Midland telecoms group Marconi yesterday confirmed that it is still in talks with potential suitors about possible business tie-ups.

"We are in discussions with a number of people," said Marconi chairman John Devaney, on the sidelines of an event to launch a new sales centre in Shanghai.

"We're just talking to people and will see if anything interesting materialises."

However, he declined to give any names or say what options were being considered, adding that the company's main purpose in exploring such alternatives was to increase shareholder value.

Early last month the group - formed out of industrial conglomerate GEC - said it was in the early stages of discussions about 'potential business combinations', adding there was no certainty that a takeover would follow.

The brief statement followed reports which said Chinese firm Huawei was involved in exploratory talks over a possible #600Emillion takeover of Marconi, which is cutting some 450 jobs at its base in Coventry.

Mr Devaney said yesterday: "We have some relationships with Huawei. I can't give an answer to whether they're a potential suitor in a black and white sense."

Huawei, a rapidly-expanding firm from southern China, was one of eight suppliers to win work from BT on a #10Ebillion network upgrade - a contract that eluded Marconi, forcing it to cut more jobs and begin a strategic review.

Analysts believe the acquisition of Marconi would boost Huawei's European presence by giving it access to Marconi's developed sales and distribution networks, aiding the Chinese firm in its attempts to establish itself as a major brand in developed markets.

They suspect a sale is the most likely option, as Marconi is seen as being too small to compete with heavyweights such as Ericsson and Siemens.

However, Huawei may not be the only Chinese firm with its eyes on Marconi.

The Hong Kong-based newpaper Ta Kung Pao reported that Huawei rival ZTE Corporation has approached Marconi with a competing bid.

Marconi is slowly recovering from its near collapse under a mountain of debt in the 2001 telecoms meltdown, which saw heavy borrowing to fund new capacity that failed to materialise.