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AeroMatra Consolidates Telecom Business (Mar. 31)

The Aerospatiale Matra and Nortel Networks groups have signed a binding Memorandum of Agreement to reinforce their cooperation in telecommunications through the creation of a new company focused on defense and security markets. These activities will now benefit in their development from the shared and complementary strengths of their holding companies (strong position on the defense market and Internet technologies).

The proposed company will combine Aerospatiale Matra's strong positions worldwide in the defense and public safety markets, and Nortel Networks' leadership in building the high performance Internet. The company (the official name of which will be announced shortly) will be built around the Professional Mobile Radio (PMR) and the Government and defense activities of Matra Nortel Communications.

With solutions based on Tetrapol technology, of which it is one of the most active promoters, the PMR business is already a world leader in secure digital communications and will become the business development platform for this segment worldwide. The company will be 55-percent held by Aerospatiale Matra and 45 percent by Nortel Networks. It should be operational in May 2000 .

The agreement demonstrates the commitment of the parent companies to enhancing the positions of Aerospatiale Matra in the public safety and defense telecommunications segment, leveraging support from Nortel Networks' technologies.

The shareholders intend to appoint Jacques Payer, the head of Aerospatiale Matra's telecommunications division, as Chairman of the company with responsibility for expanding the scope of the new venture at a global scale within the framework of the creation of EADS. Until the present, Mr. Payer had been Chairman and CEO of Matra Nortel Communications.

Jacques Payer said: "The company, which will be clearly focused on its core business of secure communications solutions, will benefit from Nortel Networks' leadership in optical, wireless and IP technology, while continuing to develop its own secure radio communications solutions for military and public safety applications. To build a worldwide market presence it will leverage the current positions of Aerospatiale Matra and the future strengths of EADS (European Aeronautic, Defense and Space company), consolidating its global leadership in this area."

Matra Nortel Communications, which is specialized in enterprise and carrier solutions, will now include in its portfolio of solutions in France the data network activities resulting from Nortel Networks' acquisition of Bay Networks Inc. in September 1998. This makes Matra Nortel Communications the only company in France to propose a unified range of voice and data solutions. As a result of this, Nortel Networks now holds 55 % of the company and Aerospatiale Matra 45 %.

The Board of Directors has named Michel Clément as Chairman and Chief Executive Officer of the company. Mr. Clement was previously Chief Operating Officer. Jacques Payer was also named Honorary Chairman.

Commenting on the new venture, Michel Clément said: "Stronger involvement from Nortel Networks, a world leader in high-speed Internet solutions, consolidates Matra Nortel Communications as the leader in France in converged telephony/data network solutions for the enterprise and carrier markets."

The Professional Mobile Radio (PMR) business proposes secure digital radio communications solutions based on the Tetrapol standard for both public and private sector organizations (public safety and emergency forces, public transport, airports, industrial sites, etc.) for field missions.

Recent contracts have been signed with several European defense ministries for systems to support their peacekeeping forces in Kosovo. The Mexican government has also signed a contract for deployment of a nationwide network for its security forces.

The Professional Mobile Radio business currently has a presence in 20 countries and more than 40 organizations have chosen its technology. In 1999, the sales of the PMR activity have been up to FF 1. 8 billion .

The Government and defense systems division acts as prime contractor for telecommunications networks deployed by different armed forces branches in France. Its solutions draw on technologies developed for civil applications (using off-the-shelf products) adapted to defense environments with specifically enhanced security. The unit has notably built infrastructure networks for the French Navy (RVDM project) and the French Army (MTGD project).

AEROSPATIALE MATRA is a French based private company, operating in four business sectors : - aircraft (airplanes, helicopters, services), - defense (strategic missiles and missile systems), - space (satellites, launch vehicles, orbital infrastructures), - Systems, Services & Telecommunications (networks, C3I systems, encrypted radio-communications).

The company has 56,500 employees, including nearly 10 000 outside France, and generated, for its first year of operation, 1999 worth 12,898 million Euros (FF 84,608 million), including 70 percent in export markets.

On October 14, 1999, DaimlerChrysler, Lagardère group and the French government announced an agreement for the merger of the aerospace and defense businesses of Aerospatiale Matra and DaimlerChrysler Aerospace (DASA), as the European Aeronautic, Defense and Space company (EADS), with Philippe Camus as co-CEO. On December 2, 1999 the Spanish company SEPI decided to join CASA activities to EADS, further strengthening the new group, now Number 3 worldwide.


Aerospatiale Matra Consolidates Its Position In Telecommunications