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Ericsson absorbs Marconi; Denies merger speculation

Tue, 03/28/2006 - 5:31am

Copyright 2006 World Markets Research Limited;
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World Markets Analysis
March 28, 2006

Telecoms vendor Ericsson has unveiled an integrated broadband network portfolio, combining Ericsson and Marconi's expertise and product ranges in broadband access and transport networks.

In a press release at the ongoing 21st Century Communications World Forum in London (U.K.), Ericsson said the product would facilitate operators' transition to a high-performance broadband network.

The new broadband portfolio includes solutions such as IP DSL access multiplexers (IP-DSLAM); IP multi-service access nodes (IP-MSANs); microwave and optical transport; and Ericsson's IP multimedia subsystem (IMS) and softswitch solutions. Meanwhile, the company has ruled out a large merger akin to the proposed one between Lucent and Alcatel. Speaking to Total Telecom at the conference yesterday, Ericsson chief technology officer Hakan Eriksson said that organic growth was more cost-effective than a large acquisition because of the vendor's extensive research and development (R&D) arm.

Significance: Thanks to Marconi's success in fixed optical solutions, there has been little overlap when compared to Ericsson's product line. A merger of the same scale as that proposed for Alcatel and Lucent would mean Ericsson would be hoping to drive synergies that are bound to be difficult to achieve. For Eriksson, who leads an 18,000-strong R&D department, the synergies of such a mammoth merger with the likes of Lucent would be low, as both companies could continue with their own technology platforms.

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