Ericsson in talks to buy Marconi: sources

LONDON (Reuters) - Swedish telecoms equipment maker Ericsson is in talks to buy UK rival Marconi and a deal could be announced within weeks, people familiar with the negotiations said on Sunday.

The Financial Mail newspaper said in an unsourced report on Sunday that Ericsson saw a total valuation for Marconi of up to 1.3 billion pounds (US$2.31 billion), roughly twice its current market value.

Marconi, which nearly collapsed in the 2001 telecoms industry meltdown, declined to comment.

Marconi received a major blow in April after BT Group cut the group out of its 10 billion-pound network upgrade plan. It has since announced plans to cut 800 jobs and promised to look at all of its strategic options.

The possible deal comes amid a flurry of activity in the telecoms sector as chief executives get back into buying mode after years of restructuring.

Last week, British cable operator NTL agreed to a long-awaited deal to buy smaller rival Telewest for US$6 billion.

In July, France Telecom grabbed control of Amena in a deal valuing Spain's third-ranked mobile phone group at 10.6 billion euros (US$12.9 billion).

The Financial Mail said the possible Ericsson-Marconi deal was put together with investment banks Morgan Stanley, JP Morgan and Lazard advising Marconi, while Enskilda acted for Ericsson.

A report in the Observer newspaper said British parliamentarians were demanding that the government intervene in a possible bid for Marconi by China's Huawei Technologies, due to fears that the company was too closely associated with the Chinese government.