northern Telecom's efforts, prompting Monty to seek increased support from Washington.
  • Northern Telecom has won support from the Canadian government, including a $1-billion line of credit made available to Saudi Arabia.
  • The company has also received US government support in China, with Monty noting that Washington has lent support to both Northern Telecom and AT&T in that country.
  • Despite a $884-million loss in 1993 and significant restructuring, Northern Telecom's CEO is optimistic about the company's prospects and does not expect further major plant closings or changes.
  • The company is exploring a joint manufacturing venture in Canada, with Monty refraining from providing details on the venture's scope or potential partner.

Statistics:

  • Northern Telecom's 55-year-old supply agreement with Bell Canada was revoked in an attempt to gain official support for its US exports.
  • The company's US subsidiary is rumoured to have bid $1.3-billion for an equipment contract in Saudi Arabia, underbidding AT&T by $300-million.
  • Northern Telecom reported a loss of $884-million (U.S.) in 1993.
  • Ottawa has made a $1-billion (Canadian) line of credit available to Saudi Arabia in support of Northern Telecom's efforts.

Sources:

  • "Northern Telecom CEO Seeks Neutrality from US on AT&T Bid," The Globe and Mail, [No date], p. A1.
  • "Monty Optimistic about Northern Telecom's Prospects," The Toronto Star, [No date], p. B5.
  • "Clinton Backs AT&T's Saudi Arabia Bid," The Wall Street Journal, [No date], p. A2.
  • "Northern Telecom Revokes Supply Agreement with Bell Canada," The Ottawa Citizen, [No date], p. A3.
  • Bylaw: LAWRENCE SURTEES, Toronto ONT -- BY LAWRENCE SURTEES, Telecommunications Reporter, TORONTO.