The Soviet Union’s decision to seek joint ventures with western firms for the manufacture of telephone exchanges has sparked off a race to capture a slice of the country’s potentially huge market. The Soviets are seeking telephone exchange production facilities within the USSR, and training for Soviet people in modern telecommunications techniques. Alcatel NV is a leading contender; it has offered an annual supply of 250,000 lines of its System 12, from its Bell Telephone Manufacturing Company in Belgium, before setting up full scale production in Leningrad with annual capacity of 1.5m lines. Alcatel already manufactures E10 exchanges in the Soviet town of Ufa, in the Urals, and has supplied exchanges to China since the late 1970s. Revenue from exchange manufacturing facilities is thought to come to around $250 per line, meaning that if Alcatel begins manufacturing in the Soviet Union, the joint venture could initially be worth around UKP375m. The French company is, however, facing stiff competition for the lucrative business from GEC Plessey Telecommunications Ltd, which hopes to persuade the Kremlin that System X is applicable to Soviet requirements, and from L M Ericsson Telefon.
