The new alliance in space activities will create the European leader in satellite infrastructures and services, the two companies said in a joint statement.

The alliance "will improve operating profitability by several points," they added.

Alcatel will hold a 67 percent stake in the manufacturing company Alcatel Alenia Space and Finmeccanica will own the remaining 33 percent. Alcatel Alenia Space will combine Alcatel Space and Alenia Spazio's industrial activities, and is expected to post sales of 1.8 billion euros (2.2 billion dollars) in 2004.

Finmeccanica will hold a 67 percent stake in the services company, which will group Finmeccanica's Telespazio with Alcatel Space's operations and services activities, and is expected to post in 2004 sales of 350 million euros. The new company's name has not been announced.

The creation of the new companies, which is subject to shareholders' and regulatory approvals, should be completed by end-2004, the companies said.

Shares in Alcatel fell 1.14 percent in Paris, while Finmeccanica was 0.16 percent lower in Milan.

SPACE.WIRE