By Tony Hallett, 14 September 1999 00:20
NEWS Racal Electronics declined to name Energis as the suitor for its telecoms arm on Monday, after a weekend of speculation predicting a deal worth between £750m and £800m. After past success with spin-offs - both Vodafone and security specialists, Chubb, came from the Racal camp - Racal chairman, Sir Ernest Harrison, is known to be looking at selling a division which hasn't kept up with industry growth rates. Ironically, a recent push with integrated voice and data services over IP (Internet Protocol) has been welcomed by analysts. (See http://www.silicon.com/a32558 and http://www.silicon.com/a32564 ) Racal has confirmed it is engaged in talks, but said these may or may not result in a sale of Racal Telecom. Recent deals have seen the firm's data communications business divested, and it is likely its defence and industrial electronics operations would eventually also go. Susen Sarkar, senior analyst at Yankee Group Europe, said: "In terms of the network, buying Racal is not entirely an obvious move for Energis - it is older and inherited from (British Rail unit) BRT. But it does go into city centres, and Racal has a good customer base, especially in terms of government and other discrete sectors." Racal Telecom stressed its Translink and Fieldforce operations are not part of negotiations. Translink supports Railtrack's data communications, while Fieldforce is a maintenance and engineering unit. Energis - whose lines piggyback on electricity pylons - would have its position as the UK's third largest telco consolidated, should the deal go through. It would trail BT and Cable and Wireless Communications. Yankee Group's Sarkar added that past talk about floating Racal Telecom was probably due to Racal not wanting to sell to a competitor. Mentioned previously were Germany's Deutsche Telekom and Mannesmann, in addition to Colt Telecom and ScottishTelecom.
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