Siemens AG has capitalised on the bridgehead it established in the Italian public switching market when it took control of GTE Corp’s European operations in 1986 by winning a contract from Italtel for production of the Italian’s Linea UT public switch in Italy. Siemens’ agreement with state-owned Italtel involves sharing of the costs of development and marketing of the Italian public switch, production of which has up to now been scattered inefficiently over eight plants, where according to Italtel chief Marisa Bellisario, one to one and half plants would suffice for the Italian market. The move is the first step in collaboration on sharing the costs of marketing and development of second generation public switching equipment between Siemens and Italtel. The agreement covers the Italian market only at this stage but could progress to include other telecoms companies. The two are currently bidding with Plessey on the next stage of a project, under the European Commission’s Race research programme, on pan-European broadband digital telecommunications, having finished the feasibility phase. Alcatel was also involved in the project at the start, but pulled out when it acquired ITT’s European operations in 1986. GTE sells its GTD 5 switch in Italy as a top-end switch, while the Linea UT sells into the market for medium-sized exchanges. Italtel will shortly merge with Fiat’s Telettra to form the new Telit SpA.