WASHINGTON (MarketWatch) -- France's Alcatel SA and U.S.-based Lucent Technologies Inc. have lots of reasons to stick with their old names after they complete their $13.5 billion merger. Several hundred million reasons, perhaps.

 

When Alcatel unveiled its acquisition of Lucent earlier this month, Alcatel Chief Executive Serge Tchuruk said that the two telecom-equipment giants would "choose a name later on."

 

Yet rebranding a large corporation costs a lot of money. For example, some analysts estimate that the former SBC Communications is spending as much as $1 billion to rename itself AT&T Inc. after acquiring the old Ma Bell brand in November.

 

"Branding is not cheap," said Jay Pultz, senior communications analyst at the market-research firm Gartner.

 

Lucent and Alcatel also have other priorities: They need to integrate two large organizations on opposite sides of the Atlantic, trim 10% of their combined workforce of 88,000 and find other ways to cut expenses to make the transaction pay off for investors.

 

In addition, the two brands are well known in the markets where they operate -- an important consideration, given that it can sometimes take years for new names to catch on.

 

"Unless something is wrong with your name, you're better to keep what you have," said brand expert Chuck Brymer, who recently took over as president and chief executive of DDB Worldwide. Brymer has advised AT&T and Samsung, among others.

 

Nevertheless, Alcatel and Lucent already have formed a working group to consider a new name and logo.

 

Lucent spokesman Bill Price said that it's premature to decide whether the two companies could justify an expensive rebranding campaign, even as they look for ways to save money.

 

"This group is going to look at all the possibilities," he added.

 

Lucent has been down this road before.

 

Part of the company used to be called Western Electric, the phone-equipment unit of AT&T. Other engineers in the company had come from Bell Labs, Ma Bell's research arm that invented everything from the laser to the wireless phone. In 1996, those segments were combined, rechristened as Lucent and spun off from its parent.

 

Alcatel also had its roots in Western Electric, which sold off its international operations in 1925. Some of those assets were eventually acquired by newly formed Alcatel NV in 1986.

 

Despite their ancient roots, the names of Alcatel and Lucent are relatively new. The stand-alone Alcatel brand has only existed for about 20 years and Lucent for half that time.

 

Alcatel and Lucent derive the bulk of their revenue from a small group of big-business customers: the phone and cable giants that rule the roost in North America, Europe and Asia.

 

For that reason, their brand-name appeal to consumers won't be as important as it was for AT&T, for which SBC junked its 11-year-old moniker. AT&T has a large consumer base and needs to promote its service to millions of potential customers.

 

AT&T, which is three times larger than a combined Alcatel-Lucent, spent an estimated $1.58 billion on advertising in 2005 and $2.15 billion in 2004, according to tracking firm TNS Media Intelligence.

 

Alcatel and Lucent wouldn't have to spend nearly as much, however.

 

"(Alcatel and Lucent's) primary base wouldn't have a problem with whatever they call the company," Gartner's Pultz said.

 

The name of the combined company is more important in ensuring that Alcatel and Lucent maintain a strong presence in the minds of investors. A well-known brand also would help if the combination makes a bigger push into the corporate-networking market, analysts say.

 

Politics could come into play as well. With increasing global tension over cross-border mergers, Alcatel and Lucent may want to maintain both brands to forestall any domestic opposition. Analysts believe that's the most likely scenario.

 

If that's the case, the companies could emulate Germany's Daimler, which married the names of Daimler and Chrysler after its acquisition of the No. 3 U.S. automaker in 1998. Eight years later, the combined company is still known DaimlerChrysler AG (DCX : though most of its marketing focuses on individual brands such as Jeep, Dodge and Mercedes-Benz.

 

More recently, Sprint took the same approach after acquiring Nextel Communications last summer. The new company is called Sprint Nextel, though analysts expect the company to eventually drop the Nextel brand.

 

If Alcatel and Lucent follow form and call themselves Alcatel-Lucent, analysts expect the Lucent brand would mostly be used in North America and the Alcatel brand everywhere else.

 

That's because North America remains a Lucent stronghold, with the company generating two-thirds of fiscal 2005 sales in that region. By contrast, Alcatel only derives about 15% of its revenue from North America.

 

After a few years, the Lucent brand could be phased out. "One brand is better than two," said DDB's Byrmer. "It would make sense to consolidate into one brand."

 

Alcatel and Lucent will have some time to consider those possibilities, since the cross-Atlantic merger is expected to take at least six months to complete.

 

And there will be no shortage of opinions on what to name the new firm. On a conference call to discuss the merger, one analyst joked that the they ought to call themselves Electricite de la Ouest.

 

That's French for Western Electric.