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European Business News (EBN), 97-01-17European Business News (EBN) Directory - Previous Article - Next ArticleFrom: The European Business News Server at <http://www.ebn.co.uk/>Page last updated January 17 1800 CETCONTENTS
[01] Consortium plans huge undersea cableProposals for the world's longest undersea telecommunications cable came a step nearer completion when a consortium of Alcatel-Alsthom of France, Pirelli SpA of Italy, KDD of Japan and AT&T Corp. of the U.S. signed a $737 million contract.The contract calls for the consortium to build a 21,000-kilometer network to link Singapore and Germany as part of the Sea-Me-We 3 cable project, expected to begin service in December 1998. The contract award, which was expected, came one day after telecom administrations from 70 countries signed an agreement to go ahead with the Sea-Me-We 3 cable's construction. The total cost of the cable is estimated at over $1.37 billion. In a statement, Alcatel said its submarine networks unit will supply 46% of the network contract, valued at $342 million, while KDD Submarine Cable Systems will supply 38%, valued at $280 million. AT&T Submarine Systems will provide 13% of the network contract, valued at $92 million, and Pirelli will supply 3%, valued at $23 million. The submarine network will use synchronous digital hierarchy, or SDH, at 2.5 gigabits a second, and will be able to send several channels of information down a single fibre. As a result, the network will have a maximum capacity of 40 gigabits per second for data, voice and video traffic. A company spokesman said Alcatel will supply all the SDH hardware for the Germany-Singapore link. The contract calls for the construction of a main trunk cable, as well as 25 landing points on the cable and 15 spurs or branches. [02] GM sells Hughes for $9.5bnGeneral Motors has unveiled the long-awaited sale of the defence businesses of its Hughes Electronics unit to Raytheon Co. for a rich $9.5 billion in stock and debt.The sale is part of GM's exit from businesses other than making cars and trucks. GM cast the transaction as part of an effort to 'unlock' the value of its nonautomotive operations. Under the complex pact announced yesterday and expected to close this summer, holders of GM's common stock and of Hughes's Class H stock will receive shares in the Hughes defence business that will then be exchanged immediately for shares of the new Raytheon. That means the GM and Class H shareholders will receive about a 30% stake in Raytheon valued at about $5.1 billion. Besides selling its defence businesses, which had total 1996 revenue of about $6.3 billion, Hughes Electronics will transfer its Delco Electronics business to GM's big parts-maker, Delphi Automotive Systems. That is seen as a prelude to a move by GM to sell part of Delphi in an initial public offering. The purchase agreement with Raytheon, which beat out rival Northrop Grumman, is in many ways a watershed event, marking the end of post-Cold War defence consolidation among America's biggest and most powerful arms and aircraft makers. Two companies - Lockheed Martin and the planned Raytheon-Hughes combination - will dominate much of the U.S. defence-electronics business. Commercial-jet maker Boeing Co., having teamed with McDonnell Douglas, is squared off against Lockheed Martin as well, in the development and manufacture of military airplanes. The pending sale comes more than a decade after GM and other auto makers spent billions to diversify their vehicle operations, only to shed the non- auto acquisitions in the 1990s. [03] U.K. borrowing is way above forecastBritain's public sector borrowing requirement, the amount the government needs to borrow to bridge the gap between its income and expenditure, was £2.12 billion ($3.6 billion) in December, nearly double the 1.2 billion pounds economists were expecting.And the Treasury is forecasting a PSBR of 26.4 billion pounds in 1996-97. In 1995-96 the shortfall was 31.69 billion pounds. The government said the rise in the PSBR in December compared with the year earlier was due to higher interest payments, which were 1.16 billion pounds higher than a year earlier due to the introduction of strippable gilts, and lower privatisation proceeds. The data, published jointly by the Office for National Statistics and the Treasury Friday, also showed that the cumulative PSBR for the first nine months of the 1996-97 financial year, which began in April, was 16.1 billion pounds. This was down from 23.0 billion a year earlier. Excluding privatisation proceeds, the cumulative PSBR was 20.4 billion pounds, down from 23.6 billion a year earlier. In December, privatisation proceeds totalled £260 million pounds, mainly due to the sale of residual share holdings compared with 556 million in December 1995. Looking ahead the government said the introduction of self-assessment has meant that the first payments of income tax by the self-employed for the current year is due on January 31 rather than January 1 previously. It is possible that some of these payments will not score in the PSBR figures until February. [04] U.K. government falls into minorityThe U.K. government suffered its worst setback yet when the death of M.P. Iain Mills tipped Britain's Conservatives into a parliamentary minority.Mills, a rank-and-file Conservative M.P., died at the age of 56, reducing Prime Minister John Major's strength in the lower House of Commons to 322 against 323 members of opposition parties. Major is now head of Britain's first minority government since James Callaghan's government in the late `70s, fuelling media speculation that he could be forced to call an election earlier than the May 1 date he apparently favours. But there were few signs that the news had increased election fever in parliament. A cabinet minister said Major had already given out signals about the likely timing of the election. 'I see no reason to re-examine those signals,' he said. Labour's lead in the opinion polls approaches 20 points, and Blair has pledged himself to forcing Major out of office if he can persuade the minority parties in parliament to back it on a key issue. But there is no sign of such an issue on the horizon. [05] Airbus sins up its first partners for the jumbo plane projectAirbus Industrie has signed an agreement with Belgium's Belairbus and the Netherlands' Fokker Aviation to take part in the study phase of Airbus' super jumbo passenger plane, the European consortium has announced.The memorandum of understanding foresees an eventual partnership in the A3XX program. The A3XX will be a super jumbo passenger aircraft with the possibility of seating 555 passengers. Airbus bills it as the world's largest airliner. The memorandum is expected to lead to an agreement that would total about dlrs 2 billion in business for Fokkair and Belairbus combined, Airbus said. [06] EU considers forcing 'phone companies to sell off cable holdingsEuropean Union regulators are studying whether EU-based telephone companies must divest their cable holdings, a conclusion that could deal a major blow to companies such as Germany's Deutsche Telekom AG and France Telecom SA.The EU Commission agreed in 1995 to review the cross-ownership of cable and phone networks before 1998, when the telecommunications market across Western Europe is due to be liberalized. According to EU officials, Arthur D. Little, a consulting firm, has just embarked on a six-month study to examine whether a single dominant operator can in the future offer both telecommunications and cable services. The move has led to intense speculation in Germany and France, where current phone monopolies Deutsche Telekom and France Telecom could be virtually shut out of growing and lucrative domestic-cable markets. Commission officials stress that they haven't yet decided on any specific course of action. From the European Business News (EBN) Server at http://www.ebn.co.uk/European Business News (EBN) Directory - Previous Article - Next Article |
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