Marconi, the telecoms networks maker whose shares have nearly doubled since it completed a £3bn financial restructuring, is to put its US business, which makes power supplies and housing for telephone exchanges, up for sale.
The business, called Outside Plant, Power & Services, is profitable and had a turnover of £220m last year. While Marconi has not set a price, it is believed that the business could be worth as much as £150m.
Although Marconi's chief executive, Mike Parton, has identified Outside Plant as non-core, the business is not expected to go on sale formally until next year. Marconi wants to maximise the amount it receives from the sell-off and believes conditions are still depressed.
The restructuring has left the group, which became a byword for financial mismanagement, in the happy position of having net cash. It has boosted this situation in recent weeks by selling its 40 per cent stake in Easynet, the telecoms company, for £56.7m and its remaining holding in Bookham Technology, the optical components group, for £17m.
Last month it signalled it was ready to buy back up to £300m of bonds by saying it would pay the next tranche of interest on them early. The move will cost Marconi nearly £20m.
The market for telecommunications equipment remains difficult, with big customers such as BT and AT&T still reluctant to invest heavily in an area that has stopped growing. In the late 1990s, when the sector was one of the most exciting in business, there was heavy spending by telecoms companies.
However, after the markets peaked in early 2000, investment was heavily cut back and leading equipment makers such as Lucent, Nortel and Marconi bore the brunt of the pain.
Recently there has been a hint of optimism in the sector. Frank Dunn, the chief executive of Canada's Nortel, said earlier this month that he could see a recovery in the battered sector.
Mr Parton is believed to be more cautious. He points out that the market turnover has slipped in every one of the last 12 quarters, and bottoming out would be good news.
- More about:
- Dwelling Houses And Apartments
- Georgia (usa)
- Information Technology