EADS, Siemens Win German Police Radio-Network Order (Update2)

Aug. 28 (Bloomberg) -- European Aeronautic, Defence & Space Co., Europe's biggest aerospace company, and Siemens AG won an order valued at as much as 1 billion euros ($1.28 billion) supply German police with radios less prone to eavesdropping.

The contract to build a digital network, awarded jointly by Germany's federal and state governments, may provide EADS with as much as 1 billion euros in revenue, a company spokeswoman, speaking on condition she not be identified, said in a phone interview today.

The nationwide police-radio network will be completed by 2010 ``at the latest,'' Germany's Berlin-based Interior Ministry said in a statement. Field tests run by police showed the system offered by EADS and Siemens, Europe's biggest engineering company, ``to be the most economical,'' the ministry said.

Wrangling between Germany's states and the federal government has delayed the project, originally planned for completion before the World Cup soccer tournament Germany hosted in June and July, to replace a network vulnerable to breakdowns and to listening by outsiders. Competing bidders included Vodafone Plc and a partnership between Deutsche Telekom AG's T-Systems unit and Motorola Inc.

Shares of Paris- and Munich-based EADS rose 15 cents, or 0.7 percent, at 22.64 euros in Paris, reversing a decline earlier in the day. Siemens shares rose 56 cents, or 0.9 percent, to 66.10 euros in Frankfurt.

EADS's Secure Networks unit will build the digital radio system with Siemens as subcontractor, the Interior Ministry said, without specifying the cost of the project.

Renewing the communications network for the police and border guards may eventually cost as much as 3 billion euros as Germany's 16 states add refinements to the network, according to Torsten Gerpott, a University of Duisburg academic commissioned by the government in 2004 to assess costs. Germany's analog police network is the oldest in Europe after Albania's, according to the study.

To contact the reporter on this story: Brian Parkin in Berlin at bparkin@bloomberg.net.

To contact the editor responsible for this story: Eddie Buckle at ebuckle@bloomberg.net