Marconi and Ericsson announce £1.2bn deal

Telecommunications equipment firm Marconi has announced plans to sell the bulk of its assets and name to Swedish firm Ericsson in a deal worth £1.2 billion.

Under the new deal, Marconi will sell its telecommunications equipment and international services businesses – representing about 75% of its overall turnover - to Ericsson. The remainder of the company will continue as a services provider to telecommunications operators and will be renamed Telent.

It is believed that Marconi will retain 2,000 of its 9,000 staff to work at Telent, while around 6,670 staff will be transferred to Ericsson.

However, the Swedish company warned that around 1,000 jobs could be lost due to the takeover.

Marconi’s future had been in serious doubt since it failed to secure a major contract from BT, the company’s biggest customer.

BT did not select Marconi to work on a £10 billion upgrade of its network, forcing the firm to conduct a strategic review of the business, leading to the closure of the company’s Edge Lane plant in Liverpool.

Ericsson said that the deal would help to meet the increasing demand for mobile and fixed broadband access, around the world. The company said that the upgrade to broadband would lead to a “massive increase in data traffic”, which would require the transmission capacity in telecom networks to be “dramatically increased”.

Ericsson said that Marconi’s competitive transmission offerings, especially in optical systems, would help growth.

Carl-Henric Svanberg, President and CEO of Ericsson, said: “The acquisition of the Marconi businesses has a compelling strategic logic and is a robust financial case. As fixed and mobile services converge, our customers will substantially benefit from this powerful combination.”

(KMcA/SP)