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June 7, 1987

NOW NORTHERN TELECOM TRIES WEST GERMANY

By CBR Staff Writer

Northern Telecom is making noises about expanding its presence in Germany, which sound disconcertingly similar to the high hopes it had of entering the UK market. Northern Telecom says it is tracking the liberalisation of West German telecommunications market but that process will be a very slow one. Public switching and transmission will remain a monopoly business under the West German governmentappointed commission recommendations, with telecommunications services being hived off to compete with private industry. Northern Telecom wants to set up alliances and joint ventures in Germany saying that it would be hard pressed to keep its global position unless it becomes more active in Europe. It does only 10% of its business outside North America and aims to get this up to 15% by 1990 and 20% by 1995. Following liberalisation of the UK telecommunications market in 1983, the Canadian telecoms equipment manufacturer invested $Can12.9m in a reorganisation and expansion of its UK operations. It planned a big pitch for British Telecom business, hoping to become its second supplier with its DMS public exchange as an alternative to System X, before Thorn-Ericsson won the business. It does sell its DMS switch to Mercury Communications in competition with System X. Northern Telecom says it has installed two switches with Mercury to date. The company’s chairman in 1983, Walter Light, projected annual sales in the UK of about $US300m in the UK by 1988, with 50% of its revenues coming from the public sector. But the company’s revenues outside North America as a whole for last year only reached a total of $246m. The UK company was consolidated into telecoms and data systems units in 1983 and all UK manufacturing was moved to a 100,000 square foot plant in Hemel Hempstead in Hertfordshire. The UK was seen as a springboard for Northern Telecom to launch into the rest of Europe. It has been in Germany for four years, where it supplied its DPN SL/10 packet switches to the Bundespost for the country’s packet switching network, called Datex-P between 1979 and 1985. The network now has 20,000 connections and has brought Northern Telecom some $16.6m business.

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