Marconi Communications

Marconi Communications

Company type	Subsidiary (formerly)
Industry	Telecommunications
Predecessor	GEC Plessey Telecommunications (GPT)
Founded	August 1998 (1998-08)
Founder	General Electric Company plc (GEC)
Defunct	2006 (2006)
Fate	Acquired by Ericsson; remaining operations rebranded as Telent
Successor	Ericsson, Telent
Headquarters	United Kingdom , United Kingdom
Area served	Global
Products	Telecom systems and equipment (including asynchronous transfer mode technology, gigabit Ethernet, Internet Protocol-based products)
Owner	Marconi plc (later Marconi Corporation plc)
Parent	General Electric Company plc (until 1999), then Marconi plc / Marconi Corporation plc

Marconi Communications served as the telecommunications division of Britain's General Electric Company plc (GEC), established in August 1998 through the consolidation of GEC Plessey Telecommunications (GPT) alongside other GEC subsidiaries such as Marconi SpA, GEC Hong Kong, and ATC South Africa.

By December 1999, it became the primary subsidiary of Marconi plc, a company formed when GEC rebranded itself after divesting its defence segment, Marconi Electronic Systems, to British Aerospace, which led to the creation of BAE Systems. In May 2003, Marconi plc underwent restructuring and adopted the name Marconi Corporation plc.

Utilizing funds gained from the defence division sale, Marconi Corporation expanded by acquiring several US telecommunications firms, aspiring to establish itself as a leading telecom systems provider. However, after suffering significant devaluation during the dot-com bubble collapse and failing to win key contracts, Ericsson purchased a controlling interest in 2006. The leftover operations were rebranded as Telent.

History

The "Marconi" name originates from a lineage of mergers and corporate reorganizations tracing back to Marconi Company Ltd, founded in 1963 but with roots reaching back to 1897 through its founder Guglielmo Marconi. Marconi's operations were integrated into GEC in 1968 following GEC's acquisition of Marconi’s parent company, English Electric.

Origins: GEC’s acquisition of Plessey and GPT formation (1986–1998)

The foundation of Marconi Communications can be traced to 1986 when GEC sought to acquire Plessey, a British electronics and telecom company established in 1917. Regulatory obstacles prevented a full takeover, resulting instead in a joint venture launched on 1 April 1988: GEC Plessey Telecommunications (GPT). GPT specialized in technologies such as synchronous digital hierarchy and leveraged combined expertise behind the System X telephone exchange, facilitating market penetration.

In 1989, GEC and Siemens AG jointly acquired Plessey under the entity GEC Siemens plc. While most Plessey assets were divided between the two firms, GPT remained a joint venture with GEC holding a 60% share and Siemens owning 40%. GPT continued operating legally under this name.

Throughout the mid-1990s, GPT’s brand gradually disappeared within the UK market. By October 1997, following Siemens’ mergers within the UK, GPT evolved into Siemens GEC Communication Systems. This entity merged with Siemens Business Communication Systems in 1998, forming Siemens Communications, which became Siemens AG’s largest business division.

In August 1998, GEC acquired Siemens’ 40% interest in GPT—then primarily a legal entity—and combined it with telecom operations from Marconi SpA, GEC Hong Kong, and ATC South Africa to establish Marconi Communications.

Marconi period (1999–2005)

In December 1999, GEC divested its defence business, Marconi Electronic Systems, selling it to British Aerospace, which resulted in the formation of BAE Systems. Subsequently, GEC rebranded as Marconi, with Marconi Communications designated as its chief subsidiary.

Following the January 19, 1999 demerger announcement, GEC concentrated on telecommunications by acquiring US-based equipment manufacturers RELTEC Corporation (March 1999) and FORE Systems (April 1999). Both acquisitions took place during the height of the dot-com bubble. The £2.8 billion paid for FORE Systems and £1.3 billion for RELTEC significantly impacted Marconi after the bubble burst between 2000 and 2001.

In September 2000, Marconi inaugurated Enterprise Technology Centres located in San Jose, California; Vienna, Virginia; and Israel.

By early 2001, major competitors such as Lucent Technologies and Alcatel issued profit warnings amid declining order volumes. Although Marconi initially reassured investors, by July it confronted steep sales drops accompanied by an unavoidable profits warning. Concurrently, it announced selling its medical division to Philips for $1.1 billion and suspended trading of its shares. After a contentious board meeting, Marconi revealed plans for 4,000 job reductions alongside forecasts predicting a 15% sales decline and a halving of operating profits through March 2002. When trading resumed, shares plummeted by 54%, valuing the company at £2.8 billion compared to £35.5 billion in September 2000. Deputy CEO John Mayo was dismissed amid this turmoil. A second profits warning in September resulted in CEO Lord Simpson and Chairman Sir Roger Hurn being replaced.

In June 2001, Marconi sold its Ipsaris network business to Easynet via an all-share transaction valued at over £300 million; this deal granted Marconi a 72% stake in Easynet. Ipsaris controlled one of the UK's largest fibre optic backbones spanning approximately 3,500 km. However, by March 2002 demand had collapsed; Easynet subsequently suspended use of the network and reduced its valuation from £350 million down to £15 million.

On May 19, 2003, Marconi underwent restructuring into Marconi Corporation through a debt-for-equity swap whereby creditors received nearly all shares—99.5%—resulting in severe dilution for existing shareholders.

Mid-2003 saw Marconi divest its remaining Easynet holdings—selling a 32% stake for £40.5 million in July followed by another 40% for £56.7 million in September—to lower debt levels and enhance liquidity.

Marconi was recognized as a significant supplier of asynchronous transfer mode technology along with gigabit Ethernet and Internet Protocol-based products. In 2005 it unexpectedly failed to win contracts within British Telecom's 21st Century Network (21CN) initiative—a surprise given prior expectations—prompting a sharp decline in its share price.

Several acquisition bids emerged subsequently, including one from Huawei Technologies, with whom Marconi had an existing joint venture. Most of Marconi Corporation’s divisions—including Marconi Communications—were acquired by Ericsson in 2005; the remaining operations were renamed Telent.

Sponsorship

At the beginning of 2000, Marconi entered into a lucrative sponsorship agreement with the Benetton Formula One team. The Marconi logo was prominently displayed on the B200 and B201 vehicles as well as on the drivers' racing suits. Although the contract was intended to last for three years, it was terminated after two due to budgetary limitations.