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Marconi savaged after failure to win BT 21CN deal

Share price falls 40 per cent

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Shares in telecoms equipment outfit Marconi plummeted more than 40 per cent this morning after it confirmed it had not secured a slice of a major £10bn contract from BT.

In a statement to the Stock Exchange Marconi announced it "has not been selected as preferred supplier for BT's next-generation 21st Century Network (21CN) project".

"This is a disappointing outcome from a very competitive tender process," said Marconi chief exec Mike Parton. "Our products performed extremely well technically, but we have been unable to meet BT's commercial requirements."

The failure to win a slice of the action sent shockwaves through the City. By El Reg's midmorning coffee break, shares in Marconi were down 207.5p (43 per cent) at 274.5p.

Putting a brave face on things Marconi added that it would continue to supply equipment and services to BT under existing contracts it has with the UK's dominant fixed line telco.

Earlier today BT named eight companies - whittled down from more than 300 across the globe - as its preferred suppliers for its 21CN project. The telco is investing £10bn over the next five years in the new network designed to deliver whizzy high-speed communications services.

The eight companies are Fujitsu, Huawei, Alcatel, Cisco, Siemens, Lucent, Ciena and Ericsson.

Said BT WHolesale boss Paul Reynolds: "21CN is a key infrastructure that will fuel the UK economy and provide a flexible way for consumers to use new services. The selection of the preferred suppliers is an incredibly important building block towards that vision. 21CN will also radically reduce BT's cost base, with identified savings of around one billion pounds a year."

Last year BT announced plans to migrate its national phone network to an Internet Protocol (IP) platform. The move will take five years to complete and should produce savings of £1bn a year for the UK's dominant fixed line telco.

The new multi-service IP-based network will carry both voice and data services and replace the UK's public switched telephone network (PSTN). 21CN will involve installing IP kit, called Multi Service Access Nodes (MSANs), in exchanges which are capable of carrying both voice and data traffic. The mass migration of customers onto the new network is set to begin in 2006 with the majority shunted across by 2008.®

Shares in BT were up 1p (0.5 per cent) at 198p at the time of writing. ®

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