Marconi chief rues confusion over BT contract

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The Independent Online

Marconi's failed bid to become a supplier to BT Group's £10bn network upgrade project was based on the false assumption that the contract would be awarded to two suppliers rather than just one, the company's chief executive, Mike Parton, revealed yesterday.

Marconi's failed bid to become a supplier to BT Group's £10bn network upgrade project was based on the false assumption that the contract would be awarded to two suppliers rather than just one, the company's chief executive, Mike Parton, revealed yesterday.

Mr Parton said Marconi had been told by BT that the contract would be "dual sourced". However, BT gave the contract exclusively to Ericsson, cutting Marconi out of new business worth about £500m and resulting in the company shedding 800 jobs.

Mr Parton said if Marconi had known BT intended to award the contract to a single supplier it would have changed the economics of its bid, allowing it to improve the terms of its offer. "We know that we could have met all of the timescales that BT needed," Mr Parton said yesterday at Marconi's annual results presentation. "I can only reinforce that we were taken by surprise they single sourced it. Everyone had been told it would be dual sourced. BT told us. BT consistently said they would dual source it."

A spokeswoman for BT said: "We made sure the procurement process was transparent to all vendors involved in the 21st Century Network project. We don't want to be drawn into Mike Parton's claims. It's their results day."

In August Mr Parton will be able to cash-in options worth £1.9m awarded for steering the company to a stock-market value of more than £1bn for 90 consecutive days early last year.

The company's value has crashed to less than £600m as a result of the BT contract decision. Marconi is now seeking a possible buyer, although Mr Parton said he did not think a break-up of the business would be in shareholders' interests.

Marconi's annual sales rose 4 per cent to £1.27bn for the 12 months to 31 March;operating profits were £28m compared with a £55m loss last year.

Marconi is aiming for cost savings worth £50m a year, with the restructuring measures costing £55m.

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