Marconi warns over cost of lost BT deal
British telecoms equipment group Marconi today warned it faced a £50m (€72.8m) hit to revenues this year following its failure to land a major BT contract.
The company, which employs 4,300 people in the UK, also said it was experiencing “fierce” pricing pressures overall, as it posted annual results and outlined the financial impact of the BT disappointment for the first time.
As well as the £50m (€72.8m) reduction expected in this financial year from BT equipment sales and services, Marconi put the one-off cost of a restructuring needed to tackle the contract failure at around £55m (€80.1m).
It hopes the overhaul, which will cost around 800 UK jobs, will save the company in the region of £50m (€72.8m) in the long term.
Marconi went on to warn that margins were likely to come under pressure this year as it faced up to a competitive market and a changing business mix.
Despite the blow from BT, Marconi said high levels of customer interest meant it still expected to achieve revenues at a similar level to last year.
In the year to March 31, Marconi announced sales from continuing operations of £1.27bn (€1.8bn), slightly up on a year earlier, while margins rose to 31.9% from 29.5% in 2004. Bottom-line losses narrowed to £27m (€39.3m), from £171m (€248.9m).
Today’s results show BT continued to be Marconi’s biggest customer, generating around 25% of current sales with total revenues of £322m (€468.8m). Other key clients included Vodafone and Deutsche Telekom.
Despite the close relationship, BT shocked the telecoms industry by choosing eight overseas-based companies for contracts in the carve-up of a £10bn (€14.6bn) project to upgrade its network.
Marconi responded by outlining a restructuring along regional lines, meaning 450 jobs will go in Coventry and a further 300 in Liverpool.
