Standard Telephones and Cables

~ the obit ~

In July 1984 a telephone company bid four hundred million pounds for a computer company, and everything that happened to Standard Telephones and Cables afterward follows from it. Sir Kenneth Corfield had been managing director since 1970 and executive chairman since 1979, and what he wanted was ICL, which by then was most of what remained of the British computer industry. The reasoning was the reasoning everyone had in 1984: telephones and computers were converging into one business, so you had better own a piece of both. STC got it. The next year the company posted a loss and cut thirteen thousand jobs. Corfield went with them.

Before that it had been one of the handful of firms that built Britain's telephone system. ITT bought Western Electric's international business in 1925 for about $29.3 million and renamed the British operation Standard Telephones and Cables on 1 October of that year, a day that only britishtelephones.com actually supplies. By 1961 it was running eight works in Britain with twenty-five thousand people in them. Its laboratory at Harlow is where Charles Kao did the optical fiber work that won him a share of the Nobel Prize in Physics in 2009, which is an unusually good line to have on a corporate record.

STC died in March 1991, seven years ahead of the first modem I ever owned, and the dates are the smaller half of the distance. This was a supplier to a state telephone monopoly in another country. Its customer was the British Post Office and then British Telecom. Nothing it built was ever offered for sale to a person. The one piece of it I have touched is the fiber, and I touch that every day without the name attached.

~ the rap sheet ~

~ what ITT left behind ~

For fifty-seven years STC was an American subsidiary that happened to be British, which is a specific kind of company. ITT ran it from 1925, and the sell-down came in three pieces: fifteen percent offered to the British public in July 1979, another ten percent in March 1982, and forty percent in October 1982. By the middle of 1982 STC was listed in London and eventually sat in the FTSE 100.

Independence lasted nine years. In October 1987 Northern Telecom bought ITT's residual holding, paying roughly 340 pence a share for a stake that came out at 27.2 percent. A Canadian competitor with better than a quarter of the register is not a passive investor, and from that point the only open question was how long the board could keep finding reasons to say no.

~ four hundred million for ICL ~

The bid for ICL arrived on 26 July 1984. STC ring-fenced it as a profit center and kept it at arm's length, but the money had gone out the door and the strain showed within a year. The 1985 figures are reported two different ways and I am not going to split the difference: a contemporaneous Computergram account gives a pre-tax loss of £11.4 million on turnover of £1,997 million, while the International Directory of Company Histories says the company lost £54 million that year through what it calls a dash for growth by acquisition. Both describe the same crisis at different lines of the same accounts.

Corfield did not resign. The Directory's wording is that Lord Keith of Castleacre led a coup against him in 1985, with Arthur Walsh installed as chief executive, and on 17 June that year the parent company dropped the full name on the register and became STC Limited. Not one account I can reach attaches a day or even a month to the chairman's removal. A rights issue went out and the cuts landed. By 1986 the company was back to a pre-tax profit of £134.2 million, which was enough to look recovered and not enough to be.

The unwinding took until 1990. STC agreed in July to hand Fujitsu eighty percent of ICL for £750 million, with completion scheduled for 30 November. The company had owned it for six years.

~ 327 pence ~

Northern Telecom came into the open on 8 November 1990 with an offer of 327 pence a share, structured as 317 pence in cash plus a ten pence second interim dividend payable if the offer went unconditional. That was a 21.6 percent premium on the 270 pence the shares had fetched on 15 October, and it valued STC at £1,650 million. The company was sitting on £850 million of cash at the time.

The offer was conditional on the ICL disposal completing, which tells you exactly what the buyer thought it was purchasing and what it thought it was avoiding. Nobody has published the day the acquisition completed. What is dated to the day is the register: on 27 March 1991 Companies House recorded STC Limited becoming Northern Telecom Europe Limited, and that is the moment the name stopped describing anything.

~ the cable business outlived the name ~

The best part of STC was under the sea and it survived the parent by three years. When the Monopolies and Mergers Commission looked at Alcatel Cable's purchase of the submarine arm, referred on 27 October 1993, it put STC at nineteen percent of the world long-haul submarine systems sector over 1990 to 1993, in a market worth about $6,788 million, with another twenty-two percent of a $779 million short-haul sector. AT&T was bigger at thirty-six percent, so the common claim that STC led the world in submarine cable does not survive its own regulator's numbers. Nineteen percent of the ocean is still a serious business. The DTI cleared the sale on 24 February 1994 at a reported £600 million, and the operation became Alcatel Submarine Networks.

There is one last oddity in the register. On 1 January 1992 the dormant parent was renamed again, from Northern Telecom Europe Limited back to plain STC, and it carried those three letters as a non-trading shell for another thirty-three years before being dissolved on 9 January 2025. Companies House also lists the 1910 to 1985 period under the name Standard Telephones and Cables Public Limited Company, which cannot be right, since public limited companies did not exist in British law until 1980. Even the gravestone has a typo on it.

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