Alcatel, Finmeccanica Create Two Venture Space Companies 

PARIS and ROME, Jan. 31/Satnews Daily/ — Alcatel (Paris: CGEP.PA and NYSE: ALA) and Finmeccanica (Milano: SIFI.MI, FNC.IM) announced on Friday the signature of final agreement to merge their space activities through the creation of two joint ventures companies, to which both partners will contribute their respective satellite industrial and service activities.

The first company, Alcatel Alenia Space, of which Alcatel will hold 67 percent and Finmeccanica 33 percent, will combine Alcatel Space and Alenia Spazio's activities. It will concentrate on the design, development, and manufacturing of space systems, satellites, payloads, instruments and associated ground systems for civilian and military applications.

The headquarters of Alcatel Alenia Space will be located in France, with plants in France, Italy, Belgium and Spain. With estimated 2004 sales of $2.34 billion (1.8 billion euros) and around 7,200 people, it will create the European leader in satellite systems and services.

The second company, Telespazio, of which Finmeccanica will hold 67 percent and Alcatel 33 percent, will combine Telespazio with Alcatel Space Services and Operations activities. It will concentrate on operations and services for satellite solutions, which includes control and exploitation of space systems as well as value-added services for networking, multimedia and earth observation. Its headquarters will be located in Italy with plants in Italy, France and Germany. With estimated 2004 sales of 350 millions euros and around 1,400 people, it will be a key player in the space services market.

According to a statement, the two groups have decided to combine their respective space businesses to consolidate significant operational synergies and economies of scale (mainly in R&D, product development, procurement policy and increased industrial efficiency), which will improve these businesses operating profitability by several points and will be realized progressively, in line with business cycles.

The management team for each company will be appointed in the coming weeks.

Alcatel and Finmeccanica will account for Alcatel Alenia Space and Telespazio using proportional consolidation. Alcatel and Finmeccanica will have a cash/debt impact of $141.86 million (euro 109 million) for the two companies respectively, at the closing date.

The completion is expected during 2005 subject to necessary approvals by regulatory authorities.

Finmeccanica is Italy's leading high-tech company, operating in the design and manufacture of helicopters, civil and military aircraft, aerostructures, space satellites and infrastructure. Finmeccanica boasts significant manufacturing assets and skills in the transport and energy sectors. With operations in Italy and abroad, it employs around 46,000 staff in total. Finmeccanica spends 14,5% of its revenues on research and development.

Alcatel provides communications solutions to telecommunication carriers, Internet service providers and enterprises for delivery of voice, data and video applications to their customers or employees. With sales of $16.26 billion (euro 12.5 billion) in 2003, Alcatel now operates in more than 130 countries.

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