Alcatel-Lucent says it plans to cut €1 billion in costs and switch its focus to its IP networking and mobile broadband units in what represents a major strategic overhaul for the company.

The France-based vendor said it would rework its balance sheet and focus on a small number of core businesses as part of an effort to return to profitability.

Branded as the "Shift Plan", A-L also intends to divest €1 billion euros of assets over the next three years and raise €2 billion in new debt financing.

The plan is the brainchild of new A-L chief executive Michel Combes, the former Vodafone Europe chief who was brought in in April to deliver "sustainable profitability" following several years of poor financial results.

In April, Combes confirmed that senior A-L management were "actively reviewing" the group's business and operating model after it made a loss of €353 million in the first three months of the year.

Under the Shift Plan, A-L will split its divisions into two segments - Core Networking and Access - with high-growth businesses managed under the Core banner and others "managed for cash".

A-L is to focus its research and development spending on IP networking and broadband access as part of an effort to redefine itself as an IP and ultra-broadband specialist.

The company aims to grow revenues in its Core businesses by more than 15 percent, from €6.1 billion in 2012 to over €7 billion in 2015 as well as lifting operating margins in this segment from 2.4 percent to more than 12.5 percent over the same period.

Combes said A-L was taking "comprehensive action" to position itself at the heart of the "digital ecosystem".

"With The Shift Plan, which is designed to be self-funding, we are aligning realistic and deliverable ambitions with our core competencies," he said.

Combes confirmed that Philippe Guillemot is to join A-L's management team as senior executive vice president, operations, while current CFO Paul Tufani is to step down from his role once the new push gets under way.

A-L was formed in 2006 following the merger of France's Alcatel and New Jersey's Lucent Technologies.

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