C&W Splits, Ditches CEO

Cable & Wireless announces changes to its structure and management and provides business update

January 31, 2006

4 Min Read

LONDON -- Cable and Wireless plc (Cable & Wireless) today 31 January 2006 announces a number of changes to its structure and management along with a business update. The highlights are:

  • Creation of two self-contained operational units – UK (including Bulldog) and International - to reflect the differing characteristics of the two and the establishment of clear strategies for both;

  • Significant reduction in scope and role of the Group corporate centre;

  • Francesco Caio to continue in his role as Group Chief Executive until the start of the new financial year, after which he will step down, as the Group Chief Executive position will not be part of the new structure;

  • UK EBITDA (excluding Bulldog but including Energis) for 2006/7 is currently expected to be no higher than for 2005/6;

  • Confidence restated in medium-term target for the UK business; and

  • National Telcos continue to trade in line with expectations.

Richard Lapthorne, Group Chairman, said: "Today’s reorganisation marks a significant step in the development of Cable & Wireless. The creation of the two operating units is the result of a huge amount of effort by the team and, in particular Francesco, who has worked closely with me to get us to this point. We have put in place the tools for the strategic repositioning of the UK business, though the short term environment remains extremely challenging. We are focused on operational delivery in all of our markets."

Francesco Caio, Group Chief Executive, said: "Over the last three years we have transformed Cable & Wireless from an unfocused business into a group of telecom operators relevant in each of their markets. This has been achieved against a background of unprecedented change in the industry. We exited unsustainable markets including the US and Japan and we have rebalanced the revenue mix in the National Telcos towards the growth areas of broadband and mobile.

"In the UK, we have devised and started to implement the strategy for long term success through scale, access and IP capability. Notwithstanding the continued pressures, particularly in the legacy voice market, the robust performance of the former Energis business together with promising progress that is being made with Bulldog means that we continue to have confidence in the medium-term financial objectives for the UK business announced last November.

"These moves over the last three years, together with the calibre of leaders that we have attracted, create the right conditions for the reorganisation announced today and enable the company to progress into what I regard as the next natural phase of its development."

Changes to Group Structure

The Group will divide its business into two operationally self-contained businesses, UK (including Bulldog) and International. This decision reflects recognition of the differing characteristics of the UK and International businesses, the critical scale achieved in both, the quality of management leading both businesses and the move into a phase of execution against agreed business plans.

As a result, the central functions of Cable & Wireless will be reshaped to ensure the continuation of proper governance and control at the Group corporate centre but will no longer operate shared services for the two business units.

New Management Structure

Francesco Caio will continue as Group Chief Executive until the start of the new financial year after which he will work with Richard Lapthorne to ensure the successful transition of the organisation to the new structure. As part of this new structure in the UK, John Pluthero is appointed joint Group Managing Director and Chairman of the UK from the start of the new financial year, and Jim Marsh, Director of Retail, UK will assume the role of Chief Executive of the UK business. As a result of the decision to integrate Bulldog into the UK business, both Emanuele Angelidis, Chief Executive Bulldog, and Jim Marsh will report to John Pluthero.

In International, Harris Jones is appointed joint Group Managing Director and Chief Executive of International, again with effect from the start of the new financial year, and Lord Robertson of Port Ellen will become non-executive Chairman of International whilst remaining a Deputy Chairman of the Group. Both Harris Jones and John Pluthero will report directly to the Group Chairman, Richard Lapthorne.

Business Update

While the UK management team confirms the UK medium-term objectives announced in November 2005, it currently expects that UK EBITDA (excluding Bulldog but including Energis) in 2006/7 will be no higher than in the current year. The principal reasons are:

  • Continuing margin erosion, high levels of churn and the acceleration of the switch from legacy services to IP;

  • The impact of actions associated with the integration and realignment of the UK business; and

  • The reduction in non-recurring items, which are expected to make a major contribution in the current year and which primarily reflect the successful conclusion of a number of matters including billing disputes and negotiated settlements with suppliers for bandwidth, access and operations and maintenance services.

The company intends to update the market on its progress to date with its UK plans on 28 February 2006. This will provide an overview of the integration, business improvement and wider transformation programmes that are now in place.

In the third quarter, performance for National Telcos continued to be in line with the positive trends seen in the first half and in line with our expectations.

Cable and Wireless plc (NYSE: CWP)

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