Most of the revenue growth Alcatel-Lucent will see in the next two years will come from the Alcatel side of the house, according to estimates published by UBS Investment Research this week.

The 5% growth in wireline revenue Alcatel-Lucent will see this year will come from Alcatel, whose wireline revenue contribution will grow 8% while Lucent’s falls 5%, UBS said. And the 2% growth in wireless revenue the company will see this year will come from the addition on Nortel Networks’ WCDMA business; Lucent’s CDMA revenue contribution should be flat this year, while its GSM/WCDMA revenue falls 10% and Alcatel’s GSM/WCDMA revenue falls 5%.

The former Lucent business will contribute 52% of the combined company’s wireless revenue this year and 22% of its wireline revenue, UBS said.

UBS did not break down into Alcatel and Lucent sources the 8% growth in enterprise revenue the vendor should see this year, nor the 8% growth in services revenue. The services business grew 14% in 2006, UBS said, with 58% of the revenue and a faster rate of growth coming from Alcatel.

Revenue from Alcatel-Lucent’s convergence products should be flat for the next two years after declining in 2006, UBS said. Alcatel saw about twice as much convergence revenue as Lucent last year, UBS said, but both saw 20% declines.

The vendor’s enterprise business grew more than expected last year--13%, UBS believes, prompting it to raise its expectations for the division. UBS now predicts enterprise revenue will grow 8% this year and 7% next year. Services revenue, which also grew more than expected last year (an estimated 14%), should grow 8% this year and 7% next year.

“The first half [of 2007] will remain difficult for Alcatel-Lucent, as communication about headcount reductions and product rationalization will likely limit the top line,” UBS said, adding that the risks inherent in slow revenue growth are outweighed by the potential rewards of cost-cutting. “This continues to be a [second half of 2007] cost-saving story.”

After growing more than 4% this year, UBS expects Alcatel-Lucent’s overall revenue to grow less than 3% in 2008 to more than 19.5 billion euros.