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Another year of telco turmoil – C&W

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ComputerWire: IT Industry Intelligence

able & Wireless Plc believes it faces another 12 months of 'industry turmoil' and that its global IP business will continue to lose money until the beginning of 2004. The London, UK-based carrier can only see a reduction in competitive activity in the financial year to March 31, 2004 as the sector shakeout comes to an end.



For the current financial year, the emphasis is on stemming losses by improving the revenue mix, concentrating on data rather than voice, reducing capital expenditure by 50% on the previous year's level, and increasing asset utilization.

Chief executive Graham Wallace told Friday's annual general meeting that the acquisition of Digital Island, Exodus and PSINet in Japan has given the company a market leadership position with 2,500 customers and a 20% share of the hosting services market.

In a statement that will add to the gloom of equipment suppliers, Wallace said: "We have now invested in all the data centers we will need for several years, and consequently we expect our capital expenditures for the business for the next few years to be very low."

C&W's global infrastructure was largely complete and Wallace said it now has to make better use of it. He said the company has a complete understanding of where it had spare capacity and sales activity was focused on selling what it had, not what it had to build. Global's capital expenditure fell 70% between 2001 and 2003 and will continue to fall in 2003/04.

He said that the restructuring of its US activities, to eliminate loss-making activities and focus on hosting and web services for large corporate customers, will produce significant savings in operating costs and leased networks.

In Japan, where C&W took over international telecoms operator International Digital Communications in 1999, Wallace said the proportion of lower-margin international telephone business had declined from 80% in 2000 to 40% in 2002/03 with IP and data growing from 20% to 50% in that time.

Wallace saw a major strength in its $2.6bn pound ($3.9bn) cash pile that he saw as essential at a time when customers are looking for financial strength and stability in their suppliers.

© ComputerWire

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