MARCONI TELECOMMUNICATIONS MEXICO CASE STUDY

Marconi Telecommunications Mexico Case Study

Marconi Telecommunications Mexico Case Study

Introduction

The General Electric Company (GEC) attempted a takeover of Plessey in 1986 but was barred by regulatory authorities. Instead on 1 April 1988 GEC and Plessey merged their telecommunications businesses as GEC Plessey Telecommunications, commonly known as GPT. GPT was a world leader in many fields, for example Synchronous Digital Hierarchy (SDH) technology, and this brought the two companies responsible for developing and building the System X telephone exchange together, which was supposed to make selling System X simpler. In 1989 GEC and Siemens acquired the Plessey Company through the joint company GEC Siemens plc. While most of Plessey was divided between the companies GPT remained a joint venture, with a 60/40 shareholding between GEC and Siemens respectively. GEC Plessey Telecommunications officially renamed itself GPT (no longer standing for anything) because Plessey no longer existed (except Plessey Semiconductors retained its name).

In October 1997 in the UK, the name GPT disappeared and the company was called SGCS (Siemens GEC Communication Systems). A year later SGCS merged with SBCS (Siemens Business Communication Systems) to form Siemens Communications Ltd.

Marconi Telecommunications Mexico Case Study

The agreement strengthens Ericsson's position in the accelerating transmission segment. Expands Ericsson's platform for leadership in next generation converging networks. Adds sales of approximately SEK 14.0 b. (GBP 1.0 b.), acquisition price SEK 16.8 b. (GBP 1.2 b.) It will contribute positively to EPS from 2007, neutral effect in 2006. Headquarters and certain businesses in UK and Germany are not part of the acquisition. Marconi's UK pension plan is not part of the acquisition

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."

Mobile and fixed broadband access is quickly growing throughout the world. Ericsson is leading the build out of mobile broadband and has a strong position also in the new wireline technology. The upgrade to broadband will lead to a massive increase in data traffic. As a consequence, transmission capacity in telecom networks will have to be dramatically increased.

Marconi's competitive transmission offerings, especially in optical systems, will combine with Ericsson's strong microwave radio position and worldwide sales organization to create a solid foundation for growth. Telecom operators' focus on next generation IP based networks is sharpening. Ericsson is determined to secure a leading position in this fast emerging field. This will require R&D investments as well as bolt-on acquisitions.

Ericsson's fixed network business combined with Marconi's broadband access offering and Marconi's long-standing relationships with leading fixed operators will reinforce Ericsson's market position.

Ericsson will acquire assets representing about 75 percent of Marconi's turnover:

# Marconi's optical networking business

# Marconi's broadband and fixed radio access network business

# Marconi's softswitch business

# Marconi's data networking equipment and services businesses

# Marconi's relevant telecommunications services activities

# The Marconi trademark, associated brand names and IPR

Ericsson will pay approximately SEK ...