Siemens says no plans to sell US access business

Sarah Knight

MUNICH: Siemens AG on Tuesday dismissed analysts' suggestions that the firm

sell its loss-making broadband Internet access unit Efficient Networks, saying

it wanted to develop technology in that area.

Analysts have said that Siemen's ailing fixed-line telecommunications unit

ICN, struggling with heavy losses amid a downturn in capital spending by telecom

operators, would probably want to divest units making heavy losses such as

Efficient Networks.

But Thomas Ganswindt, the head of ICN, told journalists at a briefing in

Munich that Efficient Networks was part of its plan to build up a position in

technology to provide homes and offices with high-speed Internet access.

Siemens last year paid $1.5 billion for Efficient Networks, a US company that

makes modems for DSL, an Internet access method that upgrades ordinary copper

telephone wires to broadband.

DSL was considered one of the high-growth areas of the telecoms equipment

sector. But since the takeover, Siemens's DSL business has suffered from lower

investment by operators, which are scraping pennies to pay off huge debts and

are reluctant to invest in businesses that are not instantly profitable.

Ganswindt said there were no plans to sell Efficient. "For loss-makers

you can choose to fix, sell or close the business. We are taking the approach to

fix it," Ganswindt said of Efficient Networks. "We have to restructure

the operations of Efficient to align it with business volume," he added.

Broadband telecoms service has been struggling to take off. Many new

operators have gone bankrupt or scaled back their ambitions as they failed to

generate enough revenues. They have been struggling to get access to local

telecoms exchanges to offer their service, but incumbent operators have stalled

in providing access, much to the chagrin of the European Commission.

Experts still regard DSL a growth area in telecoms, because broadband is

essential for customers to use new applications, such as online gaming and

video-on-demand.

No pick-up



However, Ganswindt does not see a pick-up in spending in the
"short-term" as carriers focus on balance sheets and reducing their

debt pile. ICN intends to continue streamlining its business, including

integrating units such as US optical network business Optisphere, to cut costs.

The firm announced in April it would shed 6,500 jobs, including jobs losses

at its US router business Unisphere which it agreed to sell to Juniper last

week, on top of the 10,000 already signaled. "I expect it will take several

years to reach the capex level in 2000," said Ganswindt.

Despite the brutal downturn Siemens also will continue to invest in research

and development of new technology that can save operators money. ICN plans to

pump 1.2 billion euros this year into research and development on leading edge

technology, seeing it as having major cost advantages and revenue generating

potential for clients.

The executive said a Siemens study based on calculations devised by research

firm Gartner Group showed that a return investment in its next generation

switching and access technology could pay off almost straight away. Siemens said

carriers could cut their operating costs by up to two thirds and increase

revenues by some 20 percent using its solutions.

ICN said its aim was to offer carriers and enterprises, which have already

invested heavily in separate voice and data infrastructure, convergence systems,

which merge the telephone, and Internet networks.