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February 29, 1988

ORBITEL, PLESSEY-TELENET NOT IN GEC PLESSEY FIRM, BUT GEC STILL PAYS UKP45m

By CBR Staff Writer

GEC Plc and Plessey Co Plc have finally reached agreement on the terms for establishment of their telecommunications joint venture company, which is now due to open for business on Good Friday and All Fools’ Day, April 1. That’s three months later than originally forecast. Forecasting annual turnover of UKP1,200m, Sir John Clark, chairman and chief executive of Plessey, who will also be chairman of the new company, described the marriage as the final step in the reconstruction of the UK telecommunications industry. He claimed that in the world digital switching league, GEC Plessey Telecommunications Ltd will rank as the number five player. A Class 1 Circular being delivered to all Plessey shareholders confirms that GEC will make a payment of UKP45m to its partner in order to match the assets that Plessey is injecting into the venture. Industry observers have commented that GEC seemed to have got the upper hand as the nssey is injecting into the venture. Industry observers have commented that GEC seemed to have got the upper hand as the negotiations progressed and Sir John took the opportunity publically to stress that both companies hope to benefit equally from the partnership. Plessey has confirmed that for the time being, neither Orbitel Ltd joint venture with Racal, or its Plessey-Telenet Ltd joint venture with US Sprint Telenet – on digital cellular radio and packet switching implementation respectively, will be included in the venture. But this decision is not fixed and Plessey said that discussions are continuing with both of these concerns. Plessey hopes that its other core businesses in defence and microelectronics will benefit from the refocussing of its telecommunications interests. Of particular interest is Plessey’s admission that it will be pursuing new telecomunications interests outside the joint venture. Sir John named data communications and value added data services as two key areas which Plessey is investigating, and the company is known to be particularly interested in broadcast data services such as radiotext and teletext. Plessey will be seeking approval from its shareholders to go ahead with the joint venture under the terms stated in the Class 1 Circular on at a meeting on March 25.

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