Huge job cuts loom at Marconi

THOUSANDS of jobs are at risk at telecoms group Marconi following last week's failure to win a share of a £10bn BT infrastructure contract. The company said today that it is considering 'all strategic options'.

City analysts believe the most likely option is that the company puts itself up for sale. More than £500m was wiped off the company's stock market value after BT revealed that Marconi was not one of the firms it would be using for its network renewal project. Marconi had invested huge amounts of money and effort in the project and described the decision as 'devastating'.

Weekend reports claim that the company is looking for prospective buyers in Europe, the US and the Far East and has hired Morgan Stanley to find a partner.

About 25% of Marconi's UK business comes from BT, including a £90m a year deal that has three years to run. But the company's long-term prospects hinged on winning a major share of the BT infrastructure project. Even if Marconi now finds a new owner, it said it would need to review the numbers of people it employs.

Marconi currently employs 4,500 people in the UK and 5,500 overseas. Today it said that it would consider what level of staffing it needed. In a statement to the Stock Exchange, Marconi said the details of this review would be released in due course.

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'The company clearly recognises the need to refocus its business in the light of BT's decision and recent trends in the global telecoms equipment market. In addition to this, management is reviewing the resource and headcount in each of its activities, particularly in the UK and will announce shortly the result of this review together with the associated cost savings and level of headcount reduction.'

Union leaders fear as many as 2,000 jobs could be lost as a result of BT's decision to award eight of Marconi's rivals work to equip a £10bn overhaul of its network. Marconi, which has worked to restructure its businesses after near collapse in 2001, has operations around the country, including Livepool, Basildon, Coventry and Beeston in Nottinghamshire. The company's research and development activities are thought to be at most risk of closure.

Marconi is due to report full-year results in two weeks' time. It said the figures will be in line with forecasts. The company still has net cash of about £300m but its share price remains a cause for concern ? it lost almost half its value to close at 261.5p.

Trade and Industry Secretary Patricia Hewitt, meanwhile, is understood to have told the company that there is 'no prospect' of a Government bailout to help Marconi through its current difficulties.