UK govt silent over 'rebuff to Marconi' reports

The British government today stayed tight-lipped about claims that it had rebuffed a plea for help from struggling telecoms group Marconi.

The Department of Trade & Industry (DTI) declined to confirm a report in The Observer that it had told Marconi it was unable to spend taxpayers’ money to protect up to 2,000 jobs under threat at the company.

Marconi reportedly warned trade secretary Patricia Hewitt that the jobs could go after the firm failed to win any work on British Telecom’s £10bn (€14.8bn) plan to build a new telecommunications network. BT, which provides 30% of Marconi’s business, awarded all the work to eight of its overseas rivals.

A spokesman for the DTI said: “We are aware of the situation and this is a competitive tender between two commercial companies.”

Marconi lost about £500m (€738.5m) of its value last week after BT said it had awarded the lucrative contracts to Fujitsu, Huawei, Alcatel, Cisco, Siemens, Lucent, Ericsson and Ciena.

The firms will help BT carry out its five-year project to deliver a “21st century network” capable of running traditional voice services with the same technology used for data transfer.

The move has prompted speculation that a rival could buy Marconi, which has about 4,500 staff in the UK at bases at including Coventry, Liverpool and Beeston near Nottingham.

The company is to speed up efforts to sell itself to US, Chinese or European rivals following BT’s decision, the Sunday Times claimed.

Chief executive Mike Parton said it would close its UK research and development operations and turn itself into a services and distribution business, according to the report.

Marconi completed a life-saving £4.7bn (€6.9bn) debt restructuring in 2003 and has impressed investors with an improving trend for sales since then.

The company had earlier hit a financial crisis after a costly switch from electronics to telecoms as it paid for companies at peak prices during the tech boom. Existing shareholders were left with virtually nothing following the restructuring.