Marconi wins £100m-plus contract from BT

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The Independent Online

The telecoms equipment maker Marconi yesterday announced it had signed a deal - potentially worth in excess of £100m - to supply broadband telecoms equipment to its biggest customer, BT.

Mike Parton, Marconi's chief executive, said he thought the three-year contract would get signed off in the next few days and estimated it would be worth "tens of millions of pounds" to Marconi this financial year.

Analysts at Dresdner Kleinwort Wasserstein estimated the deal could be worth up to $200m over the three-year-period. Mr Parton said that over a three to five-year period, the figure could be even greater than that.

But Marconi, which has suffered from a downturn in trading, is unlikely to see any short-term gain from the deal since it will take some time before new revenues start to flow in. In return for the new contract, Marconi has also agreed to revise the terms of another deal it has with BT, where it supplies optical equipment to the telecoms giant. That contract was not due to expire until 2006.

Under the revised terms of that deal, Marconi will supply BT with at least 70 per cent of the kit - implying BT will bring in other equipment suppliers alongside Marconi. Last year, BT made up about 20 per cent of Marconi's total £1.8bn of sales.

Marconi may lose some volume but will not have to supply more cheaply, Mr Parton said.

Separately, Easynet - a provider of broadband internet access in which Marconi has a 72 per cent stake - said trading was "in line" with expectations.