European Union regulators have cleared the proposed $13.4 billion merger between French telecom equipment maker Alcatel and Lucent Technologies. The merger is due to be completed before January 2007. According to the European Commission, the merger’s main impact on competition would be on supply of optical networking equipment and broadband access solutions. However, it is believed that sufficient competition in both the areas will remain even after the merger. The combined company is expected to earn about $26.5 billion in annual revenue. Alcatel reported an 8 per cent drop in its April-June 2006 net profit to $226.6 million over the previous year due to deteriorating margins in the competitive wireless infrastructure business. Sales rose 7.6 per cent to $4.25 billion due to strong demand for broadband internet equipment for the fixed line unit.
