Swedish telecom equipment maker Ericsson said today it would buy the bulk of British rival Marconi for $2.1 billion.
Ericsson, the world's biggest maker of mobile phone network equipment, said the deal to buy assets representing 75 per cent of Marconi's turnover will help it supply the world's telecoms operators, which are seeking ways to deliver broadband Internet and services to subscribers in the home, office or on the move.
Marconi's contribution in this so-called fixed and mobile convergence is its strength in the transport of voice and data over medium to long distances with its optical switches.
Ericsson dominates global sales of radio access equipment.
The Swedish company said it would probably need to reduce the 6,700-strong workforce at Marconi, named after the Italian radio pioneer, by around 1,000 people.
Five years after the bursting of the Internet bubble, Ericsson stated that the best has yet to come. "The upgrade to broadband will lead to a massive increase in data traffic. As a consequence, transmission capacity in telecoms networks will have to be dramatically increased," it said in a statement.
Marconi, Britain's last remaining telecoms equipment maker, saw its future thrown into turmoil in April when it lost a key contract from its largest customer, BT Group.
But Ericsson has retained its global lead in mobile systems while operators built their first high-speed wireless networks for mobile broadband services such as video.