C&W cuts UK jobs and plans exit from US

4 Jun 2003

Following weeks of intense speculation, troubled telco Cable & Wireless (C&W) [CW.L] has announced that it will refocus its core UK operations and exit its loss-making US business. C&W reported a widening loss of GBP6.53 billion for fiscal 2003, the legacy of former CEO Graham Wallace’s attempts to turn the UK’s second biggest phone company into a worldwide corporate communications leader, and the telco has been under increasing pressure to improve profit and cut costs in its home market. C&W will axe 1,500 UK staff over the next two years as it seeks to turnaround sliding revenues and an operating loss of GBP303 million, posted despite a positive EBITDA of GBP110 million. The telco expects to make significant savings by offloading its US business, which makes up the largest part of its international data service division Global, after analysts estimated the loss-making venture would eat up GBP300 million this year alone, following a GBP255 million loss in fiscal 2003. However, C&W has unnerved investors by failing to provide details of its US exit strategy, which could come at a potentially huge cost. Additionally, the telco surprised many by announcing that it will not pay a dividend this year.

United Kingdom