AT&T said to be narrowing suppliers to eight pairs

AT&T’s (NYSE: T) plan to reduce the number of suppliers it works with appears to be more exclusive than previously thought, according to UBS Investment Research Analyst Nikos Theodosopoulos.

Citing multiple sources, analysts had previously said the carrier was in the process of establishing 14 or 15 technology categories it called “domains,” with plans to appoint two key suppliers for each domain. In some cases, AT&T was expected to suggest that those vendors partner with smaller firms for desired technologies. One analyst argued that the strategy wouldn’t represent a big departure from the status quo.

In a note late last week, however, Theodosopoulos said AT&T has reportedly cut the number of technology domains from about 14 to about eight.

It’s still unknown what those domains might be, though Theodosopoulos suggested they could include optical, access and IP, for example.

The new buying strategy – which Theodosopoulos said may be limited to North America -- is expected to benefit the largest vendors, which are each likely to be named to multiple domains. But the outlook for smaller vendors – analysts typically site Adtran, Ciena and Tellabs as examples – is more mixed. Over the long term, small and mid-sized vendors “may become detached from tech selections, with domain winners preferring their own products,” Theodosopoulos said. At the same time, those that partner with larger firms to serve AT&T could potentially leverage that partnership to reach a broader global customer base, he said.