Heavily-indebted telecoms firm Marconi has confirmed that it may sell its Italy-based defence communications business to local aerospace and engineering giant Finmeccanica.

Marconi said on Thursday that it was in "advanced" talks with Finmeccanica, and would make further announcements "in due course."

Earlier on Thursday, Italian newspaper Il Sole 24 Ore reported that Finmeccanica's board had backed plans to buy Marconi's communications unit, known as Marconi Mobile, for 610m euros (�406m).

Marconi Mobile specialises in secure communications systems for the defence industry.

The disposal, if agreed, would go some way towards relieving the company's �3bn debt burden.

In the City, Marconi shares edged slightly higher to 3.62p on the news.

Survival battle

Marconi has already sold off a string of businesses in an attempt at paying down its debts, amid growing doubts over the company's long-term future.

The company, formerly the defence firm GEC, attempted to turn itself into a global telecommunications specialist through a debt-fuelled acquisition spree during the late 1990s.

But the global tech and telecoms industry went into meltdown just as the company completed its makeover, forcing it to write down huge sums as the value of its acquisitions plummeted.

Marconi's share price has fallen by about 99% from its September 2000 peak of about 1,200p.

The company, which is thought likely to attempt to swap its debt for shares, saw its sales fall by another 22% on the year during the April to June period.

Finmeccanica is Italy's largest aerospace and defence group.