AT&T 'to axe suppliers'

15 June 2009

16 June 2009 | Jake Kanter

Telecoms firm AT&T plans to reduce its number of equipment suppliers, according to a report in the US media.

The claim was made by Simon Leopold, a senior analyst at financial services firm Morgan Keegan (MK), writing in investment magazine Barron's. His report said that AT&T, which has an annual spend of $15 billion (£9 billion), wanted to secure better contract terms and build stronger relationships with a smaller number of suppliers.

Leopold based his conclusions on the fact that AT&T held meetings with the "majority" of its equipment suppliers in May, and he was in agreement with other industry insiders who have expressed similar views.

AT&T has refused to comment.

Several companies have cut supplier numbers in recent months, including Siemens, which announced plans in March to axe 74,000 vendors.

Leopold believes AT&T will select two suppliers for each of its 14 main technology categories - a drop of 12 vendors from its current list of 40 equipment suppliers.

"By reducing the number of vendors AT&T hopes to use its scale and purchasing power to extract favourable pricing terms while reducing the administrative costs associated with supporting on the order of 40 equipment-supplier relationships," he claimed.

Leopold added the strategy would also help mitigate risk and was likely to favour larger and more "diversified" suppliers, such as Alcatel-Lucent.

AT&T uses more than 5,000 companies as suppliers of materials and services.

Last week the firm launched a year-long project to mentor small women-owned businesses and help them win large contracts.


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