Alcatel (Paris: CGEP.PA and NYSE: ALA) and Lucent Technologies (NYSE: LU) today announced the completion of their merger transaction and that they will begin operations as the world’s leading communication solutions provider on December 1st, 2006. The new company Alcatel-Lucent, with one of the largest global R&D capabilities in communications and the broadest wireless, wireline and services portfolio, is incorporated in France, with executive offices located in Paris. The company will be traded on Euronext Paris and the New York Stock Exchange (NYSE) from December 1st, 2006 under a new common ticker (Euronext Paris and NYSE: ALU). As a result of the merger, each outstanding share of Lucent common stock has been converted into the right to receive 0.1952 of an Alcatel ADS. In connection with the merger, Alcatel has issued approximately 878 million shares, which is equivalent to the total number of ADS to be issued to the holders of Lucent common stock. Following the completion of the merger, approximately 2.31 billion ordinary shares of Alcatel-Lucent are outstanding.

Serge Tchuruk, appointed today as Chairman of the Board of Alcatel-Lucent, said: “Alcatel-Lucent will be for our customers a partner with the scale and scope to design, build and manage increasingly complex networks that deliver advanced converged services and communications experience to the end-user. That is what Alcatel-Lucent will deliver with an unparalleled focus on execution, innovation and service for our customers: the company will have the most experienced global services team in the telecommunications industry, as well as one of the largest research, technology and innovation organizations in the industry. In fact, our combined company is ideally positioned to help our customers transform their networks so they can offer new kinds of personalized, blended applications and services.”

Patricia Russo, appointed today as Chief Executive Officer of Alcatel-Lucent, added: “Through this merger, we are bringing together two top-ranking companies to form an undisputed leader in the industry, a company poised to enrich people’s lives by transforming the way the world communicates. Alcatel-Lucent is a strong and enduring ally that service providers, governments and enterprises can count on to help them unlock new market and revenue opportunities. This combination represents a strategic fit of vision, geography, solutions and people, leveraging the best of both companies to deliver meaningful communications solutions that are personalized, simple to adopt and available globally. Both Alcatel and Lucent embraced a common culture of innovation and excellence that will help ensure the success of our merger.”

A global communications solutions provider

With a comprehensive and diversified portfolio of complementary products, Alcatel-Lucent is well-positioned to address the fastest growing areas of network transformation. The company is a leader in IPTV, broadband access, carrier IP, IMS and next-generation networks, and 3G spread spectrum (UMTS and CDMA). With more than 18,000 employees working in services worldwide, the company has the largest and most experienced global services team in the industry. In enterprise communications solutions, Alcatel-Lucent is No. 1 in Europe and has more than 250,000 enterprise and government customers worldwide.

A global reach with local presence

With a worldwide presence in 130 countries, 79,000 employees (after completion of the Thales transaction) and balanced revenues across all regions, Alcatel-Lucent has strong customer relationships with the 100 largest telecommunications operators in the world. The company will have four geographic regions: Asia-Pacific, Europe and North, Europe and South and North America, to answer the needs of service providers, enterprises and end-users in the most advanced telecommunication markets, as well as in high-growth economies.

There will be five Business Groups: the Wireline Business Group, the Wireless Business Group and the Convergence Business Group (addressing the needs of the carrier market), the Enterprise Business Group and the Service Business Group. Each Business Group will have a decentralized regional organization that will provide strong local support to customers.

In addition there will be several corporate functions that support the company including worldwide integrated supply chain and procurement, finance, information technology, marketing, human resources, legal and communications.

“While our respective corporate structures have changed, one constant remains: our commitment to be a first class corporate citizen and to act in a socially responsible way in interactions with all our stakeholders,” said Patricia Russo.

Unrivaled breadth and depth of research and innovation expertise

Approximately 23,000 of the 79,000 total number of employees at Alcatel-Lucent are in R&D, including global Bell Labs which will remain headquartered in New Jersey, USA. With Euro 2.7 billion invested in R&D in calendar year 2005 by Alcatel and Lucent and 25,000 active patents, Alcatel-Lucent stands as an innovation powerhouse, featuring one of the largest global R&D capabilities in communications ready to partner and collaborate with customers on breakthrough technology. Alcatel-Lucent also leads standards initiatives with some 600 experts participating in 130 standardization bodies.

Creating Shareholder Value

Significant cost synergies are expected to be achieved within three years of closing and will come from several areas, including consolidating support functions, optimizing the supply chain and procurement structure, leveraging R&D and services across a larger base, and reducing the combined worldwide workforce by approximately 9,000 employees. The merger is expected to result in approximately Euro 1.4 billion in pre-tax annual cost synergies. A substantial majority of the restructuring activity is expected to be completed within 24 months after closing. The transaction is expected to be accretive to earnings per share in the first year post closing with synergies, excluding restructuring charges and amortization of intangible assets.

Corporate governance

The 14 Members of the Board of Directors are: Daniel Bernard, W. Frank Blount, Jozef Cornu, Linnet Deily, Robert Denham, Edward Hagenlocker, Jean-Pierre Halbron, Karl Krapek, Daniel Lebègue, Patricia Russo, Henry Schacht and Serge Tchuruk, and two additional jointly agreed directors appointed by the Alcatel-Lucent Board: Sylvia Jay and Jean-Cyril Spinetta, who were not members of either Alcatel Board of Directors or Lucent Board of Directors prior to the merger. There will be two Board observers representing the employee shareholders of the company’s Employee Investment Fund: Jean-Pierre Desbois and Thierry de Loppinot.

Alcatel (Paris: CGEP.PA and NYSE: ALA) and Datang Telecom Technology and Industry Group (Datang Group) today signed a Memorandum of Understanding (MOU) in Beijing that further reinforces Alcatel’s commitment to support China’s home-grown 3G standard, TD-SCDMA. This MOU complements an initial agreement that was concluded between Datang Mobile and Alcatel Shanghai Bell in November 2004.

According to the MOU, Alcatel and Datang Group will work closely together to drive TD-SCDMA development. Specifically, the MOU reinforces the cooperation that currently exists between the two companies in the areas of sales, marketing, industrialization, research and development of TD-SCDMA products and technologies for the domestic China market. Alcatel will assist the Datang Group abroad and support this global effort by taking advantage of its worldwide presence in over 130 countries. Finally, the MOU includes joint development of LTE (Long Term Evolution) products and technologies.

The signature of this MOU is a demonstration of the confidence both companies place in the future of TD-SCDMA and of their intention to become leading providers of TD-SCDMA when 3G arrives in China and well-positioned to capture a number of market opportunities.

In November 2004, Alcatel and Datang Mobile, a subsidiary of Datang Group, signed an agreement to invest in the industrialization of TD-SCDMA in China. In April 2005, Alcatel Shanghai Bell and Datang jointly demonstrated a live end-to-end TD-SCDMA solution during the TD-SCDMA International Summit in Beijing. In August 2005, the two companies finished the TD-SCDMA industrialization and announced readiness for large-scale commercial deployment. In March 2006, Alcatel Shanghai Bell and Datang jointly established a TD-SCDMA lab to provide a real network environment dedicated to interoperability testing between GSM and TD-SCDMA applications.

Alcatel (Paris: CGEP.PA and NYSE: ALA) announced today the successful demonstration of Europe’s first broadcast of live TV channels on mobile handsets in S-band. The demonstration took place in Alcatel’s UK premises. It is using the new DVB-SH standard (Satellite services for Handhelds), which is currently being drafted by the DVB Project. To perform this demonstration, Alcatel was assisted by UK broadcasters Sky, ITV and BBC.

Representatives from European mobile operators, TV broadcasters, industry analyst firms and regulatory bodies attending this demonstration were able to enjoy high quality images displayed on SAGEM myMobileTV handsets. These terminals are using the S-band telecom frequency between 2.17GHz and 2.20GHz, which is adjacent to the 3G/UMTS band. 30MHz of spectrum is currently available all across Europe and in other major regions in the world.

DVB-SH is a new technology targeting the S-band. DVB-SH is a related standard to DVB-H. With DVB-SH technology, Mobile TV signals can be broadcast from satellites as well as from terrestrial transmitters directly to handhelds. DVB-SH handhelds can be designed in such a way that they become compatible with DVB-H so that both standards can be received in one end-user terminal.

In addition, Alcatel demonstrated two possible key technical features using the DVB-SH standard. Reception Antenna Diversity, a feature using two antennas inside the same mobile device, enables improvements in the signal quality under difficult conditions. Furthermore, improved Time Interleaving overcomes fading impairment in mobility conditions. The significant quality enhancement was demonstrated by implementing these DVB-SH features.

On the occasion of this demonstration, Professor Ulrich Reimers, Chairman of the Technical Module of DVB Project declared: “I am delighted to have been given the opportunity to witness a live Mobile TV demonstration in the S-band even before the new Mobile TV standard has been finally designed. Within the DVB -Project, we have decided to give that standard a new name – DVB-SH – digital video broadcast from satellite for handhelds. DVB-SH is a perfect complement to other standards, such as DVB-H, which is typically using UHF frequencies but is capable of using the L-band. Thus DVB-SH may have a significant impact on the global Mobile TV industry.”

Olivier Coste, President of Alcatel’s mobile broadcast activities concluded: “Quality of Service is essential for operators to attract and retain Mobile TV users. Today, we demonstrated that high quality live Mobile TV using the S-band works. This can be up and running commercially very soon. With the additional benefits of universal indoor and countrywide coverage, the fundamentals of our solution are already solid enough to enable operators to profit from sustainable Mobile TV market growth thanks to the S-band.”